Rarely has any policy proposal been subject to so much debate before its details were announced. The early flagging by Minister for Finance Simon Harris about his intention to introduce a new savings product aimed at Irish households in October’s budget has led to plenty of speculation. This has been fuelled in large part by a variety of indications from Harris himself about what the scheme might look like and how it might work. A few months on and after a consultation programme with interested parties, there are still some key questions to be answered. How much will I be able to save? This is a key starting point. An annual limit is expected on the amount which people can put into the new investment accounts, which will have tax benefits attached. Behind-the-scenes lobbying by the banks, and most likely the Central Bank, will underline this, warning that there could be dangers to “financial stability” if too much money disappeared from bank accounts at once to head into new investments. Their point will be that deposits are important as a source of funding for banks, to allow them to lend. They are also, of course, key to their profitability, allowing them to raise money cheaply and then lend it out at significantly higher interest rates. The annual limit in the UK for investment in their ISA accounts is £20,000, which is just over €23,000. Some international schemes also have a limit on the total people can hold in these funds.What will the tax incentive be? This is, as yet, unclear. The UK and Canadian schemes allow investors to avoid both capital gains tax on the rising value of their investments and income tax on any dividends or interest rates returns. This is the kind of arrangement being pushed by the financial sector here. The Minister had previously hinted that Ireland would have a Swedish type arrangement, also avoiding regular capital gains and income taxes but with an annual charge based on the total sum saved above a certain limit. He has since made clear that no decision has been made yet. A key issue here will be the forecast impact on tax revenue. In a blog post on the issue, TCD economist Barra Roantree has warned of the risk that an incentivised scheme might attract a limited amount of new money, but instead would lead to people with existing investments moving them into the more tax efficient structure of the regime. This could lead to a once-off boost for the exchequer as investors sell off exiting holdings – and incur a capital gains charge – to move them into the investments covered by the new reliefs.Where will I be able to invest? The plan is part of an EU drive – under the Savings and Investment Union – to channel savings across the Union into European businesses. And Harris has spoken of directing more savings into the Irish economy, However, there is an issue here. International schemes offer investors a full range of international investments, like existing exchange traded funds (ETFs), for example, which are a way of investing in stock markets. Investors can choose to buy into ETFs focusing on certain sectors or geographical areas. But many, to spread risk, invest in broadly based funds. The Banking and Payments Federation Ireland (BPFI), the banking lobby, argues that Irish investors need a broad choice and that having rules which mandated minimum allocations to EU or Irish assets would add complexity, restrain choice and discourage providers. It could also increase risk and lower returns, the federation argues. This is an important choice for designing the scheme.Will I make money? It depends. Over time stock markets have generally performed better than putting money into cash. But they also have bad years – most recently 2022 when stocks and bonds both fell. Investors need to be prepared to leave money for a lengthy period, say seven years at least, and the charges from the provider need to be reasonable. That gives the best chance of earning a decent return.How much money will go into these schemes? Impossible to know and it will depend on the rules. However, talk about the €170 billion plus savings pot needs to be treated with care. As both the BPFI and Roantree point out, this included not only household savings but also that of SME’S, sole traders and other bodies such as charities Roantree points to separate CSO figures showing average household savings are below €9,000. The BPFI points out that a portion of the €170 billion – perhaps around €20 billion – is already tied up in longer-term savings and a further €60 billion plus may be held by over 65s, who in many cases are not an appropriate market for longer-term, risk based investment. It estimates that around €20 – €30 billion of household savings may be “addressable” for the scheme in year one, with perhaps €2 billion to €7 billion invested in the new scheme after year one. This could, on the basis of other international schemes, grow to €50 billion to €115 billion over a decade, it says. It is not clear how much of this would be “new” money and how much transfers from existing investments. David McRedmond: ‘O’Connell Street needs high density housing’ Listen | 50:36This week, Inside Business host Ciarán Hancock is joined in studio by An Post chief executive David McRedmond, who is about to step down after 10 years in charge of the State-owned company.He recently wrote an article for The Irish Times about the explosion in online shopping in this country and how it would impact on bricks and mortar retailers.Last year An Post delivered 75 million parcels to Irish homes.This year he expects that figure to be well north of 100 million parcels. All this in a country of just two million homes.In this episode, you’ll hear David outline how he believes we need to reimagine the streetscape in our towns and cities to reflect this shift.And he gives ideas on what to do with the historic GPO in Dublin, which An Post largely vacated some time back for new offices in the docks.Produced by John Casey with JJ Vernon on sound. Roantree points out that separate CSO figures indicate average household deposits are below €9,000 and that those with spare cash to invest are much more likely to be among the higher income groups.How will this fit in with other tax measures? This is key. Ireland currently has three main tax regimes. First, capital gains tax on gains from individual shareholdings and income tax on dividends. Second, a particular regime applying to many collective investments including ETFs where the investor is “deemed” to have disposed, or sold the holdings, after eight years and thus may face a capital-gains tax bill. And a pensions regime which gives tax relief on contributors and raises tax when the money is drawn down, subject to various reliefs.The new incentivised savings scheme will generally apply to funds in the second basket. It will offer ETFs and other collective investment marketed under -or “wrapped” – in the structure of the new funds. However if capital gains tax does not apply then to the new funds, then presumably the eight year deemed disposal rule will not apply either. Having ETFs outside the scheme subject to the rule and those inside not subject to it will be complicated.Will I have easy access to my money? Probably, yes. Generally a central feature of such schemes is that people get access their funds whenever they wish. There are some exceptions – for example a UK ISA plan linked to savings for pensions. Will I have to file complicated tax returns? No. A new aspect of the schemes internationally is that the provider takes care of any tax-related issues – if any arise – meaning there are no additional obligations on the investor. Will the banks lose out? Unlikely. The BPFI argues that the annual limit on investment must be “prudent”. But as Goodbody Stockbrokers pointed out in research this week, the two main banks both own stockbroking firms – Bank of Ireland owns Davy and AIB owns Goodbody. The brokers, in their research note, said that the scheme would create just a “modest near-term headwind” to bank profit margins on funding and lending (net interest margins, in the jargon.) The key issue, it says, is retaining customer relationships which the banks are well-placed to do, though the scheme will bring new competition for their attention from other traditional and newer, online providers. Who will benefit? Harris’s pitch is at “squeezed middle” households, allowing them to build up a source of wealth outside their pension and the value of their home. Experience in markets like Sweden and the UK shows how such schemes can attract a lot of funds, though a key issue there has been building on an active stock market and listing culture. Academic research also questions whether the savings in such schemes are additional savings, or ones which would have occurred anyway but are now benefiting from a cheaper tax rate.Roantree argues that given the limited savings on many lower to middle income households, it is higher income people who stand to benefit, including by switching existing investments. Low annual contribution limits or a limit on total holdings could mitigate this switching but only to an extent. When will the new scheme be available? Harris will push for it to be open as soon as possible. However the experience of the pensions auto enrolment scheme shows these kind of things take time. The BPFI says nine months would be needed from an announcement outlining all the details, suggesting summer 2027 if the scheme was outlined in the budget and legislated for the in the subsequent Finance Bill. Will it happen? Probably. Harris has invested a lot of political capital in it. There could conceivably be a delay before full details come out but it remains likely to happen in the budget.