Ireland is set to introduce a new personal savings and investment scheme next year. The initiative aims to encourage citizens to invest a portion of the 170 billion euros currently sitting in bank deposits earning minimal interest. Finance Minister Simon Harris has prioritised this policy since assuming his role four months ago, detailing the plans further on Tuesday. Harris highlighted the need to diversify Ireland’s savings and investment culture, noting that inflation erodes the value of savings held in low-yield deposits over time.
The proposed investment account will feature an annual flat-rate tax on assets exceeding a tax-free threshold. This flat tax rate could potentially be the only form of taxation applied to investments made through the new account. Harris emphasised that these plans align with the European Commission’s recommendations to develop consumer-friendly savings accounts. Currently, approximately one-third of the 33 trillion euros in private savings within the EU is held in current accounts.
Irish households save approximately 1 euro out of every 8 euros of disposable income, however, only 2.3% of their financial assets are in direct investments like listed equity and debt securities. This figure contrasts with the EU average of 7.5%, according to research conducted by the central bank last year. The initiative is designed to address this disparity and foster a more robust investment landscape.
Irish Central Bank Governor Gabriel Makhlouf expressed support for the efforts to lower barriers to retail investment. He stated that improving financial literacy and establishing a robust consumer protection framework are essential complements to the availability of suitable investment products.
