Earlier this year Tánaiste and Minister for Finance Simon Harris announced a plan to launch a scheme that would incentivise Irish people to move some of the €180 billion they have on deposit into investment products.
Ireland has one of the lowest levels of retail investment participation in Europe, with just 2.2 per cent of individuals investing compared to an EU average of 7.5 per cent.
As the representative body for Ireland’s funds and asset management industry, Irish Funds is deeply involved.
“Irish Funds is actively engaged in the development of savings and investment reform. We participated in the Central Bank of Ireland’s savings and investment forum recently, where a personal investment account was announced as the preferred vehicle to encourage greater retail participation in investment,” says its chief executive Pat Lardner.
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The potential benefits for Ireland are significant. “While cash savings play a role in household financial wellbeing, a portion of that capital could be working harder for both households and the wider economy,” says Lardner.
“Increasing long‑term domestic investment would help deepen Ireland’s capital markets, broaden funding sources for businesses, and support investment in areas such as infrastructure, housing and the energy transition. It would also strengthen the connection between Ireland’s globally successful funds industry and the domestic economy.”
Ensuring our domestic savings and investment framework reflects Ireland’s global funds capability only strengthens Ireland’s credibility at EU level, he says, particularly as Europe advances its savings and investment union agenda.
The initiative, which was designed to integrate EU capital markets and increase retail investment, supports Ireland’s plans to introduce new, simplified, tax-efficient savings and investment accounts.
For individuals, the core benefit should be improved long-term financial security. “Irish people are strong savers, but saving alone is increasingly insufficient in an environment of rising living costs, longer life expectancy and growing pressure on public resources,” he points out.
“Holding cash for short-term needs and emergencies remains essential. However, money left in low-interest deposit accounts over the long-term risks losing purchasing power as inflation erodes its value. Investment offers the potential to grow savings in real terms and better support long-term goals.”
The momentum behind the retail investment programme is encouraging, says James Costello, head of the portfolio management group at Davy, who is also involved in the process
“The level of engagement between Government, industry and the working groups feeding into policy design has been very substantive and a 2027 delivery date is both ambitious and achievable. You don’t often see this degree of alignment on a structural reform with the potential to reshape how Irish households build long-term wealth and credit is due to all involved in government departments for the urgency they have brought to this,” he says.
He believes simplicity must be at the core of it.
“If the primary policy objective is to maximise public participation in capital markets, the structure has to be one that an ordinary saver who doesn’t currently invest can understand at a glance. With this in mind, we believe a decent tax-free limit, whether on an annual or lifetime basis, is the best way to ensure high levels of participation,” says Costello.
A simple-as-possible structure is critical.
“The framework can, of course, evolve over time, but design choices made at launch are sticky and getting them right at the outset matters disproportionately to long-term success,” he says.
Equally important is implementation. Once the design is settled, the industry needs adequate time to build – particularly if tax remittance is required – test and integrate the systems, processes and client communications required to deliver at scale.
“A 2027 launch is well within reach, but only if the final design is agreed and communicated to industry as early as possible,” he cautions.
For more than 20 years, Waystone, a global specialist services provider to the asset management industry, has been embedded in Ireland’s funds industry, headquartered in Dublin with additional operations in Cashel, Co Tipperary.
“As an integrated, strategic partner, we bring together regulatory expertise, operational depth and product knowledge into a single, integrated platform and operating model. In Ireland, as one of the largest third-party management companies, we play a key role in underpinning the country’s position as a leading global fund domicile,” says Vanora Madigan, Waystone’s managing director and global head of public affairs
She believes the EU’s savings and investment union addresses the challenges of a lack of retail participation in capital markets.
At a national level, incentivising a shift from deposits into investment products will mobilise a significant pool of underutilised capital within the Irish economy. “A large proportion of household savings currently sits in cash or low-yield accounts. Redirecting even a portion of that into long-term investment vehicles can support funding for businesses, infrastructure and broader economic growth. This creates a more dynamic capital environment, where domestic savings are actively contributing to productivity and expansion rather than remaining largely static on bank balance sheets,” she says.
“The more Irish citizens [who] are participating and investing in capital markets and understanding their investments, the better their potential investment outcomes are. Holding excess savings in deposit accounts can erode real value over time, particularly in inflationary environments, whereas diversified investment products offer the opportunity for capital growth and compounding returns,” she says.
That should help move the dial in relation to Irish savers’ risk aversion, too.
“As a country, we lag significantly behind most developed economies in terms of translating high savings into productive capital market investments,” says Colin Farrell, financial services international tax partner at PwC Ireland.
“The Government recognises that encouraging individuals to invest, rather than simply save, could significantly improve the long-term financial wellbeing of Irish citizens and reduce reliance on the State pension. The mobilisation of this private capital should also help fund Irish businesses and EU businesses, driving economic growth and job creation.”
The proposed account will be a simplified, tax-efficient vehicle, likely allowing for the receipt of tax-free dividends and gains, at least up to a certain threshold.
“It is hoped that the account will permit investment across a broad and diversified asset base, ensuring that individuals can access a range of investment opportunities that align with varying risk appetites, time horizons, and financial goals,” says Farrell.
For the industry, the biggest risk is that the scheme will be overly complex in a way that limits uptake.
“While funding the real economy in Ireland and beyond should be a policy objective, it should be tangential to the primary policy objective of encouraging individuals to invest in a diversified and informed manner,” says Farrell.
“With appropriate safeguards, education and accessible products, the scheme could transform how Irish households engage with long-term investing both within the scheme, but also more broadly. The ultimate objective should be for Ireland to move more towards a wealth-based economy,” he says.
There is an irony in the fact that, while Ireland is home to one of the world’s largest fund industries, managing almost €6 trillion in assets, Irish retail investors have historically not participated.
The funds industry can help the initiative by developing low-cost, transparent and accessible products tailored to everyday savers, providing clear investor education, and working with Government on practical design features.
“Its expertise and scale position it to assist in making the scheme both credible and successful,” says Farrell.
