Mr. Declan Bolger:

I thank the Chair. We have provided a detailed submission, so I will keep my comments on the opening statements rather brief.

Irish Life Group thanks the committee for its invitation to present our views on the on the Bill. Irish Life believes the introduction of auto-enrolment will drive a very positive cultural change within Ireland for generations to come, enabling more people to save for their retirement and to have a better quality of life in retirement.

The introduction of auto-enrolment in Ireland will be a seminal moment for 750,000 people, who will be provided with the opportunity to put in place a more financially secure future. This is very important legislation, and it behoves all stakeholders to get it right first time.Auto-enrolment is a social good that should be designed and implemented with the best outcome for all members at its core.

While Irish Life is strongly supportive of the introduction of auto-enrolment, there are a number of important public interest concerns that influence its introduction that we strongly advocate that the committee should consider carefully as it develops its pre-legislative scrutiny report. These are based on our experience as a pension provider for over half a million customers in Ireland and detailed analysis and visits to markets where auto-enrolment schemes already operate. These are the lack of any cost–benefit analysis for the optimal build of infrastructure and system required to support auto-enrolment; the impact the revised proposals will have on women, which, if not addressed, could exacerbate the pensions gender gap; and the lower levels of protections and rights provided to auto-enrolment members compared to those within occupational schemes.

In addition, the heads of Bill also remain silent on a number of key aspects that are critical for members when entering a pension fund – in particular, how they can access their funds in retirement.Auto-enrolment members are therefore being asked to provide contributions with no certainty as to how they will access their money in the future and what tax treatment will apply, which is contrary to any other form of pension arrangement in the State and potentially leads to the accumulated savings not being used to actually provide an income in retirement. The Bill currently does not provide information on how pensions will be paid out.

I will now expand briefly on these three points. The first is on a central processing agency. The core principles of a universally available affordable scheme that could be implemented in a reasonable timeframe with clarity on required State investment were well thought through in the pensions strawman, developed over years and published in 2018. The response to the widespread consultation on the strawman was positive and it provided an excellent foundation on which to build a fit-for-purpose Irish auto-enrolment model. However, the auto-enrolment Bill sets out a model that fundamentally differs from that envisioned in the pensions strawman. The strawman had as a core principle the need to provide choice to consumers, choice of provider, choice of contributions and choice of investment manager. However, this key principle has been completely removed from the proposals as set out within the Bill with the creation of a State monopoly.

The proposed model differs in a number of important ways from well-established international comparisons. Therefore, it is in the public interest that the cost and timing for the State to build and deliver the revised model within the timeframes required be thoroughly scrutinised versus established alternatives to achieve the best outcome for future pension members and for the State.

While we are all rightly proud of the many achievements of the State in creating infrastructure to improve the lives of people in Ireland, we can all also point to State builds that commenced with the best of intentions but were subsequently bedevilled by unanticipated complexities, increased costs and significant delays. It is not in any of our interests for that to happen here, especially when there are alternatives available, as set out in the original strawman. We believe the original strawman will be lower cost and lower risk for the State and will be operational sooner for the benefit of pension members.

The change from the pensions strawman will have worse outcomes for women, in particular, as women often have uneven periods at work and take some breaks. The inability to increase pension contributions will put women in the auto-enrolment scheme in a worse position than those within existing occupational pension schemes, which will widen the pensions gender gap. The inflexibility also means the scheme will actually stop members who might want to increase their savings – for example, on approaching retirement – or who might have periods out of work or long-term illness from ever increasing their pensions pots.

Women in Ireland already face a multitude of obstacles in reaching pensions parity with men. The State should not implement a system that embeds this discrimination for generations to come and removes any chances of improvement.

The third point concerns alignment with occupational pension schemes. The members of auto-enrolment should have the same protections and rights as those afforded to existing occupational scheme members and should align as far as possible in benefit structure with occupational schemes; otherwise, it will create cost and complexity for both employees and employers, and difficulties for savers who move from auto-enrolment to occupational pension schemes and vice versa, as they move employment throughout their careers.

Irish Life is fully supportive of auto-enrolment and its core principles. This is really good for Ireland, including an additional 750,000 Irish citizens. However, the necessity for auto-enrolment should not be at the expense of remedying gender inequality and the elimination of consumer choice. These concerns have all stemmed from the change implemented from the pensions strawman, which would have allowed competition in auto-enrolment instead of the establishment of a State monopoly.

Irish Life is strongly supportive of the introduction of auto-enrolment in Ireland. This is a really good thing. It should bring better retirement incomes for generations into the future. However, there is a quicker and more cost-efficient implementation model with better outcomes for members than that proposed within the current head of Bill.