Positive view of proposed new investment account
Six in ten adults in Ireland expect to invest up to €250 a month into the proposed Personal Investment Accounts (PIAs).
Fifty-seven per cent of adults in Ireland expect to invest up to €250 a month into the proposed Personal Investment Accounts (PIAs) – sometimes referred to as SIAs – if the Government goes ahead with its plans to launch these tax-efficient accounts.
The research also found that men, on average, expect to invest more than three times as much as women at €893 a month, compared to €240. A survey from Royal London Ireland, one of Ireland’s leading life insurance and pensions companies, looked at how much people believe they would set aside in the proposed PIA, which is expected to be unveiled in the Budget later this year in a bid to encourage Irish savers to move some of the €170 billion they hold on deposit into capital market investments.
A key feature of the planned PIA is a flat-rate tax which would only apply once the account exceeds a specific threshold, thereby making it more attractive for households to invest.
“There is likely to be strong take-up of PIAs if these products are launched, with the vast majority of people expecting to invest a monthly amount into the account,” said Noel Freeley, CEO of Royal London Ireland. “More than 50% of people in Ireland expect to invest up to €250 a month into the proposed investment account. 82% of the people we asked said they expect to invest an equivalent annual amount of up to €24,000.
"So, if the Irish Government were to set up a reasonable tax-free threshold for these investment accounts, like the €25,000 annual allowance proposed by Insurance Ireland, it’s clear from the research that the vast majority of individuals would benefit. This threshold would extend the benefit of the scheme and support more widespread participation in long-term investment across the country.”
Royal London Ireland survey respondents were asked how much they would expect to invest in the proposed PIA: Almost six in ten (57%) adults in Ireland expect to invest up to €250 a month; 29% expect to invest up to €100 a month; 28% believe they would invest between €100 and €250 a month; 14% expect to invest €250-€500 each month/
At 8%, Dublin residents were the least likely to say they’d invest nothing in PIAs. This compared to 20% of those in other Leinster counties, 18% of Munster residents and 17% of those living in Connacht and Ulster.
“The Government’s proposed simple, tax-efficient investment account is long overdue,” said Freeley. There is a compelling need to incentivise people in Ireland to move money from low-yield deposits into productive investments - and in doing so, to realise their full savings potential and to have a better opportunity to thrive financially.”
In terms of gender, men are at least twice as likely as women to invest sums of €500 or more a month. Some 9% of men anticipate will invest between €500 and €1,000 a month into the proposed scheme, only 5% of women said the same.
“The gender divide is stark,” Freeley added. “The average that men expect to invest monthly is more than three times that of women. In many cases, women in Ireland simply don't have as much to invest as their male counterparts. Wages in some of the job sectors traditionally dominated by women are often low. Women are three times as likely as men to work part-time. In addition, mothers often take time out of the workforce - or move to shorter working weeks - to look after children.”
He said it is important that women have the same opportunity to benefit from the proposed investment accounts as their male counterparts. When launching the scheme, the Government will need to be mindful of the gender investment gap and to take steps to help bridge that gap, possibly through education which highlights the benefits of the scheme and by putting in place initiatives which will help to realise the full benefits of PIAs.
“If we look back to the Special Savings Incentive Accounts (SSIAs), the cross-class benefits of incentivised schemes are clear. Almost a third of the population3 took up SSIAs at the time, with the scheme stimulating savings over varying income ranges and extensive take-up by low-income earner. And today, if we look at our counterparts in Sweden and the UK, around 40% of their populations have the equivalent of PIAs, which is proof of the popular appeal of such schemes and their potential to have a positive societal and economic impact.”
Ireland has an opportunity to design a simple, modern investment account that is open to everyone and it’s important that the Government grabs this opportunity and lives up to its promise, he concluded.
“If the Government wants Irish households not just to save, but to thrive financially by investing in equity markets over the medium to long term, a well-thought-out PIA is a must.”
