21 March 2022
Savings Cap Changes
Members, please note that we are reducing our Savings Cap from €50,000 to €40,000 with effect from 1st June 2022.
We have experienced strong growth in member savings in recent years, a time when we are also seeing record low interest rates.
Regulatory rules require Comhar Linn as a Credit Union to allocate and hold 10% of the value of all members’ savings in our ‘Capital Reserve’ account. This money must be taken from our surplus. Put simply, for every €100,000 our members have saved with us we must allocate €10,000 from our surplus to our reserve. The cost of meeting this Central Bank requirement has resulted in many credit unions introducing limits on how much members can have in savings.
To address this, from the 1st June 2022:
• We are reducing the cap on savings from €50,000 to €40,000 on all share accounts.
• We are introducing a monthly lodgement limit of €10,000 on all share accounts.
• We will refund any savings you hold with us over €40,000 in June 2022.
• We will return all lodgements in excess of €10,000 in any calendar month, commencing in June 2022.
We understand that many of our members contribute to their shares by salary or pension deduction and we appreciate that it takes time to make changes to your mandate. From 1st June 2022 any contributions received in excess of the cap, before you have had an opportunity to make changes to your mandate, will be refunded to you every quarter.
The actions we are asking you to take to support your Credit Union:
• Please review your current level of savings with us and withdraw any surplus funds in excess of €40,000 before 1st June 2022.
• Please consider the level of your regular share contribution to us in line with our new cap and monthly lodgement limit.
• Please make any necessary adjustments to your DAS or direct debit payments to us before 1st June 2022.
Members, please know that the decision to implement additional restrictions on your savings has not been taken lightly. The options available to us were discussed and approved by our Board of Directors, with the long-term best interests of all our members in mind at all times.
Your support of our Credit Union is invaluable, and we sincerely regret the impact and inconvenience this may cause you.
Our Member Services team is here to help you with any question you may have. Please feel free to get in touch with us on 01 873 1101 or by email at info@intocreditunion.ie.
We thank you for your understanding and your ongoing support of the credit union.
FREQUENTLY ASKED QUESTIONS:
Below are more details on the Savings Cap; we hope that any questions you have are addressed within the FAQ section, but if not please feel free to contact us with your query.
The Savings Cap is the maximum level of savings you can hold as a member in your Regular or Special Share Account with us. This cap will reduce from €50,000 to €40,000.
The new cap will take on effect on 1st June 2022.
Our guiding principle in making this decision was to protect the long-term best interest of all members while ensuring we remain operationally sound.
Saving statistics at Comhar Linn:
- Members’ savings during the most recent financial year (2020/21) increased by 8.01% from the prior year (2019/20).
- We now hold savings in excess of €252 million in our CU.
- We have experienced strong growth in member savings over the past number of years.
- This member savings growth, when combined with a very low interest rate environment, has put pressure on our ability to generate sufficient capital to maintain our regulatory requirements set out by the Central Bank of Ireland.
For every €100,000 our members have saved with us, we must allocate €10,000 from our surplus to our reserve. The cost of meeting this Central Bank requirement has resulted in many credit unions introducing limits on the amount of savings members can hold in the credit union.
The credit union is required to maintain a Regulatory Reserve that supports the credit union’s operations, provides a base for future growth and protects against the risk of unforeseen losses. The credit union needs to maintain sufficient reserves to ensure continuity and to protect members’ savings.
While this should be good news it is greatly overshadowed by the low-performing investment environment available to us.
Comhar Linn invests member’s savings prudently ensuring their protection, but the returns on savings and investments are minimal due to continuing low interest rates, including, in some cases, negative interest rates.
The cap has been set at a high level so it will impact as few members as possible. Approximately 1,300 members are impacted by the cap of €40,000 which represents a relatively small percentage of our 25,000+ membership.
All existing members with savings over €40,000 will receive a refund of the excess funds and will no longer be able to add to their savings.
Members are welcome to continue to save with us, up to the €40,000 limit.
We will refund the amount that exceeds the cap via cheque or electronic fund transfer to your validated bank account.
Members are welcome to continue to save with us, up to the €40,000 limit.
Whilst a Credit Union may not provide investment advice to members in relation to returned funds, you may be aware that there are financial advisors that provide advisory services to INTO and RTAI members.
The Savings Cap will be reviewed on a regular basis and judged on its effectiveness and impact on members. Members will be informed if any further changes are made to the Savings Cap.
It is too early to determine what rate of dividend, if any, the credit union will pay out. We will communicate with members directly to inform them of the dividend once we are in a position to do so.
The cap is at account level.
A member may have up to €40,000 in each account they hold with us.
The cap applies to:
o Regular Share Accounts
o Special Share Accounts
No, we have excluded:
o Current Account
o Budget Account
o Club Account
o Existing Saver Loan Account
No, the cap will not apply to:
o Deceased accounts
o Dormant accounts
The cap will apply and any funds in excess of €40,000 will be returned to the member.
Yes, we are implementing a monthly lodgement limit of €10,000 to each account in each calendar month. Any funds in excess of €10,000 will be rejected and returned to the member.
Yes. Due to the growth in savings over recent years, we have significant funds available to lend to members.
All savings are secure. We are a financially strong and stable credit union and your savings continue to be guaranteed by the Government Deposit Guarantee Scheme up to €100,000.
No, quite the opposite in fact. Due to this growth in savings over recent years, we have significant funds available to lend to members.
No. The savings cap is in line with recent similar moves by the majority of Credit Unions.
