Dr. Claire Keane:

As the Deputy said, a couple of years ago, we looked at the impact of those first six months. This was even before the cost-of-living crisis and very high inflation. That six-month period is an attempt to bed things in for people and to try to get them to stay. In the UK, you can just opt out straight away. There is that option. However, a suspension option has been introduced. People can suspend payments for a period if they feel they are facing affordability issues rather than coming out of the scheme entirely. From a practical point of view, contributing from the very start may make it a little easier, particularly young people. It will mainly be young people and those on lower incomes who will be affected by auto-enrolment. If it begins as soon as they start employment, they many never notice it. They will also know that their employer is topping it up so they are getting something back. We are the only OECD country not to have an additional system on top of the State pension. We are facing into an ageing population, so we definitely need something like this. It will be really beneficial. People of all ages, although particularly young people, often do not think about how they will benefit from this when they are in their 60s. This default auto-enrolment will be positive for them, even if it takes them decades to see that.

As the Deputy has said, we have looked at this. We used the ESRI's tax-benefit model, SWITCH, to simulate 6% being taken off all of those people who are not currently in a pension scheme and who will be auto-enrolled. We were a little bit surprised at the results because we found that the bottom two income quintiles, the poorest 40% of the population, will see very little impact from auto-enrolment. This is for a variety of reasons but mainly because there is not so much employment income in those categories. There are people who are dependent on social welfare or who are below the €20,000 cut-off. We saw that it was more the middle-income groups that would be affected. This is because, while it is more likely that an individual lower earner will be auto-enrolled than a higher earner, because higher earners are generally already paying into pensions, those people tended to be found in higher income households. Poverty rates and distributional impacts are calculated on the basis of household income. The majority of people who would be auto-enrolled had partners whose income was higher, which put them higher up the income distribution ladder. That is a positive from the point of view of poverty impacts. We found very little impact on poverty from this change because those people are not found at the very lowest end of the income distribution but in the middle. That is a positive and, as I have said, that suspension option would allow individuals who really feel they cannot afford these payments in the shorter term to pause payments into the scheme.