John Paul O'Shea (Cork North-West, Fine Gael)
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I will read a note on privilege and housekeeping matters before we begin. Witnesses and members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity either by name or in such a way as make him, her or it identifiable or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction I might make.

Members attending remotely are reminded of the constitutional requirement that in order to participate in public meetings, they must be physically present within the confines of the Leinster House complex. This is due to the constitutional requirement that in order to participate in public meetings, members must be physically present within the confines or place where the Parliament has chosen to sit. In this regard, I ask any members participating via MS Teams to confirm they are on the grounds of the Leinster House complex if they wish to contribute to the meeting. I remind all those in attendance to make sure their mobile phones are switched off or in silent mode.

We are joined by the following officials from the Department of Social Protection: Mr. Tim Duggan, assistant secretary general; Mr. Donal Spellman, principal officer; and Mr. Ciaran Diamond, assistant principal. They are all very welcome to today's meeting. There have been a number of developments since our previous engagement, including the roll-out of MyFutureFund, which became fully operational on 1 January 2026.

We look forward to engaging with the officials on those developments and the impact they are having on what is a significant milestone in pension provision in Ireland.

I invite Mr. Duggan to make his opening remarks.

Mr. Tim Duggan:

I acknowledge that the committee asked us to come in in December. I asked for it to be deferred to January and the committee very kindly acceded to that request. It was enormously helpful because we were in the throes of implementation at the time. I want to express my appreciation and thanks to the committee for doing that; it was a super accommodation. If members read the statement as I am going through it, they will hear me say some numbers that are slightly different from what is in it. That is simply trying to give them the very latest we have available to us.

As members know, when we were last here in July, I described the auto-enrolment system, which we call MyFutureFund, and how it would work, and set out the preparations that were under way for its introduction. Since then, a wide range of activities have been completed and implemented and the programme has now been delivered in full.

First, all sections of the Automatic Enrolment Retirement Savings System Act 2024 have been commenced and are fully operational. In addition, the rules and parameters for a range of operational matters under the Act have been prescribed through SIs 636, 637 and 668 of 2025.

Second, the National Automatic Enrolment Retirement Savings Authority, NAERSA, was established on 14 October 2025. The Minister appointed a board of seven members, including members who have particular experience and knowledge of both employee and employer matters. The board has been very active since its establishment, meeting approximately every fortnight to ensure that preparations were progressing as planned. The chief executive officer, Mr. Dermot Griffin, was appointed in September and, since then, a team of approximately 30 people have been recruited and appointed to work with him. The authority’s offices have been fitted out and are located in Letterkenny, County Donegal. Although NAERSA has taken over responsibility for all aspects of the operation of the programme, the Department is maintaining its implementation team as a support to the authority for a period.

Third, contracts were concluded with the three investment managers selected during the summer. These are Amundi, BlackRock and Irish Life Investment Managers, which is now trading as Keyridge Asset Management Limited. All three of them received the necessary approvals from the Central Bank of Ireland and have established their funds.

Fourth, a number of national communications campaigns were delivered through a wide range of media platforms. Members will be familiar with the “ice cream” advertising that commenced last summer. In addition, we had a number of employer-specific campaigns. We also ran newspaper supplements, a whole load of social media campaigns and a very wide range of webinars.

Fifth, the Minister has prescribed standards under section 52 of the auto-enrolment Act to ensure that pension arrangements outside of MyFutureFund are at least as favourable for the participating employee as they would be under the introductory contribution rates in MyFutureFund.

The system went live in two phases. The first phase began on 1 December 2025 when the employer portal was made available to allow employers to register their company, contact and payment details. In addition, a 13-week look-back on payroll data from Revenue allowed for eligibility determinations to be made and for automatic enrolment payroll notifications to be issued to all employers that had eligible employees in early December. This was so that we could capture January payrolls that were being run in advance of the Christmas period. Finally, a customer support service was initiated in Letterkenny.

The second phase began on 1 January 2026. From this date, NAERSA began accepting payroll submissions, raising contribution payments, drawing down State top-up funds, pooling contributions and forwarding these to investment managers for investment in the appropriate funds. In addition, the employee or participant portal was opened. Participants can now access their individual accounts to see the contributions being made and any returns being generated from investment. Furthermore, they are able to select their investment preferences, if they wish, and in time will be able to suspend saving or opt out.

As a result of all of that activity, over 763,000 employees have been deemed eligible and automatically enrolled in MyFutureFund. In addition, an additional 5,000 people have opted into the scheme voluntarily. These are people outside the age and income thresholds who have decided they want to participate. All of these employees work for approximately 104,000 employers. Approximately 101,000 employers have registered their details on the employer portal, which shows a very high level of compliance. We encourage those employers who have yet to register to do so as soon as possible as it makes it easier for them to fulfil their legal obligations. NAERSA has received and processed approximately 225,000 payroll submissions to date covering almost all payroll types. This has resulted in approximately €41 million of contributions being raised for investment. Since 1 December, the customer support service has dealt with approximately 36,000 customer engagements primarily by phone and webchat.

Every effort has been made to ensure that MyFutureFund provides excellent value for money to participants. NAERSA will incur costs in administering, monitoring, regulating and developing the scheme. These administrative costs will be paid for through an administrative fee set at 55 cent per week per contributing participant, which will be increased in line with the consumer price index, CPI, every five years, if needed. Investment managers charge for their services using an asset under management model. A blended asset under management charge of just under 0.04% will be applied to the funds of participants. This is a fraction of what is typically charged for private pension arrangements.

All of this has been possible because of the extensive work done over the past couple of years with the Revenue Commissioners, Chief State Solicitor’s Office, Office of the Attorney General, over 60 payroll product developers through the Payroll Software Developers Association, Danske Bank, the three investment managers I mentioned and Tata Consultancy Services, TCS. I take this opportunity to thank all of them for their intense engagement and diligent co-operation with us over that time.

While the implementation marks a major milestone, it is hopefully just the beginning of what should be a transformative programme for pensions delivery in Ireland. Over the next while, NAERSA will concentrate on bedding the system in, ensuring all stakeholders have the necessary information and that employers are compliant with their legal obligations, and promoting the benefits of the system in advance of the opt-out window that will become available in the late summer. In the medium term, the Department, working with the authority, will seek to progress consideration of a range of policy matters, including possible provisions for: additional voluntary contributions; transferring of savings pots between schemes; pension drawdown options; and facilitating other participant types, for example, the self-employed.

I hope that summary gives the committee a sense of what has been done since we last briefed it. My colleagues Mr. Spellman and Mr. Diamond and I will try to answer any questions members may have.

John Paul O'Shea (Cork North-West, Fine Gael)
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I thank Mr. Duggan for that very detailed briefing on the rollout of auto-enrolment and MyFutureFund.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I thank the officials for being here and for giving us the information. There are a couple of points. I apologise that I have to leave as I am speaking in the Chamber. I do not lack interest in this subject, in case they think I do. I will look back at the transcript.

