Q&A:Q Some time ago, I read a headline which stated that Gordon Brown was considering whether or not to extend the British protection scheme to Northern Rock account holders outside Britain. Can you please confirm that the British government actually protects deposits up to €I00,000 when held by Northern Rock account holders in Ireland?
Likewise, does the Danish government cover deposits up to €40,000 when held in National Irish Bank in Ireland rather than in Denmark? Does the Dutch government cover RaboDirect deposits in Ireland?
Ms E.C., e-mail
A I’m not sure when you saw the headline about Gordon Brown extending protection to foreign holders of Northern Rock accounts but Irish account holders with that bank have been fully covered – regardless of the amount – since it was nationalised.
At that time, the British government, as part of its efforts to stem a run on the bank, said that all deposits were protected – even above the £50,000 threshold generally observed by the British deposit protection scheme. That cover was extended to include not only holders of accounts at the time the bank was nationalised and the sums contained in those accounts, but also new account holders after that date and additional deposits made following nationalisation.
In relation to the other banks you mention, National Irish Bank chose to avail of the Danish government scheme rather than the Irish one last year. Similarly, RaboDirect opted to remain under the Dutch scheme. Irish deposits in those banks are now covered by the terms of those schemes in the country where their parent is based.
Levy for card holder
Q An article last week by Caroline Madden indicates that “the levy does not apply to people who have a full medical card”. I am a retired public servant with a full medical card (over 70) and the 1 per cent is being deducted from my pension. Could you clarify the position for me please?
Mr S.G., e-mail
A The position is quite clear and is laid down in the guidelines covering the implementation of the income levy from January 1st of this year. It is exactly as Caroline Madden stated last week and as we have stated several times in this column. Among those people exempt from payment of the levy are holders of the full medical card.
The situation this year is going to be somewhat complicated by the fact that a number of people over 70, who have until now been automatically entitled to a full medical card, are going to lose that entitlement under new rules coming into force from March 1st. At that point, the Government has decided to reactivate the means test for medical card holders – even over the age of 70.
However, the Revenue guidelines state that “the individual does not need to hold the full medical card for the full year to qualify for the exemption”.
“For example, the card may be issued to the individual in December, but the individual is still entitled to the exemption for the full year in question,” it continues. You need to contact whoever is administering your pension with evidence that you do hold the medical card – in your case, I imagine evidence of age would suffice, at least until March 1st.
Investment security
Q I live in the UK and have a two-year fixed bond with Anglo Irish Bank, a substantial amount invested.
I would like to think my money is still safe, but I don’t understand what the term, “investments are safe with the Government until September 29th, 2010” means. Does this mean my money is not safe after that date? My investment matures in December 2010.
Mr G., e-mail
A I have been very careful in addressing peoples concerns about the security of their deposits to note, as you point out, that the current State guarantee covers all deposits only until September 29th, 2010.
When the Government announced that it was covering all deposits at the six named Irish institutions – AIB, Bank of Ireland, Anglo Irish Bank, Permanent TSB, EBS and Irish Nationwide (and Postbank, which joined later) – it specified that this was only for a two-year period. That period runs out in September 2010, although it is possible the Government will extend that deadline closer to the time if there is still uncertainty about the security of bank deposits.
Separately from the State guarantee, the Deposit Protection Scheme provides protection for the first €100,000 held by a person in any institution regulated by the Financial Regulator. Note that, under this scheme, the protection threshold is per institution and not per account.
The Deposit Protection Scheme is not encumbered by a two-year timeframe and, so, depending on the amount you have invested, you will be covered beyond September 2010.
Value of guarantee
Q With reference to your response to a recent query concerning the Government guarantee of savings in Anglo Irish, does the Government guarantee cover the current value of funds – ie, capital plus interest – or only the original capital value?
Mr. E.B., Dublin
A The State guarantee covers all deposits in each of the seven institutions – AIB, Anglo Irish, Bank of Ireland, Permanent TSB, EBS, Irish Nationwide and Postbank. That would include the original capital sum deposited with the bank and any interest that has accrued.
Please send your queries to Dominic Coyle, QA, The Irish Times, 24-28 Tara Street, Dublin 2 or by e-mail to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
