Dear Reader

Welcome to the September edition of the Money Mentor newsletter, brought to you by Vantage Financial Planning, your trusted partner in navigating today’s shifting financial landscape.

Market & Economic Overview

Strong Market Rebound

Global markets advanced by roughly 12% between May and September, rebounding from earlier tariff-driven lows. Those who adhered to the old “sell in May and go away” adage would have missed this upswing, a reminder that history may reveal patterns but never guarantees outcomes. Since ChatGPT’s debut in November 2022, AI-focused companies, especially the so-called Magnificent Seven, have accounted for much of the S&P 500’s gains, propelling market valuations to record breaking levels of concentration.

Central Bank Shifts

Adding to the momentum, the U.S. Federal Reserve cut its funds rate from 4.25% to 4.00%, pivoting from prioritising inflation control to supporting a cooling labour market. Yet historically, central banks tend to favour inflation control, often at the cost of higher unemployment.

Warning Signs Ahead

Beneath steady headline data, risks are emerging:

• Youth unemployment is edging higher.
• Wage growth is slowing.
• Redundancy risks are rising.

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Longer term, structural forces are reshaping the global order:

• Technology & reshoring: AI adoption and critical supply chain realignment.
• Geopolitical strains: Ongoing economic and military wars along with China’s accelerating military build-up.
• Retreat from globalisation: reversing decades of integration.

At the same time, public trust in governments and institutions is weakening, creating further uncertainty.

The End of the “Peace Dividend”

For decades, governments could reduce defence spending and redirect resources into public services. That dividend has expired. Rising military and security budgets will now squeeze fiscal space, curtail social investment, and add to already heavy debt burdens.

U.S. Political Risk

There may be a U.S. government shutdown on 1st October 2025 if Congress fails to agree on funding. Disputes over spending priorities Republicans favouring cuts and security, Democrats prioritising healthcare have created gridlock. Even with Republican majorities, the 60-vote Senate threshold remains an obstacle.

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Budget 2026: What to Expect

Ireland’s new government, formed in 23rd January 2025, faces into its first full budget with a stable mandate up to January 2030. With no election pressure, Budget 2026 is expected to emphasise restraint and long-term investment, not populist giveaways.

Social Welfare & Supports

• Likely modest increases in weekly core welfare payments (advocacy groups are pushing for €25/week).
• Possible eligibility tweaks for schemes such as the Fuel Allowance.

Taxation

• Incremental reforms to investment fund taxation and deemed disposal rules.
• Exit tax alignment with CGT.
• Selective income tax adjustments (smaller than previous years).
• Sector-specific measures: VAT for hospitality, levies on vapes, possible incentive credits (e.g. a “gym tax credit”).

Capital & Infrastructure

• Substantial increases in housing, transport, water, and energy investment.
• Funded by buoyant corporate tax receipts and the €14 billion Apple windfall.
• Aim: boost housing supply and long-term productivity.

Business & Investment Environment

• Likely push for simplified regulation and targeted supports for sustainable finance.
• Business groups urging caution on over-reliance on corporate tax receipts.

The Investment Tax Burden

Ireland’s current tax system disincentivises household investing:

• Over €162 billion sits in current accounts or low-yield deposits.
• After paying income tax (household average of 32%), savers face:
  • 33% DIRT or CGT
  • 40% income tax (on some products)
  • 41% exit tax

Effective combined tax rates can average between 65% and 73%, with higher earners paying a proportionately larger percentage of income tax.

This reflects the Laffer Curve in action: when taxes are too high, activity (and revenue) falls. Dormant savings neither support growth nor generate optimal revenue:

Lowering tax barriers could unlock capital, stimulate investment, and broaden the tax base sustainably.

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Auto-Enrolment Payroll & Case Studies: An Employer Perspective

As an employer in Ireland, your payroll steps will be:

• Identify eligible employees (aged 23–60, earning €20k+, not already in a pension)
• Enrol them via the Central Processing Authority (CPA)
• Calculate and deduct contributions from payroll (employer + employee + State top-up)
• Submit contributions to the CPA with each pay run
• Manage opt-outs and re-enrolments in line with scheme rules

Payroll pre auto-enrolment:

• Enter employee details
• Get latest Revenue Payroll Notification (RPN) file
• Run payroll calculations
• Complete payroll
• Produce bank file, payslips, Revenue Payroll Submission Request (PSR) file

Payroll post auto-erolment (two additional steps):

• Retrieve the AE Payroll Notification File (AEPN) from NAERSA to identify eligible staff.
• Submit the AE Contribution File after payroll is run.

