Dr. David Begg:

First, I will address the question of what worked well in other countries. To some extent, we have had a slight advantage in Ireland in that we are the last of the OECD countries to move into this area. People in business often talk about first mover advantage. We might have last mover advantage in the sense that some of the difficulties that were experienced elsewhere have been comprehended reasonably well in the heads of the general scheme in trying to set the right parameters for it and in trying to set the opt-out arrangements while preserving some degree of voluntary participation and, at the same time, trying to nudge people in the right direction. It is what is referred to in the literature as libertarian paternalism, namely, to nudge people in the right direction to get them to do the right thing. I would say that the balance has been struck reasonably well in that regard. For example, one of the big difficulties in the UK have is that if people move from job to job through their working lives, they have a series of different pension pots. Trying to co-ordinate those pots is quite difficult. At present, the UK authorities are talking about the concept of a pensions dashboard in order that people will be able to see exactly what they are entitled to. The Irish authorities have taken a different approach. They have taken the approach that the pot follows the employee. In other words, they can take it with them wherever they go. The Irish authorities have picked up on quite a few of the difficulties in other jurisdictions and have incorporated ways to deal them as much as possible.

It is important so say that this approach is not a panacea, particularly because the difficulty of defined contribution schemes of any sort is the individualisation of risk. Looking at what has happened in this country or the world over the past 30 or 40 years, we used to be in a space where we had collectivisation of risk in defined benefit schemes. The risk was entirely borne by the employer. With the advent of what could be described as shareholder primacy and the introduction of rules such as financial reporting standard 102, which requires companies to put these liabilities on their balance sheets, there has been a definite movement away from that to the point where risk has been individualised. The individual cannot possibly cope as well because people do not have the interest, knowledge or the experience to be investors. Therefore, it is quite difficult. Auto enrolment is, in philosophical terms almost, an attempt to find some kind of middle ground where auto enrolment will pull people in, deal with the problem of inertia that people have in going into pension schemes, and at the same time give them a degree of autonomy over their own affairs. It is not a perfect situation by any means. My view is that, ultimately, we will have to find a better way of dealing with the collectivisation of risk. I cannot remember which particular head provides for it - it might be head 59 or head 56 - but to be fair to the drafters of this general scheme, they have made provision for the possibility of introducing refinements as we go along. These will not become acutely necessary for perhaps ten to 15 years because the fund will not be of such a value as to be useful, but by that time some of initiatives which are currently being probed in countries like the Netherlands will have come to fruition and we will be able to get to a better situation there to minimise the risk at least. However, we cannot disguise the fact that enormous shift has taken place over the past 30 or 40 years. In answer to the Chairman's question, the drafters have done as well as they possibly can to pick up on the experiences of other jurisdictions and to be as pragmatic as possible.

On the timescale, I think it is challenging to do what has to be done to establish the central processing authority, for instance, and to get all the legislation and so on through. At the other end of the spectrum, we have been talking about auto enrolment for quite a long time. It featured strongly in the pensions roadmap in 2018. It is for that reason that the Pensions Authority feels it is necessary to drive through on that quite quickly. It is one of the six strands of the pensions roadmap. There are other things that need to be done, such as the consolidation of the pensions industry here. For example, there are 160,000 occupational pension schemes in this country, most of which are single-person schemes. The onerous requirements of the EU directive mean that most of those schemes, in their own way, could not really be sustainable. What we would have to do to comply, in a regulatory sense, with the directive, would make it impossible to sustain them.

The advent of master trusts means that there is a possibility to make these into a multi-employer instrument and to take the numbers down substantially, and in the process reduce charges and get a better level of supervision. It is interesting. I mentioned the Netherlands. The Netherlands has a population of 16 million and 400 pension schemes. The members can see my point. We have 50% of all pension schemes in Europe, while representing 1% of GDP. I do not want to stray too much outside of the brief today, but the reimagining and readjustment of the pensions landscape in Ireland is an imperative, particularly with the changing demographic. When we think about it, in 2010 we had a ratio of something like 2.1 pensioners for every five people working. That ratio will have shifted significantly by 2050, I think, to more or less double. There is an imperative to move very quickly, and indeed, for our country as a whole in areas such healthcare. The Chairman is very interested in healthcare provision. That is another huge area. Taking a simple point, if we do not get pensions right this ageing cohort of people, who may have paid for private health insurance all their lives, may not be able to pay for it in retirement if they do not have decent replacement incomes.

That is a rather long-winded response to the Chairman's two questions. I am trying to emphasise that there is an interdependent relationship between a lot of these things, and for the sake of the country, we need to move as quickly as we possibly can on it. The Chairman indicated that Mr. Kennedy might deal with his other points about fees.