IRELAND IS NO country for savers.

Banks pay out measly, essentially non-existent, interest rates. To add insult to injury, any tiny amount of interest earned is taxed at 33%.

These two factors mean it is essentially impossible for returns from savings to outpace inflation.

Almost everyone in Ireland holds their spare cash in low-return demand accounts, meaning the value of their savings is constantly falling.

It’s not pleasant if you’re trying to save up for, say, a house deposit. As prices rise, you have to save, but the value of your savings drops by the day. It’s like a negative feedback loop which adds to the difficulty of saving up long-term for big purchases.

Private investing also has a few uniquely Irish barriers, as we explored before.

The government has now pledged to do something about it. During the week, Tánaiste Simon Harris said he’s aiming to get a new savings scheme signed off in the coming months, with the aim of having something concrete ready for the Budget in October.

Actual details around the scheme are scant as of now.

However, we have some indication of where the government is looking.

Harris mentioned schemes in the UK, Canada and Sweden as possible examples which Ireland should follow.

So how do these saving schemes work, and which ones could Ireland take inspiration from?

The Individual Savings Account

The most obvious point of comparison is the UK’s Individual Savings Account (ISA).

This is a scheme which lets UK residents save or invest without paying tax on returns.

There are a few different types of ISAs, with perhaps the most straightforward being the cash account.

This allows savers to earn interest tax-free, normally at good rates. Many cash ISAs currently pay about 4% per year.

This means that someone who puts £10,000 into a cash ISA will get £400 in tax-free interest back a year later.

Compare this to €10,000 in an on-demand account, which is typically where Irish savers keep their money. The average rate on this is 0.13% per year. This works out to €13 in interest, which is liable to 33% DIRT.

So the Irish saver gets a grand total of just under €9 compared to £400 for essentially the same amount in the UK.

As mentioned, the UK has a few different types of ISAs. As well as the cash one, there’s also a Lifetime ISA where the state adds a 25% bonus on all savings, up to a maximum of £1,000 per year.

Unlike the cash ISA, where savers can use the money as they please, a Lifetime ISA can only be used to buy a home, or when the account holder reaches 60.

UK savers can put £20,000 per year across different types of ISAs.

To be clear, this is an absolute no-brainer for savers. Someone who puts the max £20,000 into an ISA and gets the £1,000 bonus is likely looking at a total return not far off £2,000 in a single year.

Compare this to Ireland, where the saver who puts €20,000 into a demand deposit account likely wouldn’t be able to buy a round of drinks with their annual interest payments.

Further afield

The scheme in Canada is a bit more straightforward. There, a Tax-Free Savings Account (TFSA) lets savers invest C$7,000 per year in products linked to the stock market.

Several of these are so-called ETFs (exchange-traded funds) which track the value of the country’s stock market. This generated a return of 25% in 2025, meaning that investing $7,000 in this would have given a tax-free return of $1,750.

Obviously, this was an exceptional year and normally the stock market doesn’t generate nearly as much, but it still tends to go up over the long term.

Again, this is in contrast to Ireland, where gains from ETFs are taxed at 38% every 8 years. This seriously hinders compound growth, making it harder to build up savings over the long term.

Finally, Sweden’s ISK (Investeringssparkonto), a special savings account, works similarly to Canada’s scheme.

The key difference is that instead of no-tax, it’s low tax.

ISK users pay a standard tax rate on their accounts, usually equivalent to just under 1% of the fund value. The rate is linked to Sweden’s government bond yield and so can rise or fall slightly, but is normally about that level.

So if the fund value is €10,000, you might pay about €80 or €90 in tax per year.

But crucially, there is a tax-free threshold. No tax is due on the first 300,000 SEK (€28,000) held in an ISK.

In return for the small flat tax, account holders do not have to pay fees on individual trades. As no tax is due on trades, transactions do not have to be tracked, making investing much more straightforward. There is also no capital gains tax due on profits.

All of this encourages compounding – locking away your money for a long period of time, and letting the returns stack on top of each other.

This is very different to Ireland, where ‘deemed disposal’ undoes much of the compounding work of investing in an ETF.

To give a rough example. Say for 30 years, you invest €10,000 a year in an account which gets a 4% annual return.

By year 30, you’d have about €560,000.

But in Ireland, with ‘deemed disposal’, you have to pay 38% tax on the increase in fund value every eight years.

The impact? By year 30, you’d have about €427,000 – so you lose about €134,000 due to Ireland’s tax rules.

Ireland is unlikely to directly copy any of these three countries. It will instead likely take bits from each.

Most welcome for small Irish investors would be some tax incentive to push people towards investing rather than saving. And lower, or no, taxes on gains in a fund, so they could properly stack over time.

Property market risk

It’s worth finishing on a thought – why is this all so important? Why does it matter if the middle class invests its money, or leaves it on deposit earning zero interest in a bank?

There are a few reasons, but two often come up.

One, the estimated €170 billion sitting in Irish bank accounts is essentially doing nothing. The idea is that if people were incentivised to invest that money, it could be used to boost indigenous businesses. Then there’s a knock on positive impact for the state, with more jobs, tax, all that good stuff.

Two, it would broaden Ireland’s wealth base beyond property.

Virtually the entire population has most of its wealth tied up in the country’s property market. This is obviously risky if house prices ever dropped.

And it has a knock on impact on society, as politicians are generally not incentivised to find a way to get house prices to fall.

This could change if people held more of their net worth in investments. All of a sudden, property doesn’t become as important, and house prices falling doesn’t have to be a national disaster.

The fundamental idea makes sense. Now we’ll have to see the nitty-gritty proposals to see how it all works in practice – and if the government can deliver on its pledge to help the ‘squeezed middle’.