Mobilising the Future: Children's Investment Accounts for Ireland

Ireland is standing at a defining economic juncture in 2026. We are a wealthy nation, boasting a robust fiscal surplus, full employment, and demographics that are the envy of our European neighbors. Yet, beneath these headline statistics lies a persistent, structural weakness that threatens our long-term prosperity. We are world-class savers, but we are terrible investors.

In the last week alone, my feeds have been full of calls from organisations like the Banking and Payments Federation of Ireland and senior Government ministers arguing for a new savings and investment architecture. They are right to raise the alarm. We are sitting on a time bomb of cash that is being eroded by inflation, while our indigenous businesses starve for capital.

However, while the industry bodies are focused on products for adults, I believe they are missing the most powerful catalyst for cultural change available to us: our children.

Inspired by the radical "Invest America Act" currently shaking up US policy, I am proposing a Children’s Investment Account. This would be a universal, tax-free investment account for every child born in Ireland, seeded by the State and designed to turn the miracle of compound interest into a national strategic asset. It is a policy that costs peanuts in fiscal terms but could be worth billions to our future economy.

Here is the deep dive into why this is a total no-brainer, and exactly how we can build it.

The Paradox of Irish Wealth

To understand why we need this, we first have to look at the numbers. They tell a story of extreme caution and missed opportunity.

As of the second quarter of 2025, the Central Bank of Ireland reported that total household net wealth had reached a historic high of €1.288 trillion. This figure represents a remarkable recovery from the crash of 2008 and stands as a testament to the prudent financial management of Irish families. We have paid down debt, and we have saved.

But here is the problem: an estimated €178 billion to €215 billion of that wealth is sitting in cash deposits. In an economic environment where inflation targets hover around 2% to 3%, this money is not "safe" in a real sense. It is slowly burning. This is what economists call "cash drag." It acts as an invisible tax on the prudent saver, eroding purchasing power year after year. If you hold €10,000 in a deposit account yielding 0.1% while inflation is at 3%, you are effectively paying the bank to lose value for you.

The second pillar of our wealth is residential property, which accounts for nearly 67% of our net worth. While property provides security of tenure, such extreme concentration violates the fundamental principle of diversification. It ties the financial destiny of the nation's families to a single, volatile asset class.

Unlike households in Sweden or the United States, Irish families have almost zero exposure to productive equities. We own houses, and we own cash. That is it. When the S&P 500 rallies, or when global tech surges, or when the green energy transition creates new value, the average Irish household gets nothing. We are spectators in the wealth creation of the global economy, not participants.

The Inspiration: The "Invest America Act"

Across the Atlantic, the United States is currently implementing a policy that should stop us in our tracks. The "Invest America Act," often referred to as "Trump Accounts," is rooted in a philosophy of "stakeholder capitalism." The premise is simple but profound: the most effective way to support the free market system is to ensure every citizen owns a piece of it.

Championed by figures like Senator Ted Cruz and supported by tech titans like Michael Dell, the mechanics of the US proposal are incredibly simple yet powerful:

Senator Cruz describes it as giving every child a "share in America." It signals that asset ownership is a birthright, not a privilege reserved for the wealthy. The US Treasury estimates that a single $1,000 deposit, growing at historical market rates, creates a significant nest egg by adulthood. If parents add to it, that child graduates not with crippling student debt, but with a deposit for a house or seed capital for a business.

Learning from Europe: The UK and Sweden

We don't need to copy the US model verbatim. We can refine it using lessons from our European neighbors who are already miles ahead of us.

The United Kingdom: The Junior ISA (JISA)

The UK has had a version of this for years. While they made mistakes with the original Child Trust Fund (using paper vouchers that got lost), the modern Junior ISA is a massive success.

Around 1.37 million Junior ISA accounts were subscribed to in 2023 to 2024, the twelfth full financial year since the scheme was launched, up from 1.25 million in 2022 to 2023. Crucially, we are seeing a behavioral shift. Parents are moving away from cash and into stocks, realizing that for an 18-year timeframe, equities are the only rational choice. Nearly two-thirds of new subscriptions are now going into investment JISAs rather than cash JISAs.

Sweden: The Investeringssparkonto (ISK)

Sweden is the gold standard. Their Investeringssparkonto (ISK) is the primary reason Swedish household participation in capital markets is so high. The ISK wraps investments in a low, flat tax structure that removes all the headache of reporting trades. You don't pay tax every time you sell a share; you pay a tiny percentage on the total value of the account each year. It is simple, transparent, and fair. It has made investing culturally normative for ordinary Swedes, not just the rich.

The Irish Reality: A Hostile Environment

By contrast, Ireland makes investing for children a nightmare. We have created a tax system that actively punishes prudent, long-term investment in diversified funds.

Deemed Disposal is the killer. It creates a fictional tax event that destroys the compound interest effect. For a child's account, which relies on an 18-year compounding horizon, deemed disposal interrupts the growth cycle twice (at year 8 and year 16). It is financial vandalism.

The Proposal: Irish Children’s Investment Account

We can fix this. Drawing on the US ambition, UK infrastructure, and Swedish simplicity, I propose a bespoke model for Ireland: The Irish Children’s Investment Account.

