New Savings & Investment Union will help grow Irish families’ savings and promote investment in innovation – Financial Services Ireland Chair and Irish Life CEO

• Proposed Savings & Investment Union (SIU) designed to give savers more options, and increase capital available for productive investment
• Consumer tax incentives shown to increase retail investor participation in jurisdictions like Sweden & Denmark, and should be introduced as part of SIU

The proposed EU Savings & Investment Union stands to deliver powerful benefits to the Irish economy by growing consumer savings, promoting investment in innovation, and creating material new opportunities for financial services firms located here, according to one of Ireland’s most senior financial services CEOs.

Declan Bolger, chair of Financial Services Ireland (FSI) and CEO of Irish Life, said the breadth and capability of Ireland’s financial services industry means firms in this country have the potential to be central players in realising the benefits of the SIU.

The initiative is designed to create integrated capital markets and banking systems within the EU, with a view to offering consumers more opportunities to invest their savings in a way that will deliver better returns. At the same time, the enhanced capital markets system aims to unlock more capital that can be accessed by firms and invested productively.

Mr Bolger said introducing meaningful tax incentives for consumers who invest in capital markets will help achieve better outcomes, both for consumers themselves and for the European economy, by increasing uptake for the SIU.

Speaking today to financial services leaders at FSI’s annual lunch sponsored by KPMG, Mr Bolger said: “Ultimately the SIU is about empowering consumers with more choice and flexibility to achieve their financial goals. The track record we have built, the breadth and capability of the firms located here, the unmatched relationships we have with key stakeholders across the US, EU, and UK - all of these things mean Ireland can be at the centre of this project. But for the Commission to achieve the full potential that exists, we need to ensure we are doing everything we can to drive uptake from consumers. Government support, including consumer tax incentives, would help increase the attractiveness of the SIU to households, giving them further encouragement to put their savings to work in the SIU. We have seen that consumer tax incentives have worked in similar situations in Sweden and Denmark and would encourage similar measures in this instance.”

FSI is the Ibec group that represents the financial services sector in Ireland and is continuing to advocate for an SIU that is optimal from the point of view of the Irish economy, and maximises the opportunity on offer for firms located here.

An example of a measure that has been successful in practice is the tax treatment of Sweden’s ISK savings account. There is no tax on capital gains realised by the account holder when shares held in the account are sold - rather the accounts are taxed through a standard charge that is levied every year, at a far lower rate than the capital gains rate.

FSI is also calling for the removal within the EU of cross-border withholding taxes on investments, as part of the SIU. This would remove a significant disincentive to cross-border investment within the bloc, and help further in increasing consumer uptake.