Robert Troy (Longford-Westmeath, Fianna Fail)

I thank the Senator for raising this important and topical issue. It is also a timely issue, as today the European Commission adopted its savings and investment account recommendation as part of the savings and investments union, SIU, strategy.

Despite the impact of the higher cost of living in recent years, Irish households continue to have substantial savings, with approximately €160 billion in household savings on deposit in Irish banks. Some €9 of every €10 of these savings is held in low-interest, overnight deposit accounts, meaning savers are getting little return for their money. The stark truth is, because of global inflationary pressures, this money is actually losing value.

Discussions on encouraging citizens to invest more has been part of the savings and investments union strategy which the EU Commission launched in March. The central thrust of this initiative is to help citizens to invest more so as to increase the amount of money they have in their retirement and to use the invested money to energise businesses, bringing more growth to the economy. From my engagements across the financial services sector since taking this role, I am particularly confident that Ireland has the right infrastructure across talent and technology to be a key player in the SIU. We must acknowledge that the infrastructure deficit we have across housing, water and renewable energy cannot be solved by Government funding alone. Private capital is necessary to achieve our aims.

The SIU strategy includes measures to advance the capital markets union project. Included in this strategy is a commitment to adopt a European blueprint for savings and investment accounts. This blueprint is meant to offer member states a codification of best practice in terms of savings and investment accounts in the EU.

Here at home, last October, the Minister for Finance published the Funds Sector 2030: A Framework for Open, Resilient and Developing Markets report. The report was timely given the interest in growing retail and savings and investments in both Ireland and the new mandate of the European Commission in the context of the SIU proposal.

At the national level, we are reviewing the recommendations from this wide-ranging review of the funds and asset management sector. Part of the review focused on encouraging retail investment. As part of this aspect of the review, the development of an incentivised retail savings and investment account was considered. The report made eight recommendations on the topic of retail investment, including recommendations to better align the tax on investment funds and life assurance products with that of direct equities by removing deemed disposal and aligning the rate of tax to 33%. The report noted that there may be merit in exploring an incentivised savings and investment account in due course. Developments at EU level in the context of the savings and investment union will have relevance in this regard.

While the report concluded that measures proposed for amending the existing taxation of investment funds and life assurance products should be prioritised, the Commission’s recommendations published today demonstrate the importance of savings and investment accounts within the SIU, which is an important point for consideration.The programme for Government has committed to progressing and publishing an implementation plan taking into consideration the funds review recommendations to unlock retail investment and opportunities to grow the sector in Ireland. Detailed consideration is therefore being given to the best way to support a greater level of retail investment in capital markets and the necessary reforms required. It is likely, given the breadth of the funds review and the complexity of the relevant regimes for the taxation of investment, that the delivery of associated tax measures may take place over multiple Finance Bill cycles.

In line with the Senator’s query, we will continue to consider such proposals in this important area. This work will also take account of developments at an EU level in respect of the savings and investments union and, in particular, the Commission's recommendation on increasing the availability of savings and investment accounts.