The scheme appears to be working fairly well in the main. People have come on board and there do not seem to be too many issues. I have a couple of questions on something that happened in the Oireachtas. Oireachtas staff were wrongly enrolled in the scheme; they should not have been. It is not a great advert for the work done by the Department that, for whatever reason, political staff who should not have been enrolled were enrolled. What role does the Department have in reimbursement? That money has been taken from people. They should not have been in the scheme, and were written to and told they should not be in the scheme, but have still not received a reimbursement. This is not just specific to Oireachtas staff. I am sure there are other cases where people were wrongly enrolled. When that happens, how quickly can the Department process returns for people when they apply?

Mr. Tim Duggan:

It is NAERSA that will do that rather than the Department. My understanding is NAERSA has put a process in place to allow people seek reviews and refunds where errors have been made. It is not entirely correct to characterise it as wrongly enrolled because we have always said that people who do not have a contribution reflected through their payroll will be enrolled.

There is not a mechanism for NAERSA to establish that somebody is in a pension scheme without seeing those contributions, unless an application is made to NAERSA seeking exemption. What NAERSA will do in such a situation is check, based on evidence, if the scheme in question is in compliance with the standards that were set by the Minister in regulation before Christmas. If they are, it will then deem the people participating in that scheme for that employment to be in exempt employment and will, in that case, furnish refunds to those people. That process has to be gone through to make sure that it is the correct-----

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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They were written to and told that they were wrongfully enrolled. I am just wondering, given that the Oireachtas itself has admitted that a mistake was made, how long it will take for it to be reimbursed. If that is a matter for NAERSA, I can correspond with NAERSA on that. Let us be frank, it is not a great ad because that mistake was made here in the Oireachtas. People who are paying into a scheme from which they do not have the capacity to benefit will want to get that money back as soon as possible. I will correspond with NAERSA on that.

In terms of the lump sum and catch-up deductions, in the briefing note it said that operational uncertainties remain under discussion at the moment. For somebody who is not a member, is eligible to be a member and should be a member but may not join for a couple of months, they will have outstanding payments to be made from the date of eligibility. Is it Mr. Duggan's intention that this will be backdated? How will they step into the scheme? I am sure Mr. Duggan will agree that a lump sum would not be feasible but how will they step into the scheme then? Is it phased? How will it happen?

Mr. Tim Duggan:

I am at a slight loss to understand the question. I do not know how somebody would defer their involvement in the scheme.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I am talking about somebody who should be a member of the scheme. Mr. Duggan said in his briefing note that there are people who should be members who are not. That is obviously going to form part of a catch-up, in that there are 3,000 eligible employers not yet registered. In the case of the workers there, if they want to buy into the scheme at the maximum amount, how does that happen? Can that happen?

Mr. Tim Duggan:

I need to clarify something here. Employers registering for the scheme has nothing to do with participants being enrolled in it. NAERSA is the organisation that decides whether somebody is eligible for enrolment or not. NAERSA will issue payroll instructions to all employers, regardless of whether they are registered or not, in the same way Revenue issues payroll instructions to them and tells them to do the deductions for these people. Why employers are required to register is so that we can capture their contact and payment details so that when we get the payroll submissions from them, we can then process the pay index. We cannot process the payments unless we know the bank account details for a direct debit, if they choose that, or the card payment details, or whatever payment method they have chosen. They are not related. A person-----

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I will put the question. In the event that a person, for whatever reason, is not in the scheme today, who is eligible for membership of the scheme, when they join, do they backdate their membership of the scheme to 1 January? Do they have to do that? Have they the option to do that? If they do that, I would have called it back in the day buying back service but that is not what it is here. If there is someone who is not currently in the scheme who is entitled to be in the scheme and joins late, do they just join, or can they backdate it to 1 January 2026?

Mr. Tim Duggan:

There is no such thing as somebody who should be in the scheme who is not in the scheme. NAERSA makes determinations of eligibility based on the payroll data it receives from Revenue. NAERSA has already decided who should be in the scheme-----

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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That they are eligible.

Mr. Tim Duggan:

It decided in advance of 1 January. It issued the payroll notifications in advance of 1 January. All those people are in the scheme from the date of determination by NAERSA.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Okay. If they are currently not contributing to the scheme because the deductions are not being made from their payroll by their employer, what are their options to make those contributions? May they backdate them to 1 January? Do they have to backdate to 1 January? Can they simply start and go forward? What are the penalties on an employer that has not done that?

Mr. Tim Duggan:

Once a payroll notification is issued by NAERSA to an employer, it is the employer's responsibility and legal obligation to collect those contributions. That is where is NAERSA will be turning its attention in the event that contributions are not forthcoming from an employer. NAERSA will go to the employer seeking those contributions. It is the employer's liability and responsibility, which is why we keep saying-----

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Who makes the contributions for the worker? Does the worker make them? Do they make a lump sum deduction? We have a briefing note here. It states that there were lump-sum catch-up deductions. I am just wondering in terms of how they will come into the scheme when they have missed payments. Will the worker have the opportunity to backdate them to 1 January? I understand the penalty on the employer but will the worker be able to backdate their contributions to 1 January?

Mr. Tim Duggan:

The employer is responsible for remitting the contributions. It does not matter how long it has not remitted them for; it is responsible for remitting them for the entire length of time that they should have been remitted for that employee.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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If this morning somebody is not having those contributions taken from the payroll or the employer is not remitting them to NAERSA, it is on the employer to ensure that the-----

Mr. Tim Duggan:

If the employer has received an automatic enrolment payroll notification, it is their responsibility.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Every single employer who has a worker who should be in the scheme has received that notification.

Mr. Tim Duggan:

Yes.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Some should not, as was the case in the Oireachtas. There are obviously others.

Mr. Tim Duggan:

I told the Deputy that this is not incorrect in accordance with the law.

John Paul O'Shea (Cork North-West, Fine Gael)
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The Deputy is out of time.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I thought I had ten minutes.

John Paul O'Shea (Cork North-West, Fine Gael)
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It is seven minutes. Next up is Deputy Willie Aird.

William Aird (Laois, Fine Gael)
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I thank everybody for coming in and the Cathaoirleach. I have a couple of questions. Has the Department carried out an impact assessment on how auto-enrolment will affect workers, particularly those on low incomes already struggling with cost-of-living expenses?

Mr. Tim Duggan:

The ESRI conducted such an analysis a while back. I think we furnished it to the committee. If we have not, we will certainly do that. We certainly made it available previously. In short, the analysis said that low-paid workers will have a slight reduction in their income but, in the long run, it will be beneficial to them because they will be building up a savings pot, into which both the employer and State are also contributing. In the long run they will benefit enormously from it, although there will be that initial net hit on take-home pay.

William Aird (Laois, Fine Gael)
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That is grand. Has the Department carried out an impact assessment on how auto-enrolment will affect employers, particularly those struggling with rising costs associated with their business?

