Ireland is taking steps to transform its conservative savers into a nation of investors with the introduction of new investment accounts. Starting in July 2025, the personal investment account will allow savers to contribute up to €12,000 annually, with the first €50,000 exempt from tax. This initiative follows the launch of the My Future Fund pension scheme earlier this year, which has already seen over €550 million invested by more than 800,000 workers through contributions from employees, employers, and the State.
The new schemes aim to unlock billions in savings and improve retirement income levels. However, the question arises: where will these funds be invested? Currently, the vast majority of Irish pension money is tied up in stocks, bonds, or property outside Ireland and Europe. Historically, Irish investments were focused domestically, but the introduction of the euro, diversification advice, and the financial crash led to a shift towards global investments. The shrinking Irish stock market, with companies like CRH and Irish Continental Group relocating or going private, further reduced domestic investment opportunities.
The Irish Association of Pension Funds (IAPF) advocates for a modest increase in domestic investment, proposing that the current 3% of pension funds invested in Ireland should rise to about 5%. This small percentage increase would translate to roughly €3 billion in capital. The IAPF suggests creating an Ireland-focused, long-term investment fund to pool pension money into Irish and European private credit, infrastructure, real estate, and venture capital.
The Irish Venture Capital Association (IVCA) also highlights the missed opportunity for domestic investment. With international investors providing 85% of the venture capital raised by Irish companies in early 2024, the IVCA calls for a professionally managed national fund-of-funds to enable a small proportion of domestic pension savings to invest through Irish venture capital and private equity funds. Central Bank governor Gabriel Makhlouf emphasizes the need to address why returns are perceived as higher outside Europe, linking it to the performance of the real economy.