At the Mediolanum International Funds event in Dublin last week, Robert Troy, the Irish Minister of State for Finance, outlined how the proposed measures in the 2027 budget would benefit industry and retail investors. He also made clear his intention to bolster the country's leadership in the funds industry.

At an event in Dublin last week hosted by Mediolanum International Funds (MIFL), Robert Troy, Minister of State for Finance, outlined a new state-back investment account, often compared to an ISA, to be announced in their 2027 budget. At present, many Irish people are still holding onto cash.

Troy said that while investing can be complex, the planned tax-efficient investment account aims to help people invest more. Due to be launched next July, it is often compared to the UK’s individual savings accounts (ISAs).

Under the scheme, investors can deposit up to €12,000 ($13,430) annually; the first €50,000 accumulated in the fund will be tax free. Any amount exceeding the €50,000 threshold will be subject to a low annual charge of 1 per cent.

Patrick McKenna, deputy head of portfolio management at MIFL, told this news service that although the UK is well set up with ISAs, Ireland’s savings options have not been so good. “The culture in Ireland has always been about buying houses. Now people are being encouraged to invest,” he said.

At he event, entitled “From Savings to Alpha: How Better Decisions Create Better Investment Outcomes,” Karoline Keane, head of product, marketing and communications at MIFL, said that two in five people expect their retirement savings to run out at least 10 years before average life expectancy. For example, in some EU countries, this figure reached 57 per cent in Italy, 54 per cent in Germany and 59 per cent in Spain.

“State pensions replace 80 per cent of pay in Spain, but under a quarter in Ireland and the UK. An EU ageing report also says that they will fall further in Spain, Italy and Germany,” she said. Inflation also erodes purchasing power. “Investing in cash loses about half a person's money. For instance, €50,000 in cash for 25 years buys only about €27,000 in today’s money. In Ireland, saving 10 per cent for 40 years, with cash gives 49 per cent of a salary in retirement whilst in a balanced portfolio it gives 76 per cent.” she continued.

Keane also said that by saving 10 per cent for 40 years, an Irish saver's cash runs out for those aged 78 while it lasts until 100 when invested. To retire on pay, she said every country but Spain needs savings. Start late in cash, and it’s out of reach. “Cash is not a retirement plan. Time invested is,” she said.

The research by MIFL covered nearly 12,000 people across 13 countries.

McKenna also emphasised that there are a lot more investors and wealth managers in Ireland now: “There is a lot of wealth in the country and we are trying to change investors' culture.” 

For instance, this month UK wealth manager Rathbones secured a Markets in Financial Instruments Directive licence from the Central Bank of Ireland. This will give it a regulated base from which to expand in the EU. The licence allows Rathbones Ireland, the group's Dublin-based European entity, to serve new and existing clients in Ireland and across the EU.

The regulatory approval comes as Rathbones is seeking to respond to increased international mobility among wealthy individuals and business owners. Research published by the firm earlier this year found that nearly 6,000 high-growth entrepreneurs left the UK between 2024 and 2026, while more than 3,000 moved to the UK during the same period, as discussed here.

At the event, Troy also stressed that Ireland's Finance Strategy aims to reinforce the country as a global financial sector and a leading funds domicile. It wants to grow the total international financial services (IFS) sector employment to 70,000 jobs by 2030, up from 61,000. Over 70 per cent of the total European exchange traded funds market, which is booming, is also located in Ireland. Exports from the Irish financial services and fintech sector reached €22 billion in 2023.

“Ireland is the third largest investment fund domicile for funds after the US and Luxembourg, hosting over €5 trillion of funds, an increase of 41 per cent since 2022,” Troy added.