“Savers deserve a fair deal”: Reaction to Budget 2026

Royal London Ireland has welcomed the Government’s decision to reduce the tax rate that applies to Irish and equivalent offshore funds and foreign life assurance products from 41% to 38%, but says the move does not go far enough to create a fair and balanced savings environment.

Noel Freeley, CEO of Royal London Ireland, said:

“We welcome the reduction, but we believe it does not go far enough. It, along with the roadmap to be published next year, are certainly steps in the right direction.

"Savers in Ireland deserve a fair deal on tax.

"Right now, if you put your money in a deposit account, the tax on any interest earned is 33% – yet the interest you earn is often tiny, with many deposit accounts paying well under 1% interest, which is below current inflation levels. The same 33% level of tax applies to gains from direct investment in the stock market or company shares.

"However, the tax applied to life assurance savings and investment products remains considerably higher than what is applied to bank deposits or direct investments. On top of that, there is a 1% levy on premiums, which significantly reduces investor returns. This imbalance is unfair and penalises consumers who are simply trying to move their money out of low-yield deposit accounts into productive, long-term savings and investments.

"The current regime acts as a disincentive for small and medium-sized savers – many of whom invest as little as €100 per month – to make sound financial decisions for the future. Contrary to the perception that these products are only for wealthy investors, the higher rate of tax disproportionately impacts households trying to build financial security for retirement, education or housing.

"If we want to encourage people to save and invest wisely based on their attitude to risk, the Government needs to put everyone on an equal footing. Aligning tax on all savings products at 33% and removing the 1% levy would be a simple, fair change. Additionally, consumers would also very much benefit from the same kind of simple, tax-efficient options that are available in other countries, such as the UK’s Individual Savings Accounts (ISAs), as well as in other EU nations.

"Between 2017 and 2020, the Government cut the tax on bank deposits consistently by 2% each year so that the Deposit Interest Retention Tax (DIRT) rate fell from 41% to 33%. Yet the same approach was not afforded to life assurance investment and savings products. Irish households have almost €167.1bn sitting on deposit accounts^[1], and most of this is earning little if any interest. Savers in Ireland deserve more than this.

"Reforming the tax regime could encourage savers to put more of this money into productive investments that could deliver better long-term returns while supporting housing, infrastructure and climate goals through investment in those areas through savings and investment funds.”

The Case for Reform

Royal London Ireland had been calling for three clear measures in Budget 2026:

1. Equalise tax treatment of all savings products to 33% tax levels.
2. Abolish the 1% life assurance levy.
3. Remove the eight-year deemed disposal requirement.

Mr. Freeley added:

“These reforms would have given consumers fairer returns, more choice, and greater confidence to invest.”

^{[1] As per CBI Money and Banking Statistics July 2025}