Mr. Tim Duggan:

The funds that will be generated will be personal funds. It will go into a great big pot that belongs to the State. It is not like the Social Insurance Fund. Everyone will have a pot. They will all be individual pots. The central processing authority, CPA, will have a fiduciary duty to act in the best interests of the participants of the scheme. This means it will be compelled under this law, pensions law generally and European pensions law to ensure it is able to get the best return for the investment. Within this we can set parameters. Already in the Pensions Act there are provisions to facilitate the application of environmental, social and governance, ESG, principles for investment. The automatic enrolment Bill effectively mirrors these very principles. This will allow the CPA to instruct investment managers to invest ethically for social purposes and good governance purposes. All of the typical ESG criteria will be available to the CPA to instruct investment managers.

The difficulty with ESG principles, and Deputy Ó Cathasaigh knows this better than me, is that they are evolving. They are not static or defined. Therefore, they will take some time to bed down. As a consequence it probably would not be wise at this juncture to be entirely prescriptive in the legislation. Some degree of flexibility will have to be given to the board of the CPA to allow it to traverse the changing environment. As things change we could end up in a situation where it would be difficult to switch investments if it were too prescribed in legislation what they could be.

The principles set out in the legislation effectively mirror what is already in the Pensions Act with respect to ESG principles. The procurement process the CPA will operate to get investment managers will also reflect these principles. In its award criteria it will give marks to funds that operate these principles. Therefore, it is the intention that the investments made on behalf of people will be ethical and support ESG principles.

As for investing in the country, we run into tension between the fiduciary duty to get the very best return for the members within ESG principles and supporting activities and initiatives in the nation. This is always a tension. It is a matter for the Oireachtas to decide where to land on this. It would require very careful consideration so that the members' interests are paramount as far as the Department and the Minister are concerned.