Mr. Tim Duggan:

We have. We have always acknowledged that initially the introduction of auto-enrolment will result in an additional labour cost for employers. However, we did a lot of consultation with employers and representative bodies over a number of years since we first started looking at this angle, when we produced the straw-man proposal, the design document and so on. As a consequence of the consultation with employers, we have changed the phasing of the introduction of the scheme from what was originally intended to be a six-year term, to a ten-year term. We had originally planned a 1% contribution in year one, moving to 2% in year two, 3% in year three and so on, up to 6% by year six. Following that intensive engagement with employers, we changed it to the model that is there now, which is 1.5% for a whole three years before it moves, and then it takes a whole ten years to get to the 6%. We have factored in the concerns of employers in developing the design of the model. It was broadly welcomed by employer representative groups as a result.

William Aird (Laois, Fine Gael)
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Will the Department consider a break or flexibility around payment contributions for workers facing financial hardship?

Mr. Tim Duggan:

The contribution rate is very low.

William Aird (Laois, Fine Gael)
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I accept that but sometimes very low can be hard on a person's pocket.

Mr. Tim Duggan:

It is almost impossible to have it any lower, to be honest.

William Aird (Laois, Fine Gael)
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That was my other question.

Mr. Tim Duggan:

Once you are enrolled, you are enrolled. You can opt out for two years or you can suspend contributing for two years. At the end of those two years, you will be re-enrolled. If your circumstances have not changed, you can do the same thing again.

William Aird (Laois, Fine Gael)
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How many staff have been assigned to the administration of this scheme? Have they been redeployed from existing areas in the Department? Are all offices sufficiently staffed at the moment?

Mr. Tim Duggan:

The Department will always claim it does not have enough staff.

William Aird (Laois, Fine Gael)
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I know that.

Mr. Tim Duggan:

I will not deal with the latter piece. By the end of this month, there are going to be 32 members of staff assigned to NAERSA. We believe that to be sufficient for its purposes right now. Later in the year, we will have the ability to appoint another ten or so, if needs be. We will keep that under review as things progress.

William Aird (Laois, Fine Gael)
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Are they new staff?

Mr. Tim Duggan:

In some cases, they are brand new staff who were recruited externally. In some cases, they are reassigned staff within the Department. Those positions are then backfilled through competition.

William Aird (Laois, Fine Gael)
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They are backfilled. That was the question I was asking.

Mr. Tim Duggan:

They are. These are all additional posts that have been created. They are not a redistribution of social protection posts.

William Aird (Laois, Fine Gael)
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What steps is the Department taking to ensure employees and employers fully understand their obligations and entitlements under the new scheme?

Mr. Tim Duggan:

We have run an extensive communications campaign. There have been lots of advertisements on TV and radio, and in newspapers. There have been ads on billboards and the backs of buses.

William Aird (Laois, Fine Gael)
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Ice cream vans.

Mr. Tim Duggan:

We have had all that kind of stuff. I do not know about the Deputy but I am bored looking at them.

William Aird (Laois, Fine Gael)
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Can the scheme be tailored to accommodate workers will multiple part-time jobs whose combined income meets the threshold or will they be excluded? That is a question I have been asked by many people in County Laois.

Mr. Tim Duggan:

The scheme already accommodates that. It does not have to be designed to do it. The scheme is deliberately designed to facilitate people with multiple employments. In many cases, people will not necessarily realise that they qualify to be automatically enrolled because they are not adding all of the individual employments together. We will be doing that.

William Aird (Laois, Fine Gael)
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If an employee opts out, as was alluded to earlier, how will refunds of contributions be processed? What is the turnaround time expected to be? Will employer contributions be returned in the same manner?

Mr. Tim Duggan:

The answer to the last question is "No". Unless the enrolment is an error, the employer contributions will never be refunded. The employer contributions always go into the person's retirement savings pot and remain there.

In the case of a person opting out, there are only certain times that they can do that. They will be paid directly to their bank account or whatever payment method they choose and notify to NAERSA. I cannot tell the Deputy at this juncture what the turnaround time will be but it should be relatively quick once a person makes the application.

William Aird (Laois, Fine Gael)
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How will contribution rates increase? Has any modelling been carried out on the impact on the take-home pay for middle income workers and the effect the matched contribution will have on employees?

Mr. Tim Duggan:

We have modelled it and, as I said in earlier in respect of the first phase, it is obviously going to result in a reduction in net pay to people. However, it is not like a tax. It is going into an account in those people's names and is being saved for them. It is growing and being added to by the State and the employer. It is all considerably to their benefit. In addition, the reason for the glide path of ten years is that wages will increase over that time. This will just be a fraction of the impact because of the wage increase that will be occurring. This is a 6% deduction at the end of ten years. I would imagine that wage inflation between now and ten years' time will be considerably greater than 6%.

William Aird (Laois, Fine Gael)
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I thank Mr. Duggan for his answers, which have been very good. All of my questions were asked on behalf of the people of County Laois.

Johnny Guirke (Meath West, Sinn Fein)
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I thank the witnesses for coming in. I have a couple of quick questions. The scheme at the moment costs 55 cents per employee. Is that right?

Mr. Tim Duggan:

The cost is 55 cents per participant per week.

Johnny Guirke (Meath West, Sinn Fein)
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Some 763,000 people are participating, so that is approximately €400,000 per week to run the scheme and there are 32 employees in the Department. Is that amount of 55 cents coming out of the Government's €1 or where is it coming from?

Mr. Tim Duggan:

It comes from the pot. There are three parts going into the pot, which are the contributions from the employee, the employer and the State. They are all added together and 55 cents are then deducted.

Johnny Guirke (Meath West, Sinn Fein)
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Can that amount go higher? If it does, will it affect the pension drawdown in years to come for the employee?

Mr. Tim Duggan:

Theoretically, it can go higher if a Minister in the future writes a regulation to increase it. The level is set by regulation.

Johnny Guirke (Meath West, Sinn Fein)
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That is the amount of 55 cents.

Mr. Tim Duggan:

It is. It requires the Minister for social protection, with the approval of the Minister for public expenditure and reform, to change.

Johnny Guirke (Meath West, Sinn Fein)
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That would affect the employee's drawdown.

Mr. Tim Duggan:

It would reflect the amount of money in the pot that is being forwarded for investment.

Johnny Guirke (Meath West, Sinn Fein)
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Do we know exactly what these people will be able to draw down when they reach pension age or will it be based on the investment of the money? Some people will be in the scheme for longer than others, depending on their age and so on. Do we know exactly what these people will draw down or will it be based on how the money is invested?

Mr. Tim Duggan:

It is a defined contribution, rather than a defined benefit, scheme. It is impossible to know exactly what people will get from it because it depends on how much they put in, how long they do it for, what investment strategy they choose and the level of return on that investment strategy. While it can be modelled, the modelling is based on a lot of assumptions. It is impossible to say precisely what somebody will get.

Johnny Guirke (Meath West, Sinn Fein)
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There is no guarantee. Let us imagine that these investments go wrong. Would that mean that these people in years to come will get very little out of the scheme? I am wondering how that might affect people, down the road.

Mr. Tim Duggan:

Investments are a risk.

Johnny Guirke (Meath West, Sinn Fein)
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I know.

