Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I thank the Deputy. Pension adequacy is an important objective of auto-enrolment.

In order to ensure this is achieved, it is vital that participation and retention rates in auto-enrolment remain high. Having a mandatory participation period will help greatly with this. If somebody had given me the choice between more money in my pocket or a pension back when I started to work, I would have taken more money in my pocket and forgotten about the pension. However, when you get closer to the pension age, you are glad that you have the pension. It is as simple as that.

We want to get people started and get them in the habit of saving for six months. If they opt out after six months, they will get every penny they paid in back. We leave them go for two years because things happen in people's lives and they need a break. We want to give them the flexibility so that regardless of whatever life events they have, they get that break. After two years we opt them back in again and it is a chance for them to save for six months. If they really want out, they can leave the scheme and get their money back. For the six months that the State tops people up and their employer does the matched contribution, it will stay in a pot. This means that if a person keeps opting out for their entire life, they will still have something at the end. One hopes that things will change and people can get back into saving. If we want to get people into a pension scheme, there is no point in giving them a choice to opt out on day one. That we are giving them all their money back is reasonable.

I take on board the Deputy's points. We looked at the UK model, in which people can opt out immediately. At the other end of the spectrum is the approach in Australia, which does not allow people to opt out at all. Those are the extremes. We said we would look at it. The period of mandatory participation needs to be sufficiently long that people can see the fund build up. People will see after six months how much they have - the sum of how much they have paid in themselves, the top-up and their employer's contribution. They will see a pot there and it might encourage them to stay on. We thought six months was a fair enough balance to strike. In the space of six months, a person earning €20,000 will contribute €150 which will be matched by the employer and topped up by the State. At the end of the six months, the pot of €350 might just encourage them to keep saving. A lot of this starts up when people go into a new job and maybe want to save a little. As the Deputy knows, I come from a credit union background. I would always have said that if you save a little, it is not long adding up and it makes a difference. I do not propose to accept these amendments.