Simplicity and tax incentives will be key to the successful introduction of a new Irish Savings & Investment Account, according to Banking & Payments Federation Ireland.
The Government is currently working on a new national savings scheme in a bid to attract a portion of €170 billion funds currently saved on deposits.
In its newly published report, BPFI outlined several key recommendation for the scheme.
An account should be easy to open, understand and use, going along with a “strong, coordinated financial education and public education programme.”
“Another key recommendation is that an Irish Savings & Investment Account should offer compelling tax incentives based on an annual contribution limit, that is simple for consumers to understand and strong enough to encourage participation,” said Brian Hayes, Chief Executive at BPFI, who has welcomed the Government’s intention to launch a new Savings & Investment Account.
Flexibility is another key feature that the new scheme should have, Mr Hayes argued.
“While long term investing is the goal, flexibility needs to be built in, recognising that ordinary savers and investors may need access to their funds as and when needed for unexpected or planned life events.”
The report was presented and discussed at a meeting between retail banks and the Minister for Finance Simon Harris and the Department of Finance on Wednesday.
Mainstream investment options should be made available for consumers as part of the scheme, BPFI recommended, meaning the account should “comfortably accommodate” UCITS funds, listed securities (equities), cash, bonds, unit-linked insurance products and ETFs.
BPFI also pointed at the necessity to assess the wider features of Ireland’s investment tax framework, “calling for a phased introduction of a more competitive capital gains tax”.
At present, Irish investors are taxed at 33% on any gain on shares and 38% on many funds.
The lobby group called for sufficient lead in time and “early clarity” on the scheme and its elements (such as tax treatment, eligible assets and reporting obligations) for banks to prepare.
According to BPFI’s analysis, an Irish Save & Investment Account could see betwen €2 billion and €7 billion invested in the first year “if the scheme is designed in a simple, accessible and attractive way”.