Mr. Tim Duggan:

All investments are a risk. Some are riskier than others. There are three options available in the scheme. A very conservative approach is available. A balanced approach, with medium risk, is available. There is also the higher risk option of the growth approach. People can choose, if they wish.

When the Deputy asks about investments going wrong, I am not entirely sure what he means. Let us assume, for the sake of discussion, that all of the investment return was lost. Let us assume the money was invested. Usually, people would get a return on that but let us imagine they get no return and the investment generates no income. People will still have the benefit of the contributions from their employer and the State over the entire period.

Johnny Guirke (Meath West, Sinn Fein)
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That would not be affected.

Mr. Tim Duggan:

The loss would have to be colossal. It would have to involve no investment return. The State and employer contributions would have to be lost. Only then would we get to the piece that the person concerned put in. I assure the Deputy, and I have said this previously, that if something like were to happen, the last thing people will be worried about is the auto-enrolment pot because all the buildings outside will be on fire and the streets will be full of people.

Johnny Guirke (Meath West, Sinn Fein)
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I know. The NASDAQ and different stock markets go up and down.

I heard about an issue from a charity. This scheme may be a burden on charities. One particularly charity, Clann Mór, is a residential and respite facility in my area of Navan, County Meath. Its representatives contacted me as the charity is going through financial challenges at the moment. Last year, while looking at cost saving options, it incurred a deficit of €60,000. This year, they expect that figure to exceed €160,000.

This is unsustainable and poses risks to the continuity of the services vulnerable adults rely on. Clann Mór looks after adults with intellectual disabilities. Along with many other inflationary costs, the statutory auto-enrolment pension contribution represents a substantial cost for it and without increased funding from the HSE, the services are in danger of being lost. Are any measures being taken on that?

Mr. Tim Duggan:

This is the same as any statutory employment improvement measure. It is the same as paternity leave, parental leave or when maternity leave was increased. It is the same as any employment improvement measure in that it costs money. Any organisation that is paying people will need to approach its funders in the same way any Government Department needs to go to the Department of public expenditure and seek the additional funding that is required to pay for that additional statutory improvement in employees' conditions. This is no different. The organisation will have to seek additional funding from the HSE for this measure.

Johnny Guirke (Meath West, Sinn Fein)
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It is very early in the scheme, which we all welcome, and there are probably going to be hiccups here and there but that is to be expected. I wonder whether there is a record of any businesses or charities that have closed - though they probably would not have closed yet. How is the Department working with these employers to ensure they have the supports in place to cope with increases? Mr. Duggan is saying that is down to the HSE.

Mr. Tim Duggan:

In that case it is. If the HSE is the funder of that organisation then the HSE needs to make provision for that organisation's financial requirements if it wants the organisation to survive and continue providing the service it is currently.

John Paul O'Shea (Cork North-West, Fine Gael)
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I thank Deputy Guirke and Mr. Duggan. The Deputy is out of time but we will have supplementaries later if he wants to come back in.

Deputy Ardagh is next.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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I thank the Cathaoirleach. I thank Mr. Duggan and his staff for coming in to give us an update; it is really helpful. I congratulate him and his office as well as the Minister for getting to the stage where we have seen a roll-out. It has obviously been very successful. We are not inundated in our clinics with complaints. People understand that if you are to save you will see a reduction. It is a really great step for people who otherwise would not have had a pension. I do not have doomsday situation questions though I appreciated Mr. Duggan's doomsday scenario. I hope we will not get there in our lifetime. I have a few questions on the take-up statistics. Are we at 99% or 85%? Does the Department have statistics on take-up?

Mr. Tim Duggan:

Take-up by whom?

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Just generally on the amount of employees who are in this scheme or an RSA scheme.

Mr. Tim Duggan:

It is not like other schemes where people decide to join. They are automatically included in it, so from-----

Catherine Ardagh (Dublin South Central, Fianna Fail)
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What about anyone on an RSA? Is that the opt-out? If you are not in the auto-enrolment you are in an RSA scheme.

Mr. Tim Duggan:

You are in an occupational scheme or you are in a qualifying PRSA, yes.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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So if you are not in one of those-----

Mr. Tim Duggan:

Or else you are outside the income and age thresholds for auto-enrolment.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Are there any people who opt out just for the sake of opting out because they do not like the idea of it?

Mr. Tim Duggan:

I am sure there will be but they cannot do it until July at the earliest, because it is mandatory to remain in the scheme for the first six months.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Mr. Duggan is saying you cannot apply for the opt-out yet.

Mr. Tim Duggan:

You cannot.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Okay.

Mr. Tim Duggan:

I am sorry, you can apply but it would not be facilitated because the law is six months.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Has the Department seen many people attempt to opt out at this stage?

Mr. Tim Duggan:

No.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Does Mr. Duggan anticipate many people opting out?

Mr. Tim Duggan:

It is always difficult to predict these things. Our best yardstick is what has happened in other jurisdictions and by and large there have been relatively low numbers. Fewer than 10% have opted out in the worst cases. I would not expect it to be anywhere near that high here for a few reasons. The first is the six-month gap. Behavioural economics tends to kick in. People get used to something and therefore while their reaction in January might be that they cannot afford this or do not like this and think they might opt out, when it comes to July when they will be able to they may have a different view, for a couple of reasons. The first is they have got used to it in their pay packet and the second is they have looked at their account and they have seen the phenomenal value it is providing to them because of the employer and State contributions being added in. I therefore think there is unlikely to be a high level of opting out when that becomes available.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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That is a good message for people watching this. They should log in and look at their fund so they can have a visual idea of how the fund is growing. A lot of people might not know they can do that so it is a good message for us to get out. Do the officials have any detail about the demographics of those who opt out internationally? Is it women, men, certain professions or people with disabilities? Is there a cohort of people who are more likely to opt out than others?

Mr. Tim Duggan:

Not necessarily. Not in what I have seen. It has been spread across the board. In some cases there was a preponderance of people in older age groups opting out. That might be because they are my age and they have gone their entire lives without it. They are saying they do not need this, that they do have that much time to save anyway and that they will be better off doing something else or that they have bought a property and that is their pension, or whatever. There are loads of reasons people at the upper end of the age thresholds might decide to opt out. That is the only real, tangible pattern we have seen in some cases.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Is there still a benefit for those at that upper age?

Mr. Tim Duggan:

Yes.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Mr. Duggan would advise people to stay.

Mr. Tim Duggan:

Yes, because you are talking potentially about ten years, or thereabouts, of saving. If it was from now they will eventually get to 6% of their income, which becomes 14% on their gross income, and that is being invested. That will give them a nice return compared with what they will be putting in themselves, so it is worth it.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Yes. Mr. Duggan is saying that from the international statistics nearly 10% of people are opting out.

Mr. Tim Duggan:

The very worst we have seen is up to 10%, but I do not expect it will be anywhere near that.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Okay. Mr. Duggan mentioned he was sick of all the ads for MyFutureFund on buses, but will there be any sort of advertising campaign to encourage people to stay in come July?

