Time for the Government to live up to its promises to deliver a better deal for savers

So, the Government’s plans are a boon for consumers, as even with the cost-of-living challenges being faced, many households do have some capacity to save, and the current regime isn’t set up to help them thrive financially. However, it’s important that the Government lives up to its promises of wider tax reform and simplification in this area and delivers this SIA for consumers.

Research from the Banking and Payments Federation Ireland (BPFI) shows that less than half of Irish adults hold any type of investment product¹, thereby missing out on a valuable opportunity to boost their personal wealth. While it’s positive that three in four adults have a savings account, the poor take-up of investment products means many people in Ireland are simply not realising the full benefit of investment options – a point which the Central Bank has also made in recent months[2]. In a country that has emerged from the financial crisis of 2008 to 2013 and the significant economic downturn triggered by the Covid 19 pandemic to experience robust economic growth, this reluctance to engage with investment markets is a serious concern, particularly given that many people now have the ability to save money³.

There’s a high cost to this investment apathy. The average annual return on the FTSE All-World Index – a reputable stock market index which measures the market performance of large and mid-capitalisation stocks of companies located around the world - has been 12.5% p.a. over the last five years⁴.  By contrast, the interest earned on ordinary deposit accounts is much lower. The average interest rate on new household term deposits is 1.86%, according to the latest figures from the Central Bank⁵.This is very low, and indeed has been lower in the past, and it means that in contrast to invested savings, money left on deposit is losing value. The result is that Irish households are effectively watching wealth accumulate elsewhere, while their own savings stagnate.

Why is this the case? The answers are complex, but the tax and regulatory system play a central role. The 2026 Pre-Budget Submission from Insurance Ireland laid out a compelling blueprint.⁶ It called for equalising the taxation of financial products with similar objectives, effectively aligning the tax treatment of life assurance exit tax, Capital Gains Tax and Deposit Interest Retention Tax (DIRT). Insurance Ireland also proposed the removal of the one per cent Life Assurance Levy, a charge which discourages investment. It is also due to this myriad of taxes and Government charges that investment products can be very complex and off-putting for many people. It doesn’t have to be like this. Quite simply, if we want to encourage people to save and invest wisely, the Government needs to put everyone on an equal footing. Moving quickly to align tax on all savings products at 33% and removing the 1% levy would be a simple, fair change and make investment products much easier to understand.

Irish households have historically been risk-averse, shaped by the financial crises of the past, when many people invested directly in equities and in many cases lost substantial sums. The BPFI research shows that most Irish investors are conservative, and a recent Central Bank report shows that a significant proportion admit that they do not fully understand the costs associated with their investments or how they work⁷. The result is a population that under-invests relative to capacity and risk appetite, sacrificing long-term wealth growth. By contrast, households in the US and UK, operating under simpler tax regimes have seen markedly higher returns over the same period.

As well as tax equalisation on the current savings products, the new SIA should be introduced to include simple, transparent and tax-free incentives. Consumers would benefit from this kind of simple, tax-efficient option, similar to what is available in other countries, such as the UK’s Individual Savings Accounts (ISAs). ISAs are essentially savings accounts available in the UK which allow people to save up to stg£20,000 a year tax-free. They were introduced by the UK government in 1999 to encourage people to save, giving people the option to save their money in stocks and shares – as well as in ordinary deposits. The introduction of such a voluntary SIA in Ireland would put Irish consumers on a par with their UK counterparts and many of their European counterparts too. Such a wrapper could offer greater clarity and appeal than the current patchwork of tax treatments, levies and exemptions. The success of the Special Savings Incentive Scheme (SSIA) in Ireland in the early noughties shows that the demand for easy-to-understand Government-backed savings accounts is there.

Investment reform cannot simply be about creating new products. It must also address the underlying complexity and opacity of Ireland’s current tax and investment system. Until households can clearly understand the incentives and consequences of investing, uptake will remain low. This is a challenge not only for regulators and policymakers but also for the financial services industry, which must communicate in plain language, provide transparent pricing and build trust with potential investors.

The benefits of investment reforms are clear. Households would have greater freedom to invest as little or as much as they choose, with clarity on taxation and fees. For individuals, the difference between holding cash and investing in equities over the long term can mean the difference between a modest retirement and a financially secure one. For younger adults, early engagement with investment markets allows the power of compounding to work over decades. Overall, customers become more engaged in their financial situation. And the economy as a whole would benefit from increased domestic investment, supporting capital markets and productivity growth.

There has never been a better time for Irish people to reform how they invest. Households could be releasing billions in wealth by engaging more actively with investment markets. Downside risks exist, of course, but over the long term, equity markets have historically outperformed cash deposits.

At present, savers in Ireland hold close to €170 billion in deposit accounts⁸, earning next to nothing.

Ireland has an opportunity to quickly simplify the taxes applied to current savings products and to design a modern SIA that is open to all consumers. Doing so, provides clear incentives to move money from low-yield deposits into productive investment. If the Government wants Irish households not just to save, but to thrive financially by investing in equity markets over the medium to long term, a well-thought-out SIA and bold investment reform - rather than modest tinkering - will be required.

^{[1] As per BPFI release 2 December, 2025
[2] As per CBI release 1 December, 2025 and CBI press release 12 February, 2026
[3] As per Davy Wealth in Ireland report, 3 December 2025
[4] As per FTSE Russell Fact Sheet 30 January 2026
[5] As per CBI Retail Interest Rates December 2025 (published February 2026)
[6] As per Insurance Ireland publication, 18 July 2025
[7] As per CBI Retail Investor Participation in Ireland Consumer Research and Analysis 1 December, 2025
[8] As per CBI Money & Banking Statistical Release, December 2025}