Employment in the Irish funds sector has grown sharply over the past three years but regulation and the availability of talent domestically are the two biggest factors likely to affect the industry’s growth, a new report published on Monday has highlighted.
Conducted by economic consultancy Indecon on behalf of industry group Irish Funds, the study comes just weeks before the final report of a Department of Finance review of the sector which is expected to highlight issues with the current tax system that act as disincentive to small-time investors.
Speaking to The Irish Times, Pat Lardner, chief executive of industry group Irish Funds, said the report highlights the “success story” of the Republic’s funds sector but said greater collaboration with government is required to ensure its future.
The value of funds administered in the Republic has quadrupled since 2008, according to the report, to almost €5.7 trillion. This is mostly down to the growth of the value of Irish-domiciled funds – including regulated funds and unregulated special purpose vehicles – which have more than €5.5 trillion of assets under management.
The Irish Times Business Person of the Month: Sean O’Driscoll, iNua Collection
Ireland is incredibly vulnerable to an energy shock. We must cut fossil fuel dependence
What is the best basis for measuring our economy against others?
Lilly turns to Ireland to produce two of the hottest therapy areas in medicine
The industry directly employs more than 19,500 people, up 13 per cent since 2020, Indecon said, supporting a total of around 37,500 jobs overall. “That spread of employment, particularly direct employment, almost half of it is outside Dublin,” Mr Lardner said. “So it’s actually a national industry.”
However, almost 82 per cent of the 220 firms that responded to Indecon said the domestic regulatory environment was likely to be the largest factor impacting growth over the next five years. The second biggest concern cited by respondents is the availability of talent.
The Irish Times reported last week that Minister for Finance Jack Chambers will not be in a position to deliver on his predecessor’s plan to introduce tax changes in the upcoming budget to encourage households to invest their savings rather than have money lying idle in bank accounts offering little or no interest.
Former minister for finance Michael McGrath previously flagged that the Government was looking at tax changes to make it more attractive for households to invest, noting at the time that people had more than €150 billion on deposit with banks, most of which is in on-demand or current accounts, earning little or no interest.
The funds sector has previously called for simplification and modernisation of the State’s funds tax regime to make it easier for Irish residents to invest in funds.
Mr Lardner said: “One of the things that is of interest to everybody – whether they’re involved in financial services or not – is that not enough money is being channelled into savings for the long term. If we don’t address that, that’s actually going to be concern for everybody. We think we’re a real positive actor to encourage that.”
On the issue of attracting talent to the industry, he said a number of firms were already working with universities to grow awareness of the industry, not just in business schools but in the IT and engineering departments of third-level institutions.
The final report of the Department of Finance’s review of the sector is set to be published in the weeks after the budget is delivered on October 1st.
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