Mr. Tim Duggan:

Yes. We will be trying to get them to do precisely what the Deputy said, which is to look at their account, see what they have put in and see what it has grown to in a very short space of time.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Is it straightforward for people to do that?

Mr. Tim Duggan:

It is. It is endorphin-inducing because it is wonderful to see that you have put in €100 and all of a sudden it is €350. That just gives you a kick.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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Self-employed people generally have their own private pensions but I have had self-employed people who do not come to asking why they cannot do it when they have to do it for all their staff. They may not have planned for the future so it could be a message for them to set up their own private pension.

Mr. Tim Duggan:

It is very difficult with self-employed people because there is no such thing as a typical self-employed person. It is a little like "Monty Python's Life of Brian" in that they are all individuals. They all have different focuses, different priorities and different means of doing things. We will explore over the next while how we might be able to include self-employed people in auto-enrolment but I suspect we will get a lot of kick-back because the automatic piece is the bit they will not like. They might like voluntarily joining but not automatically joining, so we need to tease through a load of issues for them.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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I have had a few people ask me about it so Mr. Duggan might not get as big a kick-back as he anticipates, especially from smaller employers who have fewer than five or six employees. They are on the same level as their employees in a lot of cases.

Mr. Tim Duggan:

I know exactly what the Deputy means and she is probably right. However, I think there are close to 300,000 self-employed people in the land and getting something that suits the 300,000 is not going to be easy-----

Catherine Ardagh (Dublin South Central, Fianna Fail)
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We are never going to get that.

Mr. Tim Duggan:

-----but we will try.

Catherine Ardagh (Dublin South Central, Fianna Fail)
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I thank Mr. Duggan.

Pat Gallagher (Donegal, Fianna Fail)
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I thank the officials for their very clear contribution. I have a question about the 763,000 employees who have been deemed eligible who are working for approximately 103,000 employers, of which only about 100,000 have registered.

In relation to the other 3,000, will the Department use the carrot rather than the stick to try to convince them? I know there is a legal obligation, but will NAERSA be taking some steps there to try to have them included as soon as possible?

Mr. Tim Duggan:

We have no carrots. The law is the law, and employers need to comply with it. NAERSA is contacting those employers who have yet to register. In most cases, there is nothing untoward going on. There is nothing at issue. NAERSA dealt with one as recently as yesterday which simply misunderstood. The minute they understood what they had to do they did it immediately and made sure that quite a significant payment that was due was made instantly. NAERSA is monitoring that situation very carefully. Over time, it is contacting employers that have not yet registered asking them to do it and explaining why they need to do it. Some of them just had not quite understood why they needed to do it. That is all.

Pat Gallagher (Donegal, Fianna Fail)
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When Mr. Duggan said there is an opt-out clause and they can do that for two years and repeat that, what would be a typical example? Is that if the employee could not pay their contribution?

Mr. Tim Duggan:

Only the employee can opt out. The employer cannot opt out.

Pat Gallagher (Donegal, Fianna Fail)
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If the employee opts out, is the employer still making their contribution?

Mr. Tim Duggan:

No. Only the employee can decide to opt out. The employer cannot decide that they are opting out. If an employee decides to opt out, for example in July, what will happen there is that all contributions will cease from the employee, employer and State. The money that the employee has put into the scheme in the first six months of this year will be refunded to them, but the money that has been put in by the employer and the State will remain in their account and invested. In two years’ time in 2028, that person, if they still meet the eligibility criteria, will be automatically enrolled. They will not have to do anything. In the same way that they did not have to do anything to be put into it in the first place, they will be automatically re-enrolled. When they are, they, the employer and the State will recommence making contributions.

Pat Gallagher (Donegal, Fianna Fail)
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Will the employee, who is the only one who can opt out, have to make retrospective payments for the period that they have dropped out?

Mr. Tim Duggan:

No.

Pat Gallagher (Donegal, Fianna Fail)
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What is the downside for the employee when-----

Mr. Tim Duggan:

The downside is that they have missed out on two years of contributions that could have been invested. Some people have described the employer and State top-ups as "free money". It kind of is. Therefore, they are missing out on that, and the investment return they would have got if that had been invested for the two years.

Pat Gallagher (Donegal, Fianna Fail)
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Let us take an example of someone who is 58 years old at the moment.

Mr. Tim Duggan:

I know such creatures very well. I look at one in the mirror every morning.

Pat Gallagher (Donegal, Fianna Fail)
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I saw one of them. There is probably a problem with the birth certificate. I know all about it. You are always looking at your age on your birth certificate, but you look at your biological age. However, that is not much good in this case.

If we take that example, when is the earliest that a person can benefit from the payments? Will they get that together with their contributory old age pension?

Mr. Tim Duggan:

The drawdown age for MyFutureFund is 66 years old in tandem with the State pension. That is when they will be able to access the payments.

Pat Gallagher (Donegal, Fianna Fail)
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For NAERSA, will it almost be pro rata with the number of years a person has contributed?

Mr. Tim Duggan:

It is whatever one has contributed over those eight years plus the employer contribution plus the State's contribution plus whatever investment return has been generated over that eight year period. That is what they will get minus the fees.

Pat Gallagher (Donegal, Fianna Fail)
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With the contributory old age pension, one has to have a minimum number of contributions, but not here.

Mr. Tim Duggan:

That does not apply. It is purely based on the money contributions and the return.

Pat Gallagher (Donegal, Fianna Fail)
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That is helpful. Needless to say as a Donegal man, I am very pleased that the decision was taken to locate it in Letterkenny and not necessary in Ballina. It shows that our Minister is not parochial.

Anne Rabbitte (Fianna Fail)
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I apologise that I was late attending the meeting. I was listening to Mr. Duggan's contribution online. He is no stranger at this stage to this committee and neither are the officials. Yet again he comes with a knowledge and expertise that sometimes is hard to find flaw within in his presentation. I wish to drill into the next piece. It is great to have it up and running. That in itself is a huge achievement, and it is off the ground. It is about where the Department is going to go next and the data it is receiving. Of the 763,000, the Department has a great line of sight - or maybe it does not and NAERSA has not provided it with this - of the age profile of the participants who are now part and parcel of MyFutureFund and the wage income that they are also on. I do not know if the Department has line of sight of that. It is very early days. My line of questioning may be for the future be it in six months’ time when the Department has the data gathered is about the age profile, the income that they would be on and the professions that they might fall within. I am sure the Department will be capturing all that sort of data because that will feed into further research or development and support that might be in the different categories. Has the Department gathered any of that data? Is that where the Department is looking to go to next with some of this data?

Mr. Tim Duggan:

We are already capturing that data. It is one of the reasons that employer registration, for instance, is important to get some of that data and do that analysis that the Senator is asking about. On age breakdown, we have a preliminary breakdown of age. We have it done by ten-year segments. It is fairly even. About 21% of people are in the age category of 18 years old to 29 years old. Ages 30 to 39 is 29%. Ages 40 to 49 is 27%. Ages 50 to 59 is just under 20%. Over 60 years old is 2%. It is fairly even across the decade bands, which is a little surprising. I thought it might be higher in the 30s and 40s. It is slightly higher in the 30s and 40s, but it is not hugely higher.

