NOTICE OF INTRODUCTION OF €30,000 SAVINGS LIMIT FOR MEMBERS

As of 1st February 2020, the Board of Directors of Tipperary Credit Union have introduced a temporary savings limit of €30,000 per member across all accounts. The decision to introduce this savings limit was not taken lightly and only after careful consideration of the implications of increased savings in our credit union.

The Board of Tipperary Credit Union took the difficult decision to limit savings to €30,000 per member account due to a significant increase in the value of savings lodged at the credit union and the knock-on implication this has had on the credit union’s ability to maintain the regulatory reserve set out by the Central Bank of Ireland, which is a minimum of 10% of our total assets. This means that for every additional €1,000,000 of savings, we must allocate €100,000 from our surplus / profits to our regulatory reserve, and this can have the effect of depleting the amount available to pay a dividend / rebate at year end and roll out of new services such as current accounts etc.

To put this in context, for the financial year 2019 we achieved a surplus of €1,293,727 of which €948,373 (73%) had to be allocated to the regulatory reserve required by the Central Bank. This leaves little to distribute to members in terms of dividends or rebates. It also impacts on the level of surplus we can set aside for future years. We also face the challenge of a low interest rate environment which is greatly reducing the investment income that Tipperary Credit Union earns on its deposits. In some cases, up to 30% of our savings are potentially exposed to 0% or negative interest rates. Therefore, the low interest rate environment is also impacting on our ability to generate a surplus.

The Board of Directors will be constantly monitoring the level of savings in our credit union and reserve the right to increase, decrease or remove entirely the temporary savings limit in the future. Our staff will be monitoring daily to ensure all members stay within their savings limit. We thank you for your understanding on this matter and apologise for any inconvenience this may cause. Difficult decisions such as this are taken by the Board of Directors are for the betterment of the credit union as a whole, so that we can continue to offer first class products and services to our members.

Frequently Asked Questions:

If your question is still unanswered please email info@tipperarycu.ie

Why are you limiting/imposing a savings limit?

Effective 1st February 2020, the Board of Tipperary Credit Union took the difficult decision to limit savings to €30,000 per member account due to a significant increase in the value of savings lodged at the credit union and the knock-on implication this has had on the credit union’s ability to maintain the regulatory reserve set out by the Central Bank of Ireland, which is a minimum of 10% of our total assets. This means that for every additional €1,000,000 of savings, we must allocate €100,000 from our surplus / profits to our regulatory reserve, and this can have the effect of depleting the amount available to pay a dividend / rebate at year end and roll out of new services such as current accounts etc. To put this in context, for the financial year 2019 we achieved a surplus of €1,293,727 of which €948,373 (73%) had to be allocated to the regulatory reserve required by the Central Bank. This leaves little to distribute to members in terms of dividends or rebates. It also impacts on the level of surplus we can set aside for future years. We also face the challenge of a low interest rate environment which is greatly reducing the investment income that Tipperary Credit Union earns on its deposits. In some cases, up to 30% of our savings are potentially exposed to 0% or negative interest rates. Therefore, the low interest rate environment is also impacting on our ability to generate a surplus.

How many members will this affect?

This will affect just under 1,000 members in total which is only 3% of total membership.

What is the saving restriction?

The credit union now has a saving restriction of €30,000 per member across all accounts. This means that each member can only have €30,000 in savings with the credit union. Members who have less than €30,000 can increase their shares to €30,000 – but no more than that.

What about members with savings under €30,000?

If the member has less than €30,000, they are free to increase it to this amount, but not beyond this level. Staff will be tracking this to identify members that are reaching the limit and the member will be advised accordingly.

What about members with savings above €30,000?

Members above €30,000 are encouraged to withdraw funds to comply with this limit. We will communicate directly with these members on their options in order to comply with the new savings limit.

How long will the limit last for?

The Board of Tipperary Credit Union will keep the savings restriction under constant review, if they make any decision to change or remove the current limit, members will be informed.

Does this mean the credit union is in difficulty?

No, this has no bearing on the day to day operations of the credit union. Tipperary Credit Union is adequately capitalised at €25m and has assets of €152m. Over the past three years, savings have increased by €21m and stand at €126m and we must meet the regulatory reserve of 10% of our total assets at all times. Each time our savings increase, we have to allocate more money from our surplus funds to meet this regulatory reserve, therefore reducing the amount we have available to pay out a dividend or loan interest rebate. It also reduces the amount we can afford to invest in new services and new technology options that can benefit all our members. To reduce the impact of this savings growth, the decision was reluctantly taken to limit savings to benefit the greater number of our members.

Will this affect the dividend offered?

Last year Tipperary Credit Union paid a dividend of .01%, worth €12,223 to members. While it is too early this year to determine what rate of dividend if any we will pay out, we will be communicating with members directly to inform them once we are in a position to do so.

Are my savings safe here?

I can assure you that your savings remain safe and secure at Tipperary Credit Union. We are a financially strong and stable credit union with €25m in capital reserves and €152m in assets. We made a surplus in 2019 of €1,293,727. In addition, your savings continue to be guaranteed by the Government Deposit Guarantee Scheme up to €100,000.

Does this mean the credit union cannot give out loans?

Tipperary Credit Union is in a strong position to give out loans, subject to appropriate assessments being completed. Our ability to lend is in no way affected by the savings limit. We continue to provide valuable loan services to the local community.

I’m affected by the savings limit of €30,000, what will I do now?

You will receive a letter from Tipperary Credit Union setting out your options. Unfortunately, we cannot give out financial advice to members on investments or other savings options. You are recommended to talk to your financial advisor.

I have received a letter advising me I have exceeded the savings limit. How will this affect me?

Members who reach €30,000 in savings will be prevented from making further deposits until the balance on their account falls below €30,000 (this will apply to all cash, cheque and EFT transactions). Please take note of your current balance and ensure that it does not exceed the €30,000 limit on savings. You may find out your current savings balance by contacting the credit union directly or by registering for online banking.