This means payroll systems must integrate with AE notifications and contribution reporting.

Case Study 1:

• Original scheme: voluntary, 6-month wait, 8% employer / 5% employee.
• Change: scheme made compulsory for existing staff and new hires, with contracts amended → higher participation.

Case Study 2:

• Original scheme: 5% employer / 5% employee voluntary, after 6 months.
• Employer concern: compulsory membership could be received negatively.
• Approach: 6-week phased communications (emails, presentations, 1:1s) before AE took effect.
• Result: 92% of staff joined the occupational pension scheme; only those citing affordability or transiency stayed out.

Case Study 3:

• Original scheme: 5% employer / 5% employee, with 6-month wait.
• Change: mandatory from day one; removed waiting period.
• Employer introduced tiered contributions (3–6%) to make entry affordable.
• Result: higher uptake from existing employees and more buy-in with a slightly higher max contribution

Understanding these case studies helps employers anticipate questions and design communication strategies.

Cost certainty is a key concern:

• Occupational pension schemes: contributions can be based on basic salary.
• Auto-Enrolment: based on gross pay (including flexi-pay, overtime, allowances), which complicates forecasting.
• AE may create additional costs for transient staff (short-term hires).
• Employers can reclaim contributions in some cases via vesting rules.

Summary for employers:

• Payroll: AE adds two steps (AEPN file + contribution submission), requiring system readiness.
• Case studies: highlight the importance of scheme design, communication, and flexibility (tiered contributions work).
• Costs: AE based on gross pay is less predictable; existing schemes may offer more cost control.
• Employer contributions to private pensions &/or auto-enrolment are deductible for corporation tax purposes.

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Auto-Enrolment Case Studies: An Employee Perspective

Auto-Enrolment (AE) will affect employees differently depending on their salary, age, existing pension arrangements, and whether their employer already offers matching contributions.

Employees & Employers Not Currently Contributing (≤ €80k)

For employees earning up to €80,000 who aren’t currently saving into a pension and where no employer match is available, auto-enrolment (AE) provides the most effective starting point. With contributions shared between the employee, employer, and the state.

Employees With Employer Match (€44k–€80k)

If you currently contribute to a pension, your employer matches your contributions, and you earn between €44,000 and €80,000 a year, your occupational pension scheme (Occ) is likely to deliver greater value. This is because:

• Employer contributions are typically higher.
• You benefit from 40% income tax relief on your own contributions.

This advantage usually holds for the first 10 years of auto-enrolment. However, depending on your employer’s match level and how close you are to retirement, AE could still emerge as a competitive long-term option.

Employees With Employer Match (€80k+)

If you earn more than €80,000 a year and already contribute to a pension with employer matching, your occupational pension scheme (Occ) will almost always be the stronger option. Auto-enrolment (AE) caps contributions at €80,000 of salary, which restricts growth potential. By contrast, Occ allows higher contributions, continued access to 40% tax relief, and greater long-term value.

We modelled 10 years of contributions under:

• Auto-enrolment (AE): starts at 1.5% employee + 1.5% employer + 0.5% state, rising at years 4, 7, and 10 (to 6% + 6% + 2%). Contributions capped at €80k salary.
• Occupational pension (Occ): fixed 5% employer + 5% employee, with full salary covered and tax relief on employee contributions.

10-year totals:

• €40k salary → AE €36,400 vs Occ €44,000 (21% higher in Occ)
• €80k salary → AE €72,800 vs Occ €88,000 (21% higher in Occ)
• €120k salary → AE €72,800 (AE cap €80k) vs Occ €129,250 (Occ with €115k cap on employee only) → (78% higher in Occ)

Summary for employees​
Auto-enrolment (AE) builds gradually and is well-suited to lower earners, particularly those without employer pension contributions. Occupational pension schemes (Occ), however, provide stronger value overall. At €40k and €80k salaries, Occ delivers around 21% more over 10 years, while at €120k the gap widens to 78% more, due to the €80k AE cap and the benefit of 40% tax relief on employee contributions. Occ also allows additional voluntary contributions (AVCs), offering flexibility to boost savings beyond the fixed AE percentages.