Anne Rabbitte (Fianna Fail)
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That is interesting. I would have thought it would have been higher like Mr. Duggan said. On the data, is the Department also collecting the professions that people have or the trades they are involved in?

Mr. Tim Duggan:

We have it by sector at the moment. It is a long list.

Anne Rabbitte (Fianna Fail)
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What is the top five?

Mr. Tim Duggan:

The top are construction, which is about 14% and wholesale and retail, which is about 13%. I am looking for the double figures in the data. There are no other double figures. There are other service activities that I am not entirely sure of. These are CSO designations. The next one is maintenance support services at about 6%. As for the rest, the professional, scientific and technical designation is at about 6%, transport is about 5.5% and the rest fall away into small figures.

Anne Rabbitte (Fianna Fail)
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I am not surprised with that, particularly in the construction side of things. This is building on Deputy Ardagh's question. There are a lot of people who are self-employed who are possibly on exactly same level as their employees. I am thinking about the small man with a white van who might have a few lads working alongside him. In fact, he is contributing for those guys and maybe for himself he has no provisions at all. On the self-employed and it is a broad range, are we in future going to look at the self-employed based on income for them to be able to contribute or is there any thought process there yet?

Mr. Tim Duggan:

There are thought processes but designing and doing it is something else. I have said previously at the committee that we are aware of no auto-enrolment system anywhere in the world that includes the self-employed because it is so difficult to come up with a system that can universally apply and have common acceptability. That does not mean we will not try. We have a trigger for employees: they get paid on some kind of frequency basis, usually through payroll systems. Even a small employer without the wherewithal to run a payroll system probably uses an accountant or agent to do it. There is usually a payroll involved. Consequently, there is a platform and a trigger for us to impose the automatic enrolment. That does not necessarily exist for self-employed people. We have to first find a platform and trigger for auto-enrolment and then to tease out a reasonable level of income at which to start applying it. In the case of employees, we have said €20,000. Is it the same for the self-employed or does a different metric need to be used? We know self-employed people often pay themselves very little because they are pushing the money back into the business and so on. It is a tricky one but we will try to tease it out over the next year or so to see what we can do.

Anne Rabbitte (Fianna Fail)
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There is an opportunity for the self-employed to reflect about putting themselves on that structure and becoming part of the payroll systems. Sometimes they sit outside of it but by bringing themselves in, putting themselves on the red books or the quick books or whatever it is, putting a structure a place and making monthly returns, no different from their workforce, they are protecting themselves in the long term because construction can have peaks and troughs.

Mr. Tim Duggan:

That is true. On the construction side, I have noticed that in addition to loads of people going into auto-enrolment, there has been significant uptake of the construction workers' pension scheme in recent times. Many construction companies have joined that and started contributing with their employees. Auto-enrolment is not just about bringing in the 763,000; it is also resulting in an increase in other occupational pension schemes throughout the economy.

Anne Rabbitte (Fianna Fail)
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Construction is no different from other fields. Are young people participating in the apprenticeship programme model also selected or submitted by their employers to participate in auto-enrolment?

Mr. Tim Duggan:

The employer does not choose. The employer has no say in the matter. NAERSA decides whether an apprentice is eligible and enrolled - in all cases, they are, if they are not already in the CWPS.

Anne Rabbitte (Fianna Fail)
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Excellent. I thank Mr. Duggan very much.

Peter Roche (Galway East, Fine Gael)
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The witnesses are most welcome. It has been enlightening, to say the least. I offer my apologies for not being present for the opening statement. I was next door at an extremely important health committee meeting. I will have a question relating to that in a few minutes.

According to the statement, 80% of businesses stated they were not ready. We had the discussion this morning and there are still those who say it was badly advertised or publicised. Public transport was one means of advertising it. Did any correspondence go to businesses outlining the principle of the scheme? Was any thought given to doing that? Many businesses heard about it, read a little about it and saw it popping up on RTÉ during the ads but auto-enrolment meant very little to them. There was an ice cream cone as part of the advertising process. It could have been better advertised or communicated to businesses.

There is 90% take-up and 10% are not yet enrolled. That is self-declaration. Will the 10% who have not engaged be gone after, so to speak, to get them enrolled?

The health committee had witnesses in this morning representing Jigsaw, Families for Reform of CAMHS and SpunOut. Those organisations depend on contributions from the general public and get State funding as well, but they are still employers. How will they manage? A business might be able to offset the costs of this on what they sell but those in the community and voluntary sector are not in the business of making money. They provide a service or support. What mechanism or supports are there to ensure they do not go under as a consequence of having to top up employees' wages?

Mr. Tim Duggan:

I do not accept the suggestion this was not well advertised. Earlier we were joking about how boring it had become because there was so much advertising going on. The truth is an incredibly extensive advertising and media campaign was run across TV, video on demand, radio, newspapers, outdoor advertising like billboards, train stations and buses - you name it. Whatever platform or media was available to the Department was used extensively to advertise it. Specifically for employers, numerous ad campaigns were run. There was the "123" campaign and there was the "321" campaign. A wealth of webinars were run by the Department on its own and in conjunction with employer representative organisations. We spoke to tens of thousands of employers during that process, explaining how it would work, what it would mean for them, how they would have to be involved, what their obligations were, etc. All of that was done extensively.

The proof of the pudding is that 101,000-plus employers are registered on the portal today. If that were a much lower number, I could accept the criticism. There are 104,000 employers part of the scheme, 101,000 employers registered and a few thousand that have yet to register. That number is growing by the day. A week ago it was ninety-something thousand. NAERSA is contacting those who have yet to register to remind them they need to and explain how to do it. I do not accept the suggestion it was not well advertised or employers did not know about it. All the evidence proves otherwise.

Employers in the community and voluntary sector usually have a sponsor or funder. In many cases, it is from the State. As I said in reply to Deputy Guirke, those organisations need to approach their funders and say an employment improvement measure has been introduced statutorily and they need money to pay for it. It is the same as when maternity was extended, when paternity was introduced, when parental leave was introduced and so on. Additional money had to be got by those organisations to facilitate those employment improvement measures. This is no different so they need to approach their sponsors or funders and get the additional money they require for this purpose.

It is not going away. The responsibility is going to remain so they need to get the funding to deal with it, in the same way that every public body has to do the same thing. We have been extensive in our discussions with other bodies and Civil Service departments in respect of bodies under their aegis, in that they need to ensure the funding streams are in place for those.

Peter Roche (Galway East, Fine Gael)
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On the reason I referenced the advertising part of it, it was not me who claimed it was badly advertised. That is what was feeding in to us. I was merely relaying what was being said.

