Growth in savings scheme for youths

Home investment savings with tax deduction for young people (BSU) amounted to NOK 17.1 billion at end-December 2009. This is an increase of 17.4 percent or NOK 2.5 billion compared to end-December 2008.

The twelve-month growth rates in BSU last year represent the highest levels since the scheme was introduced. The twelve-month growth in all months varied from 11.6 to 18.7 percent. Comparatively, the growth from December 2007 to December 2008 amounted to only 8.4 percent.

The BSU deposits grew at a positive and relatively high rate all through the year (see figure), which is a variance from the normal seasonal pattern for these deposits. Normally, BSU deposits follow a seasonal pattern with large deposits in December, following some withdrawals in the first months of the year and the growth then levelling out in subsequent months. The concentration of deposits in December is likely to be influenced by the fact that investments in BSU give rights to tax deduction up to NOK 4 000, and that adaptations to tax rules often take place late in the year.

From end-November to end-December 2009 the home investment savings increased by NOK 1.4 billion or 8.8 percent.

One explanation for the high growth in home investment savings, measured both with twelve-month and monthly growth rates, may be the revised regulations for BSU deposits as from Jan.1, 2009.

Home investment savings with tax deduction for young people (BSU)

Home investment savings with tax deduction for young people (BSU) is a savings scheme for people under 34 years of age. As from 2009, the total savings for one year amount to NOK 20,000 and total savings in the scheme are limited to NOK 150,000. This is an increase from NOK 15,000 and NOK 100,000 respectively. The scheme guarantees a loan from the depository bank up to four times the savings amount, and gives a yearly tax deduction of up to 20 percent. In order to avoid tax liability for withdrawals, the entire amount must be used for housing purposes, i.e. buying a house or an apartment, or repayments on mortgages for a house purchased after the savings started.

Source: Statistics Norway

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