Mr. Fergal O'Brien:

We are significantly improving what is currently available, which is a positive step forward.

On the issue of the cap, we have always seen this as a low-cost, entry-level scheme. We are trying to grow a strong and positive savings habit for employees. We think that will be focused on lower to middle-income earners. As I said, we remain particularly concerned about the administrative cost on employers. In our engagement with members, two issues keep coming back to us. One is that they will have additional labour costs in terms of the contribution, but they accept that is necessary for the future sustainability of our pensions system and the economy. They are going to be our future consumers and we have to make sure they have adequate incomes in retirement. There are also concerns about what the administrative costs will be and what degree of opt-in and opt-out will employers deal with in their place of employment. We believe, therefore, that we should focus the scope on low- to middle-income earners. It was our view that we should increase the cap of €50,000.

In relation to the Deputy’s point about whether the State system should be auto-enrolment and whether there is a role for the pensions industry, right now we have a multi-pillar system. We think advancing the multi-pillar system further is the right public policy option in terms of occupational pensions that are working. In terms of the State pension, it is crucial that whatever else we do within this model, the level of percentage income contribution we have from the State pension replacement rate in the future remains the same and as strong as it is today. It is important, therefore, that we do not introduce an auto-enrolment system that comes about to the detriment of the State pillar. That has to be a key element. A range of fiscal and economic choices will have to be made by current and future Governments to ensure that happens. We will also see middle-income workers, including, for example, lots of workers in their 50s who do not have pension provision, entering this scheme. Those benefits will come back into the economy within ten or 15 years of the commencement of the scheme.