This is an additional financial burden. No matter what way we toss it out, it is an additional financial burden on a business. I anticipate - I could be wrong - there will be a consequence of that additional burden. Remember, whether it is a publican, a supermarket owner or whatever the case may be, they are constantly budgeting. They are sort of firefighting as well in many respects with regard to keeping the business running efficiently. I suspect that as a consequence of this additional burden, they may look at not hiring an additional person where they might want them and because of the complexity, difficulty and financial burden, they might decide to say "No" and push more of a workload over on those they have. That is something I was thinking about. I hear that a little but I hope it does not happen. I genuinely hear it because we know how pubs are running right now and how challenged they are. We know how the little country supermarket and many of those small businesses are operating. It is on a shoestring budget, really. I sincerely hope that it does not happen, where it would cause such a burden that they not would employ an additional person or lay off someone they might have.

Mr. Tim Duggan:

I have always said that, at least initially, this is an additional cost on labour but over the course of its introduction over a ten-year period, the additional cost per employee is 6%. The wage or remuneration package will inflate by a lot more than 6% in that same period, if history is anything to go by. I would expect the 6% to be factored in to whatever the remuneration inflation is in that period. I think it will balance out reasonably okay in the end. There is an initial shock because there is 1.5% extra but it will smooth out over time.

John Paul O'Shea (Cork North-West, Fine Gael)
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Speaking on my own behalf, on the overall side of things, it has gone really well. The process since 1 January has been really smooth. A lot of people were expecting a lot of glitches and stuff like that and that did not happen to date. Touch wood, we will keep going the right way but it seems to have bedded in very smoothly. That is a compliment to a lot of the staff who re involved in the Department and NAERSA. They have got over 763,000 employees onto the scheme and 103,000 employers, as Mr. Duggan said. He mentioned in his contribution about 5,000 taking the decision to opt in. Could he explain that a bit more? Who are they, or what sector do they come from?

Mr. Tim Duggan:

I do not have that breakdown yet. All I can tell the Chair is that they are employees who are outside the age and income thresholds. They are either earning less than €20,000 per annum or they are under the age of 23 or are over the age of 60 in the main. I do not have a breakdown by sector.

John Paul O'Shea (Cork North-West, Fine Gael)
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My understanding had been that we were not considering anybody as an opt-in yet and that it would be in future circumstances where people could contact and say they were 22 or 62 or earning €18,000, and ask if they could opt in. Can they do that now?

Mr. Tim Duggan:

Yes, absolutely. We have always made it available from the very beginning. Like the Chair, we did not expect the numbers to be particularly high at the beginning so we are both surprised and pleased that we have up on nearly 5,000 already. In a short three or four weeks, that is actually an incredible number.

John Paul O'Shea (Cork North-West, Fine Gael)
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Is there any sort of media campaign in regard to advertising for people who are outside that threshold? What we have been doing is explaining to people in December that if they are between 23 and 60 and do not have an occupational pension, they will be automatically enrolled. We said here is the information about it and here is the ice cream and if they have any other questions, here are NAERSA's contact details, etc., and it has been very good, in fairness. The feedback from the contributions and questions asked by the general public have been very well received by that phone line that is there. Have we any campaign for encouraging people now outside of that to enrol, or how does the Department think that will fare out?

Mr. Tim Duggan:

We have not specifically focused on that, to be honest. We have been concentrating on getting the 763,000 in and getting the system bedded down. We do reference it though in all of our literature. If you go on our website, look at our videos or any of that, we do call it out and say that people can do it. When you go on the MyFutureFund portal, one of the things highlighted for somebody who is not already a participant is that you can opt in. It takes the person through how they can do that. On whether we will run a specific advertising campaign, I will certainly feed that to NAERSA and ask it to consider it.

John Paul O'Shea (Cork North-West, Fine Gael)
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Mr. Duggan mentioned the portal there. Has everybody who was enrolled got an email or letter from NAERSA saying this is their login details and to please log in? Has everyone got that at the moment?

Mr. Tim Duggan:

Everyone has got a notification and the details of how they can do it. They log in using their MyGovID account. If somebody does not have a MyGovID account, then they can go on to MyGovID, register and get such an account and then use that to log in to MyFutureFund. It is simple enough.

John Paul O'Shea (Cork North-West, Fine Gael)
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That is great. I think Senator Rabbitte mentioned the point earlier that when people look at what they have contributed themselves and at how it is topped up by the employer and the State, there will be more of a reassurance that they are doing inordinately well when they are saving in that system.

There was a lot of commentary in relation to some community, voluntary or other organisations that would have a State funding body. I think it was mentioned by the Minister in this room and on the floor of the Dáil that it is reflective on that agency to make sure they are funded for the additional costs for it. The Minister indicated that he reiterated to other Government Departments that they should ensure any funding requests to compensate for the auto-enrolment should be given down to other companies like the community and voluntary organisations that were mentioned by a number of members here today. Any indication that this is not the case should be identified to the Department because, certainly from my discussions with the Minister, it was very clear that any agency funded by the State would be remunerated to compensate for those costs. Is that the feeling on the ground, Mr. Duggan?

Mr. Tim Duggan:

That is what we believe needs to happen, yes.

John Paul O'Shea (Cork North-West, Fine Gael)
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I thank Mr. Duggan. I appreciate that. Does anybody else want to come in with a supplementary? I call Deputy Eoin Hayes, followed by Deputy Guirke.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I thank the witnesses for coming in. I am sorry I am a bit late. Unfortunately, I was talking to the Minister about something else in the Chamber at the same time. I congratulate the witnesses on the launch. It is very important that the auto-enrolment scheme goes ahead. It is an important part of this transformation in the pension landscape, in particular for lower-, medium- and moderately-incomed workers. It is really important that they have this kind of security going forward.

There are a few issues I want to raise first, as a general talking point, and then ask some specific questions. The first thing is more aimed at the Minister rather than the officials. I have been a little bit disappointed with the communications on the scheme. First, the announcement in the week before the scheme was launched with businesses for the regulation, where they were steered towards auto-enrolment and told there was a different regulation coming down the pipe, could have been done earlier. I have launched pension schemes in companies. You usually give yourself a quarter or two to do those kinds of things. For the Minister as the chief spokesperson of the Department, it was a failure on his part not to have said that to people much earlier.

Second, for employees, it is really important to give the investment vehicle specificity because one employee said to me: "I do not know what I am buying into. I do not know what that actually looks like and I do not know what the returns will be or how that looks versus other options that are in front of me."

I encourage the Department to think about that over the course of 2026, and how we give people a sense of the advantages available to them in all this.

Specifically, does Mr. Duggan have a sense of the expected returns across the different risk profiles - low, medium and high - that people who invest in each of those different categories would be likely to get or that the investment funds are looking for? It looks like from their comments that about €35 million in contributions has been raised from 250,000 payroll submissions. Does that mean about 500,000 employees have not made payroll submissions yet? Are those expected in the next week or so towards the end of the month? I want to just get a sense of the breakdown of how many people who are enrolled have actually paid in.

One of the questions that always comes up in investments is that we might lose money. Things can go down as well as up. The experience of the past 80 years on the public financial markets has been generally going up and compounding. That is why people invest and typically how pension funds have done well, but there is always a risk. If there are individuals who lose money or are even wiped out as a result of say, picking a higher investment strategy, what recourse might they have? Is there any role for the Department or for Government in terms of making them whole again? The purpose of the fund is to give people security in old age so it would be self-defeating if they lost everything.

