Budget 2026 Review: What it means for your investments and pensions

Budget 2026 investment and pension changes in Ireland deliver a mix of modest yet meaningful adjustments for investors and savers. Among the key announcements:

• The Life Assurance Exit Tax (LAET) and related fund Exit Taxes will reduce from 41% to 38%. 

• The Standard Fund Threshold (SFT) will rise by €200,000 per year, reaching €2.8 million in 2029. 

• The tax-free retirement lump sum remains capped at €500,000. 

While none of these changes are dramatic, together they signal a gradual shift towards a fairer and more competitive environment for Irish investors. 

1. Lower Exit Tax: Modest Relief, Real Signal

What Changed 

The Life Assurance Exit Tax, which applies to gains from certain life assurance policies, investment funds, and offshore equivalents, has been reduced to 38%, down from 41%. This brings Ireland slightly closer to international norms and narrows the gap with Capital Gains Tax (CGT), which remains at 33%. 

However, other elements remain unchanged: 

• The 1% life assurance levy still applies. 

• The eight-year deemed disposal rule, which taxes certain fund holdings even when not sold, remains in force. 

What It Means for Investors 

For individual investors, the reduction offers a small but tangible improvement in post-tax returns. While the benefit may seem minor in the short term, over long investment horizons the compounding effect can be significant. 

More importantly, it sends a positive message that the Government is willing to modernise the taxation of funds and investment products, which is a welcome signal for those seeking long-term financial stability and clarity. 

2. Pension Changes: More Room to Save, But With Limits

Rising Standard Fund Threshold (SFT) 

From 2026, the maximum pension fund before excess tax applies, the SFT will increase by €200,000 each year, starting from the current €2 million and reaching €2.8 million by 2029. 

The path is as follows: 

• 2026: €2.2 million 

• 2027: €2.4 million 

• 2028: €2.6 million 

• 2029: €2.8 million 

This gradual increase gives high earners and long-term savers additional breathing space to build pension wealth without triggering punitive tax charges. 

Retirement Lump Sum Cap 

Despite the higher SFT, the tax-free lump sum at retirement remains capped at €500,000. 

This decoupling of the lump sum from the SFT underscores the need for strategic planning. Even if your pension grows above the rising thresholds, the amount you can take tax-free at retirement will not increase. 

Implications for Pension Savers 

• Those nearing or above the existing €2 million threshold will benefit from extra headroom in the coming years. 

• High earners and senior professionals should review contribution and drawdown strategies over time to make the most of the phased SFT increases. 

• The unchanged lump sum cap means retirement benefits may require greater reliance on Approved Retirement Funds (ARFs) or annuities to manage tax efficiently. 

Recent findings from the 2025 CCPC Pensions Research Report show that while 60% of Irish adults now hold a pension, over 26% have no retirement arrangements in place, and 61% of those without a pension expect to rely solely on the State Pension. The higher SFT therefore primarily benefits those already saving, but broader awareness and engagement remain essential. 

3. Integrating the Changes: What You Should Know

Staying Aligned with the New Rules 

• The new 38% Exit Tax rate provides modest relief for investors using life assurance or fund-based structures. 

• The rising SFT thresholds give long-term savers more room to grow retirement benefits before tax charges apply. 

• The €500,000 lump sum cap remains unchanged, continuing to set the benchmark for retirement planning. 

For most investors, these adjustments will not require immediate action. However, it is helpful to stay aware of how tax and pension rules evolve over time. Chartered Capital continually reviews these developments as part of our client planning process to ensure that every financial strategy remains efficient, compliant, and aligned with individual goals. 

Final Thoughts 

Overall, Budget 2026 investment and pension changes in Ireland represent steady progress towards a fairer and more transparent financial landscape and cautious but positive progress for investors and pension savers alike. The Exit Tax reduction to 38% provides modest relief and hints at a broader move toward fairer investment taxation. The rising SFT gives pension savers more room to grow their funds, while the €500,000 lump sum cap keeps the focus on careful planning. 

Together, these measures underline the importance of maintaining a well-structured, forward-looking strategy. 

If you would like to discuss how Budget 2026 fits within your overall financial plan, you are always welcome to book a confidential consultation with Chartered Capital 

The content of this article is for information purposes only and does not constitute a personal recommendation. You should always speak to a financial adviser that is regulated by the Central Bank of Ireland when considering financial advice. Any recommendation made will be based on a full suitability assessment that will include a comprehensive review of your circumstances, needs and objectives. Past Performance Is Not A Guide To Future Returns.