{"id":384365,"date":"2026-04-06T07:54:14","date_gmt":"2026-04-06T07:54:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/384365\/"},"modified":"2026-04-06T07:54:14","modified_gmt":"2026-04-06T07:54:14","slug":"difficult-to-understand-why-ireland-would-shun-uks-model-for-savings-account-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/384365\/","title":{"rendered":"Difficult to understand why Ireland would shun UK\u2019s model for savings account \u2013 The Irish Times"},"content":{"rendered":"

It is only fair to start by saying this: Minister for Finance Simon Harris is trying to do something that successive governments have failed to do \u2013 get ordinary people in the Republic investing<\/a>.<\/p>\n

At a forum in Dublin this week, attended by more than 300 professionals, he acknowledged something that many of us working in financial advice have been saying for years: the current tax regime \u2013 particularly the 38 per cent exit tax \u2013 is too high and acts as a deterrent to investment.<\/p>\n

That matters. Because until that is recognised, nothing will change.<\/p>\n

For those of us advising clients over the past 20 years, the issues are well understood: the rate of tax <\/a>applied \u2013 38 per cent \u2013 and the deemed disposal rule, the requirement to tax the growth of your fund every eight years, whether you want it or not. And don\u2019t get me started on the nonsense 1 per cent life assurance levy applied to premiums paid into these investment products.<\/p>\n

And then there is the broader question of fairness. It is very difficult to explain to someone why they are taking 100 per cent of the risk but only receiving 62 per cent of the gain, while the State takes zero risk <\/a>and 38 per cent of the upside.<\/p>\n

It is no surprise, then, that the State <\/a>has never seen mass adoption of investing.<\/p>\n

Which is why the Minister for Finance<\/a>\u2019s proposal \u2013 targeting the \u20ac170 billion on deposit, earning an average of 0.65 per cent \u2013 is logical and necessary.<\/p>\n

However, the design of the solution matters just as much as the intent behind it. Nothing has been finalised yet and that is important. There is still time to get this right.<\/p>\n

[\u00a0Cliff Taylor: Here\u2019s how Simon Harris\u2019s Swedish-style plan might workOpens in new window<\/a>\u00a0]<\/p>\n

Based on what has been discussed, the preferred model may resemble the Swedish ISK \u2013 a system where, instead of taxing gains, the State applies an annual charge based on the value of the fund, typically about 1 per cent.<\/p>\n

At first glance, this may appear attractive. It simplifies taxation and removes the need for exit taxes. But it risks creating a different set of problems.<\/p>\n

They always say that complexity kills innovation. And there is a danger that, in trying to be clever, we end up with a system that is neither simple enough to attract the ordinary saver nor effective enough to materially improve outcomes.<\/p>\n

An annual charge on the value of the fund \u2013 regardless of performance \u2013 introduces a subtle but important shift. Capital gains tax is levied on growth. If the fund does not grow, no tax is paid.<\/p>\n

Under an annual charge model, tax is paid regardless.<\/p>\n

You are, in effect, taxing people even when they lose money.<\/p>\n

That may not immediately register, but over time it matters. It also raises a broader question: who is this system really for?<\/p>\n

For the ordinary saver, complexity is a barrier. For the wealthy, an annual charge on assets begins to resemble something else entirely \u2013 a form of wealth tax, albeit introduced by another name. This may be offset by allowing unlimited contributions, another feature of the ISK model.<\/p>\n

\"\"Iran\u2019s cyber-attacks on Irish-based companies and the ongoing impact of conflict in the Middle East<\/p>\n

If the objective is to encourage widespread participation, then simplicity must be the guiding principle. And there is already a model that achieves exactly that.<\/p>\n

The UK\u2019s Individual Savings Account \u2013 the ISA \u2013 is about as straightforward as it gets. Every individual can invest up to \u00a320,000 (\u20ac22,900) per year. There is no tax on contributions, no tax on growth, and no tax on exit. <\/p>\n

You can hold cash or investments. The choice is yours. It is simple. It is transparent. And crucially, it works.<\/p>\n

More than 20 million UK adults hold an ISA. Anyone who has lived or worked there will tell you the same thing \u2013 it\u2019s incredibly simple and they are glad to have the chance to invest in one.<\/p>\n

Which is why it is difficult to understand why the Republic would not adopt a similar approach. To be clear, Harris deserves credit for recognising the problem and attempting to address it.<\/p>\n

But if we are serious about changing behaviour \u2013 about moving people out of deposits and into long-term investing \u2013 then the solution must be as simple and as accessible as possible. There is still time to make that choice.<\/p>\n

I would also urge caution in how any new scheme is presented. Those of us of a certain generation remember the Eircom shares debacle, when people were encouraged to invest without fully understanding the risks involved.<\/p>\n

If we want to build trust in investing, advice has to play a role. Financial literacy is important, but it is not a substitute for professional guidance. If the State wishes to encourage participation, it should do so responsibly. Because ultimately, this is an opportunity: a chance to simplify investing, improve outcomes, and finally bring ordinary savers into the market.<\/p>\n

It would be a shame to miss it by choosing the wrong model. <\/p>\n

Robert Whelan is managing director of Rockwell Financial<\/p>\n","protected":false},"excerpt":{"rendered":"It is only fair to start by saying this: Minister for Finance Simon Harris is trying to do…\n","protected":false},"author":2,"featured_media":237305,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[61,975,60,43,70,1577],"class_list":["post-384365","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ireland","tag-ie","tag-investment","tag-ireland","tag-news","tag-simon-harris","tag-uk"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/384365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=384365"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/384365\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/237305"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=384365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=384365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=384365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}