Auto-enrolment is good, but it is only a first step.

Ireland has an ageing population, and this will put increasing pressure on the State Pension.

At present, around four working age people support every person over 65. By 2050, this will be two. On top of this, around a third of private sector workers have no pension coverage other than the State pension.

After a long time on the runway, the Government introduced auto-enrolment on 1 January 2026. Since then, it is estimated that well over 800,000 employees have been enrolled and over €400 million has already been accumulated.

It would be a missed opportunity, however, for the Government if auto-enrolment was seen as the end point; rather it should be the starting point of an ambitious reform plan to drastically improve our retail investment environment.

According to the Central Bank, Ireland has among the lowest levels of direct retail participation in capital markets in the European Union. Over €170 billion of household wealth is held in deposit accounts in Ireland, earning little to no interest while inflation is running at over three percent.

This is extraordinary given Ireland is a hub for investment funds. We have trillions sitting in investment funds domiciled in Ireland, yet Irish people are missing out.

While investing is not for everyone, there is a real opportunity for Irish people to create wealth over their lifetimes.

Availability of investment products

The Central Bank, in its report on retail investor participation, outlined that one of the keys to success is the availability of suitable investment products and sufficient choice to reflect investors’ differing needs.

In Ireland, there is relatively little choice for people on middle incomes. Many investment products can be complex, and it can be hard to find them without substantial financial advice. This is simply not an option for a lot of people.

Other countries have overcome this hurdle with personalised savings and investment accounts. Sweden has the ISK and the UK has its well-known Individual Savings Accounts (ISA).

The EU has called on all Member States to introduce similar products as part of the wider Savings and Investment Union proposals.

The Tánaiste and Minister for Finance, Simon Harris, TD, has made it very clear that he will establish some form of Personal Investment Account (PIA) in Ireland next year with details to be announced later this year as part of the Finance Bill.

Simplicity and transparency for the investor must be core to these investment products. They must be simple to operate, and they must be transparent in terms of fees, taxes, risk, etc.

If we create a product that requires significant effort and work on behalf of the investor (especially from a tax perspective), then it will not be successful.

It will be up to the Government, through the legislation, the Central Bank as regulator and individual financial providers, to ensure that these products are simple, well-regulated and transparent for the investor.

Taxation on investment Taxation on investments in Ireland is highly complex, full of reporting obligations and charges at every point. Investors must think about income tax, stamp duty, dividend withholding tax, capital gains tax and sometimes more. Most of these taxes are transaction-based, which requires a lot of effort on the part of the investor or a tax adviser.

In addition, where an Irish person invests in a fully regulated Irish fund, but they hold that investment for longer than eight years, any accumulated gains at that point will be taxed at 38 percent.

This tax assumes a transaction has taken place and taxes the investor accordingly – and there is no clear rationale for keeping it.

On the one hand, the Government is telling people to think about their retirement while, on the other hand, it is penalising people for investing and trying to build wealth for their retirement. The hassle and the expense put people off investing. Investing is not a dirty word, and it most definitely should not be reserved for the wealthy.

The proposed PIA, designed effectively, seeks to overcome these complexities. The ISA in the UK is exempt from any tax, subject to certain guardrails. The ISK in Sweden is taxed, but crucially, it is paid and administered by the provider, and there is no requirement for the investor to pay themselves.

Therefore, no matter how well the new PIAs are designed in Ireland, they will not be successful unless the Government addresses the deemed disposal tax.

This rule does not support workers who wish to build wealth over their lifetime. It must be abolished if the Government is serious about supporting workers and activating a culture of investment across Ireland.

Financial literacy Financial literacy will be key if the proposed PIAs are to be successful.

When we think of financial literacy, we often tend to think about educating young people, but financial literacy is for everyone, and the Government needs to think of ways to bring financial literacy to regular workers.

The risk of losing money is everywhere. But it is how we perceive loss over the short and long term that is key.

If someone holds all their savings on deposit, even this is not risk-free. In a benign year of normal inflation, the purchasing power of that money is being eaten away.

Many would not view this as a loss – but it is. The monetary amount may be guaranteed by the State, but it is also guaranteed to lose value over time.

An investment could have a bad week, and some people would view that as a loss, but that bad week could be on the back of many, many good weeks – and in the long run, therefore, it is not a loss at all.

Add to this the compounding effect of investing when returns are reinvested and the overall pot grows over time.

If the Government really wants regular workers and households to invest more, they need to do more to advance financial literacy among this cohort.

Employers, financial providers, financial advisers and the Central Bank all have a crucial role to play but it is the Government that needs to coordinate these efforts.