Disclaimer​
This pension contributions model is for illustration purposes only and covers the first 10 years of auto-enrolment. It does not account for annual management charges, investment performance, or the impact of financial education, coaching, advice, or technology services. Please reach out if you would like to model your unique circumstances.

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Evidence Based Investing

Successful investing isn’t about chasing the latest headlines or hot tips it’s about discipline, patience, and research you can trust. Evidence-based investing uses decades of market data to focus on what really works:

• Diversification
• Managing risk
• Keeping costs low
• Avoiding emotional mistakes

With the right financial advisor, this approach becomes even stronger. An advisor helps you stay calm when markets are volatile, keeps you focused on your long-term goals, and ensures your money is aligned with your life.

Together, evidence and guidance make the difference between reacting to the market and building lasting financial success:

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Dimensional Fund Advisors (DFA), founded in 1981, translates decades of academic research into practical strategies. Instead of predicting markets, they apply factor-based investing:

• Tilting toward smaller companies, value, and profitability.
• Maintaining diversification across global markets.
• Keeping costs low.

This builds on index investing but goes further, systematically capturing proven return drivers.

This approach can offer stronger return potential than index funds alone, but it requires patience. Factor premiums may underperform for years at a time, which is why success depends on staying disciplined over the long run.

Curious how the two compare? The video below sets Dimensional’s approach side by side with Vanguard’s to show the differences in practice:

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The theory of market efficiency states all available information is already reflected in prices, making it very hard to consistently beat the market after costs. Factor-based investing has historically been rewarded with higher returns, in part because they capture risk premia and in part because they exploit persistent investor biases, such as overconfidence or herding.

Much of the “alpha” that active managers claim to generate often comes from factor tilts rather than unique stock-picking skill. By accessing factors directly, investors can systematically capture these return drivers at lower cost, with greater transparency, and often with lower risk than traditional active strategies.

Dimensional Fund Advisors released Tune Out the Noise, a new documentary directed by Academy Award–winner Errol Morris. The film explores how groundbreaking academic research at the University of Chicago reshaped investing, moving it from speculation toward evidence-based discipline.

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Featuring Nobel laureates, it shows why chasing headlines and stock tips is rarely successful, and why focusing on long-term, data-driven strategies can deliver better outcomes. A timely reminder of the benefits of tuning out short-term market noise.

The Dimensional Fund Advisors Matrix Book 2024 is an annual reference guide showing long-term investment returns across asset classes and markets.

• It uses “matrix” style charts to display historical performance from different start and end dates.
• The goal is education, not prediction helping investors see the value of diversification, discipline, and staying invested.
• The 2024 edition continues Dimensional’s tradition and includes an essay by founder David Booth on the evolution of index investing.

It’s a data-driven handbook for illustrating how markets behave over time, designed to support informed, long-term investing.​ The supplementary video “Transforming Data into Stories: How to Use the Matrix Book” provides a guided walkthrough of the 2024 edition. https://www.dimensional.com/us-en/insights/transforming-data-into-stories-how-to-use-the-matrix-book-ce​

📚 Recommended resources 💡

JP Morgan Guide To The Markets (EMEA Monthly):

​​​JP Morgan Guide to the Markets EMEA 31st August 2025.pdf​​​​​​​​​

Audiobook recommendations:

The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks

Amazon

Money: A Story of Humanity by David McWilliams (Included in Spotify Premium)

Spotify

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I’m delighted to share that Vantage Financial Planning has rebranded and relaunched our website: vantagefp.ie

The core of our services:

• Financial wellbeing webinars for employes on behalf of employers
• 1:1 coaching and technology for employes on behalf of employers
• Financial planning advice for successful small to medium-sized business owners

A huge thank you to our clients and partners for your trust and continued support. This next chapter will mark our evolution from a traditional financial planning business into a personal finance technology platform, continuing our work to make personal finance simple, accessible, and affordable.

If you’re interested in personal finance education, coaching, advice, or technology, please get in touch using the details below.

If you found this month’s newsletter helpful, feel free to share it with family, friends, colleagues, or peers. And if there’s a personal finance topic you’d like us to cover, I’d love to hear from you.

Until next month.

Kind regards,

Ken Mason CFP®

Certified Financial Planner™

Tel: (01) 539 2670

Mobile: 083 803 2008

Email: ken.mason@vantagefp.ie

Vantage | Master Your Money, Your Way

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