The Monday Interview: Jennifer Richards, Standard Life - It is in our interest to save and earn as we do

Being a female boss of bosses in the traditionally male-dominated financial services world is an honour but not unprecedented in her company, she points out.

“I’m not the first but the second female to run the Irish business. The first woman appointed CEO was a former UK colleague, Audrey McLaren who was appointed in 2008. I’m the first woman to be in charge of both the fund management businesses and the retail in pensions and investment business in Ireland. Standard Life has a progressive policy towards women and inclusivity in the broadest sense. This includes age, gender, socio-economic background, disability, sexual orientation, experience and ethnicity. I enjoy working for a company that’s committed to enabling people fulfil their potential where all forms of diversity are valued and embraced,” she said.

Standard Life is likely to choose Dublin as its European base post-Brexit, as widely reported last month. Ms Richards says her team has been working towards making that a reality.

“The most likely scenario is using our Dublin-based operations. Over recent months we have been working on contingency plans to allow us to do this for our 500,000 or so European customers in Ireland, Germany and Austria. We are working closely with our colleagues in the UK on the regulatory issues and other arrangements we would need to put in place to facilitate this. It may be necessary to create some roles in Dublin but the numbers are likely to be relatively small,” she said.

One of the biggest issues for Ms Richards and Standard Life in Ireland is the issue of Dirt, the tax paid on deposits.

“As a socially responsible company that provides savings, investment and pension products to individuals, part of our role is to speak up on their behalf when government taxation policy treats them unfairly. Unfortunately, this happened in last year’s budget. Then Minister for Finance, Michael Noonan announced a cut in Dirt from 41% to 39% without announcing an equal reduction in exit tax on life assurance based savings and investment products. This is the first time in almost two decades these two taxes have been ‘de-coupled’. This means that tax on these investment funds is now the highest, at 41%. Depositors currently pay 39% on any interest earned, which will drop to 33% by 2020 and gains on individual shares are liable to capital gains tax of 33%,” she said.

Standard Life asked Minister Noonan to equalise the tax rate to 33% for investment fund savers too, shortly after the Finance Bill was published last year.

“Investment funds have a number of benefits for ordinary consumers. They offer diversified investment portfolios on relatively small amounts such as monthly saving amounts of around €125 upwards. They offer higher expected returns for longer term investments. This is particularly important as deposit returns inch closer to zero and cannot be relied upon to produce timely and sufficient growth. Investment funds can help provide deposits required for people’s first homes, children’s education, a rainy day fund etc,” she said.

Investment fund savers have been left in the cold, with approximately 125,000 people directly affected and a further almost 600,000 depositors expected to be impacted such as those who will need to consider longer term investment funds as deposit rates cease to deliver meaningful if any real returns, she said.

“Does the Government as a bank shareholder wish to encourage consumers into deposits yielding close to zero rather than long-term investments with better prospects? We don’t believe so. The Government’s stated policy is to encourage saving and improve the return to the smaller saver. We don’t believe the Government or policymakers wish to punish savers who take personal responsibility for their own financial wellbeing and often their family’s too, to avoid being a burden on the State,” Ms Richards added.

Minister Noonan’s response to Standard Life’s letter of November 2016 requesting equal treatment for all savers was to specifically agree to consider the treatment of exit tax as part of the tax strategy group process in 2017 — an initiative warmly welcomed, said Ms Richards.

“Standard Life, Insurance Ireland, the Irish Association of Investment Managers (IAIM) and the Professional Insurance Brokers Association (PIBA) are united in their objective of seeking equal tax treatment for all savers. Given the much improved economic conditions for growth, employment and Exchequer returns we believe Dirt and exit tax rates should be equalised and the discriminatory 1% levy from the austerity era be eliminated for once and for all,” she said.

It is not about seeking preferential tax treatment, simply for all savers to be treated equally, said Ms Richards.

“Savings are a necessity not a luxury that provide highly sought after peace of mind for many. We believe [the finance minister] and his government will want to rectify this tax iniquity and trust they will proactively seek to change legislation in order to be fair to all savers in 2017. We’re happy to offer our assistance to the minister and his department on this matter to help the large number of customers and people affected,” she said.