Here are the four pillars of the proposal:

1. Automatic Enrollment & The "Baby Box" Digital Twin

Every child born in Ireland who is issued a PPSN gets an account automatically. No forms. No bureaucracy. The account is linked to the PPSN and appears in the parents' Revenue myAccount or banking app immediately. It effectively becomes a "digital twin" to the physical Baby Box currently given to new parents.

2. The State "Welcome Bonus"

The State provides a €1,000 seed contribution at birth.

• Cost: With approximately 54,000 births per year, this would cost the Exchequer €54 million annually.

• Context: In the context of a total budget package of over €9 billion, €54 million is a rounding error. It represents 0.57% of new spending. It is a negligible cost for the state but a transformative gift for the child. It ensures that no child in Ireland starts with zero assets.

3. The "Gross Roll-Up" Wrapper

This is the most critical technical part. To make this work, the account must be completely free from Exit Tax and Deemed Disposal during the accumulation phase.

• Growth: 0% tax on growth within the fund.

• Withdrawal: Tax is only paid on withdrawal at age 18. Preferably, this should be at the standard Capital Gains Tax rate (33%) rather than the penal exit tax rate.

• Qualified Withdrawals: To encourage responsible use, withdrawals for specific purposes (education, a first home deposit, or rolling the funds into a pension) could be tax-free or taxed at a reduced rate.

4. The "Ireland Inc." Strategic Fund

We constantly hear about the funding gap for Irish SMEs. A 2025 KPMG/government report identified a €1.1 billion equity funding gap for scaling enterprises. Indigenous firms are starving for equity while Irish households sit on mountains of cash.

My proposal mandates that 20% of the Irish Children’s Investment Account is allocated to a "Strategic Ireland Fund" managed by the NTMA or ISIF. This fund would invest solely in Irish SMEs, renewable energy infrastructure, and scaling tech companies.

If the scheme attracts just €500 million a year in total contributions (State + Parents), that is €100 million of new, patient equity capital flowing directly into Irish businesses every single year. We would be funding our own future.

The Numbers: The Power of Compounding

Why is this a "no-brainer"? Because the math of compound interest is the closest thing we have to magic in finance. It turns time into money.

Let's run the numbers for an Irish child born in 2026. We will assume a conservative 6% annual real return (after inflation).

• Scenario A (The State Only): Even if parents add nothing, the child turns 18 with nearly €3,000. It eliminates the "zero asset" trap for the most vulnerable children in our society.

• Scenario C (The Game Changer): If a family diverts the existing €140 monthly Child Benefit payment into the account, the result is life-changing. ~€56,400 effectively solves the deposit requirement for a first home without the state having to issue "Help to Buy" grants later down the line. It transforms the Child Benefit from a consumption subsidy into a wealth accumulation vehicle.

Addressing the Critics

I can already hear the objections from the usual quarters, so let's address them head-on.

"This is just a tax break for the rich."

No, it is the opposite. The policy is progressive because of the seed funding. A €1,000 grant matters infinitely more to a low-income family than a wealthy one. By capping annual parental contributions (e.g., at €3,000 to match the Gift Tax exemption), we prevent it from being a tax shelter for millionaires while aggressively encouraging middle-class saving. The universal nature ensures no child is means-tested out of an opportunity.

"The state cannot afford it."

We are running multi-billion euro surpluses. Investing €54 million annually to secure the financial future of the next generation is not spending; it is capital formation. It reduces future dependence on state supports for housing and education. It is an investment with a massive social ROI.

"It creates market risk for families."

Cash is not risk-free; it carries inflation risk. Leaving money in a bank account earning 0.1% while inflation runs at 3% guarantees you lose money. Over any 18-year period in history, a diversified global equity portfolio has outperformed cash. The "Lifecycle" investment strategy (which de-risks the portfolio as the child approaches 18) mitigates the risk of a market crash just before maturity.

"Why not just give the money to parents now?"

Because money given now is often spent on consumption. Money locked for 18 years works for the economy. It becomes capital. It funds businesses. It builds infrastructure. And ultimately, it teaches the next generation that wealth comes from ownership and patience, not just income.

A Roadmap for Implementation

We don't need to reinvent the wheel. We just need to connect the dots.

1. Phase 1 (Legislative): Pass the "Irish Children’s Investment Account Act" to create the tax wrapper and disapply Deemed Disposal for these accounts.

2. Phase 2 (Technical): The General Register Office (GRO) triggers the account creation upon birth registration. The Revenue Commissioners provide the portal for parents to view it.

3. Phase 3 (Cultural): Launch a national "No-Brainer" campaign. Show parents the graphs. Show them that their children can be owners of the global economy, not just customers of it.

Conclusion: Let's Get It Done

The "Invest America Act" has started a global conversation about the democratization of capital. Ireland is uniquely positioned to lead this movement in Europe. We have the demographics. We have the fiscal capacity. We have a desperate need to diversify our wealth beyond property.

An Irish Children’s Investment Account is a low-risk, high-reward policy intervention.

• It solves the complex problems of deemed disposal and exit tax by creating a contained "sandbox" for reform.

• It channels vital capital to our indigenous SMEs.

• Most importantly, it gives every single child born on this island a literal stake in the nation’s future.

It moves us from a nation of passive savers to a generation of active owners. It turns the "lucky sperm club" of inheritance into a national birthright.

As I said at the start, it is a total no-brainer. It is time for the Government to act.

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