For subsidised investment products, tax benefits alone are not enough; simplicity is needed

European households hold a considerable amount of private wealth, yet they continue to show a marked preference for a conservative asset allocation: as much as 31 per cent of their financial assets are held in cash and deposits, compared with just 14 per cent in the United States. At the same time, the proportion allocated to equities stands at 37% in European portfolios, compared with 47% in US portfolios. This trend is even more pronounced in Italia, where portfolios hold 27.7 per cent of wealth in the form of cash and deposits (twice the 13.5 per cent seen in Sweden) and direct equity holdings are limited to a modest 6.4 per cent, a far cry from the 18.7 per cent recorded in the United Kingdom. This persistent ‘equity gap’ severely hampers wealth accumulation, resulting in an opportunity cost for Italian savers estimated at between 1.2 and 1.8 percentage points of lost real return per year over the last two decades.

This situation is analysed in the 2026 report by Bocconi University, Equita and the Baffi Centre, entitled: ‘Retail investments in Europe – Composition of wealth; role and use of ISA, ISK, PEA, PIR’. The report also examines the measures adopted by European governments to correct this trend, including through tax incentives. However, the study highlights that tax incentives alone are not enough to truly mobilise household savings. Reducing the tax burden is a necessary condition, but the success of these schemes depends on their simplicity, flexibility and ability to remove practical and psychological barriers. Schemes that fail or attract only limited capital are typically those ‘designed to pursue explicit industrial policy objectives’ (such as mandating funding for small domestic businesses), imposing rigid and complex constraints. The elimination of red tape, complete freedom to withdraw funds and the ability to diversify matter far more than the mere percentage of tax relief, as investment accounts must be designed around people’s actual behaviour, not just the needs of the markets.

This trend becomes clear when analysing the schemes proposed by various countries, starting with Italia and its Individual Savings Plans (PIRs). Introduced in 2017, the PIRs are the scheme with the theoretically most generous incentive, offering total exemption from income and inheritance tax. However, to qualify for the benefit, they require a minimum holding period of five years and mandate that 70 per cent be invested in Italian companies, with strict quotas for small-cap firms. According to the authors, this excessive complexity and the high risk of concentration have led to low uptake: adoption stands at barely 1.5 per cent of the adult population, accounting for a total of 0.5 per cent of financial wealth.

A similar structure characterises the French Plan d’Épargne en Actions (PEA), which was introduced in 1992. The PEA allows for generous contributions (up to €225,000 for the SME version) and exempts investors from capital gains tax after five years, with only social security contributions being deducted. It has achieved a more modest uptake of 13.4 per cent, but remains held back by the requirement to invest 75 per cent solely within the European Union and by the formidable competition from French life insurance.

At the opposite end of the spectrum are the Nordic and Anglo-Saxon models, which have instead focused on behavioural simplicity. In the United Kingdom, Individual Savings Accounts (ISAs), which have been in operation since 1999, completely eliminate tax on income and capital gains up to an annual limit of £20,000, but above all ‘impose no geographical or time restrictions’: the money can be withdrawn freely at any time. This extreme flexibility has led to ISAs being held by 39.2 per cent of British adults, accounting for 19.5 per cent of financial wealth.