'SSIA on steroids': Will the Government's new savings and investment account deliver?

Critics of the scheme say it will do little to help the 'squeezed middle' but will greatly benefit the millionaire and billionaire class, who will avail of its generous tax regime

Finance minister Simon Harris at the unveiling of the new investment scheme on Tuesday. Picture: Stephen Collins/Collins

Budget measures are not typically announced in April.

Usually, journalists would not dream of asking a budget question in the springtime out of fear of being scolded by a minister.

Yet we already know one big aspect of Budget 2027 will be Tánaiste and finance minister Simon Harris’s new savings and investment account.

The crux of his argument is that there is €170bn on deposit sitting in Irish accounts across the State. It is understood just 2.2% of any money saved is actually invested.

The Fine Gael leader is returning to his party’s old motto of “helping the people who get up early in the morning”, saying the so-called “squeezed middle” is not investing due to the complexity of the system and the risk of being hit with a tax bill.

Capital Gains Tax of 33% is charged on profits from shares and property.

Deemed disposal rules, meanwhile, dictate if you hold an investment in an exchange-traded fund for eight years, a tax is levied on any profit you earn. 

This is applied to Irish funds and life assurance products. As part of Budget 2026, it was decided the tax would be reduced from 41% to 38%.

Earlier this week, Mr Harris questioned whether this tax was too “high” and admitted there were “broader questions around the rationale for the policy”.

In some cases, investment income can also be subject to income tax, USC, and PRSI. In addition, Deposit Interest Retention Tax (Dirt) of 33% is also charged on savings.

Under the plans proposed by Mr Harris, an annual flat rate of tax will be charged on savings and investments once the balance in the account goes above a certain threshold. How much this threshold will be is a budget day decision.

It is proposed this will be the only tax charged on the account.

The accounts will not be administered by the Department of Finance itself, but rather they will be run by the country’s financial institutions, with the Government ensuring a different tax regime is applied to them.

'Tax break for millionaires'

However, there has been mounting opposition to this part of the plan. Cian O’Callaghan, the Social Democrats’ finance spokesperson, labelled the plan a “tax break for millionaires”.

Dr Barra Roantree, an economist at Trinity College Dublin, told RTÉ’s Morning Ireland the plan could cost the State millions over the coming decades.

While it has been repeatedly suggested by the finance minister there is up to €170bn sitting on deposit in Irish accounts, Dr Roantree suggested this was “probably overstated” as it would amount to an average of €90,000 per household, which “doesn’t stack up with other statistics”.

The median amount of savings a household has is just €9,000, he suggested.

A study in December by the Banking and Payments Federation Ireland found one in three people had less than €5,000 in savings.

If there is €170bn worth of savings in current accounts and Credit Unions around the country, most of that is held by people with a lot of savings. It is held by the very rich.

Mr Roantree also said people who were already investing would just move to the new account to pay less tax.

Evidence from other countries suggests tax breaks do not lead to overall savings levels increasing. Rather, he said, it leads to those who are already saving just saving more.

“SSIA on steroids is what this would end up being, and in order for what?” he added.

This was shot down by Government sources, who said the “millionaire and billionaire argument doesn’t stack up”, because they pay funds to manage their investment.

“This is for people who don’t,” they argued. This will be for people who want to invest modestly through their bank or local Credit Union.

The Government will also be hoping to attract the younger generation who have already started to invest.

A study by Revolut in 2024 found a 17% surge in young investors across the Irish market, with those aged between 18 and 34 making up 57% of the company’s Irish investment customer base.

Whether the new Government plans can woo the youth away from flashy products like cryptocurrency is another question.

However, with the rising cost of living and global economic uncertainty, most of Ireland’s squeezed middle is set to become even more squeezed.

By the time the plan is rolled out, the Tánaiste’s target audience could have smaller savings pots due to an unexpected rainy day.

Speaking at the Central Bank on Tuesday, Mr Harris spoke of a grandmother called Mary, whom he recently met in a Cork Credit Union.

“She puts a fiver in each of her five grandkids' credit union accounts every week,” he said.

“She's going to keep on doing that, and she wants to build up a little nest egg for them.

“But at the moment, despite people doing the right thing, that's not earning any money. It'll be worth less to those grandkids when they go to withdraw it than it is when they put it in.

“That's what we're trying to fix here.”

This plan will only work if people actually have money to invest in the first place.

By the time Budget 2027 rolls around on October 6, Mary may not have €5 a week to put into one of Mr Harris’ new accounts at all.