FInally, will Mr. Duggan comment on the percentage of people who have been enrolled in community and voluntary organisations? We are a little concerned about governmental and departmental support financially for those to be able to meet the employer obligations under the auto-enrolment scheme. It would be helpful to know what the percentage of employers are in that category.

Mr. Tim Duggan:

I thank the Deputy for that. I will not address the political points he made. There are people in far better positions than me to do that.

I do not buy the argument that the regulation issue is a failure. The regulation brought in before Christmas was to deal with a very specific issue that was caused by very specific employers. It was not aimed at and does not generally affect the bulk of employers at all. It certainly does not affect any employer that has no pension scheme, which is the bulk of employers. There are only about 10,000 employers operating schemes and the bulk of those are very good schemes that operate incredibly well. Therefore, the regulation would have had no impact on them whatsoever. They would not even have noticed it.

The regulation was brought in to deal with a very specific matter that arose in the last quarter of 2025 and, therefore, it was not possible to deal with it any earlier than that. Some employers decided to compel employees who were not in their schemes into those schemes with employer-only contributions at nominal rates, not at their normal rates, that were in some cases incredibly low and derisory. It was done as an avoidance measure and that is what the regulation dealt with and dealt with promptly. Therefore, from an official point of view, rather than it being a failure, it was an absolute success because it prevented a malpractice occurring. However, politically, the Deputy may have a different view and can express that to the Minister and I am sure he will deal with it.

On the investment vehicle specificity, I find it is always difficult to explain investment options to people and the Deputy will know this better than me. What is available on the MyFutureFund side is what are called the key information documents, KIDs, which the Deputy is familiar with. They set out what the fund is, what it is using, what it is investing in, what the costs are and so on. That is all there. NAERSA does not provide financial advice, it simply provides the financial information to allow people to then consume that and make up their own minds or to seek financial advice using that information, if they wish to do so. We find, though, that the vast majority of people are comfortable with the default arrangements put in place, which is that in the early and mid-part of their working career, up to the age of 51 in the case of the auto-enrolment scheme, they stay invested in the growth fund or what we call the higher risk option. For the next ten years after that, they invest in what is called the balanced fund or the medium risk option, and then for the last five years before the drawdown phase, they are invested in the conservative fund or the low risk option, which is primarily cash and bonds and so on. The higher risk or growth fund is primarily in equities.

All the funds in auto-enrolment are UCITS. As the Deputy will know, that is the most regulated investment vehicle in the European Union. It is heavily regulated and for that reason, it is the mechanism that has been chosen for auto-enrolment. Maybe in the future, the investment committee advising the board at NAERSA, which, in turn, advise, the Minister, may decide that alternative investment funds or other types of investment opportunities should be looked at and included but right now, it is UCITS and UCITS only and they are heavily regulated. The risk levels within those UCITS are set in accordance with the European Security Markets Authority risk ratings,. The providers of those funds are contractually bound to ensure those funds remain within those ESMA risk ratings and, obviously, will have to rebalance them where they fall out of sync with those ratings.

All of the funds are passive. They track indices, so there is no active investment or active management of the funds going on. The reason we have chosen that is, first, we find the returns over the type of period we are talking about - in this case seven to ten years for the first contract - are not dissimilar to even the best active managed funds, and second, they are much cheaper. Consequently, we did not see any value in charging people more for not an awful lot more and as a result, they are passive, index-tracking funds within ESMA ratings, within those three pots I have described. The KIDs are on the site and people can use those to get financial advice if they feel they need to delve deeper.

It is not possible for us at this juncture to give any real indication of the level of returns on each of those funds. There has to be a better practice for a while to come to a conclusion on what they are likely to yield. There is some historical stuff but a lot of these funds are newly generated. The composition of them is newly generated specifically for this project and, therefore, there is not necessarily a track history there that can be looked at.

There have been 225,000 payroll submissions to date from employers. A payroll submission includes a subset or all their employees at a time. There are 104,000 employers that have employees in auto-enrolment, so that means, on average, each has submitted a payroll two point something times. That is not right either. Some are weekly so they have already submitted four and others are monthly and have not yet submitted one because they are not running their monthly payroll until later this week. It is between the two, but so far, there have been 225,000 submissions and that covers most of the 763,000 at this juncture.

Johnny Guirke (Meath West, Sinn Fein)
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I have a couple of final questions.

Following up on what Deputy Hayes said, it would be nice to know what the people would be able to draw down when they reach the age of 66.

We never really hear the percentage the State would take and how much would go back to the participants if these investments were successful and made a lot of money. I think these are issues. It would be nice to know what percentage of the State is going to take. If we go back to the local property tax, for example, we were told the local authorities were going to retain 80%. That was fine and it was done, but we were not told that the Government was going to withdraw every other bit of money it had been giving to the local authorities. While the 80% was given, the Government took it back in another way.

These are things we would probably like to know in the next couple of years. What happens to the funds if a participant dies? What would be the impact of participation in future State pensions? What are the biggest issues the Department has encountered since auto-enrolment started? It would be great to have the witnesses back in 18 months to two years’ time just to see how auto-enrolment was going. From dealing with the State myself, I know how it gives it to you with one hand and then takes it back with the other. Maybe the witnesses can excuse me for being sceptical.

Mr. Tim Duggan:

It is part of the job, I suppose. The important thing to say about My Future Fund is that it has nothing to do with the State really. It is private money. It is owned by the individual participants in the scheme. It is not State money. The State does not control it. The State cannot put its hands on it. There is nothing like that. The State is contributing a top-up amount to it. The minute it does that, it loses control of it and it becomes the personal property of the individual whose account has been topped up. All of the constitutional property protections that are there, are there. I said at a committee before that a Government would have to do something fairly extraordinary in legislation to be able to get its hands on the funds or even an element of the funds.

Johnny Guirke (Meath West, Sinn Fein)
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Mr. Duggan mentioned the 55 cent per participant. Who can increase that?

Mr. Tim Duggan:

It requires that a regulation be made by the Minister for Social Protection, with the approval of the Minister for public expenditure.

Johnny Guirke (Meath West, Sinn Fein)
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They could do the same with the auto-enrolment funds.

Mr. Tim Duggan:

They cannot do anything with the funds.

Johnny Guirke (Meath West, Sinn Fein)
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If they can increase that, can they not increase what the State can take out at the end?

Mr. Tim Duggan:

Does the Deputy mean in tax?

Johnny Guirke (Meath West, Sinn Fein)
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Yes, or in another way.

Mr. Tim Duggan:

All tax is based in law and laws are passed by these Houses, so it is within the power and gift of the elected representatives of the people to decide what the tax treatment of My Future Fund is going to be in 20, 30 or 40 years' time. I cannot predict that now.

Johnny Guirke (Meath West, Sinn Fein)
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I know that. I think Mr. Duggan is missing the point.

Mr. Tim Duggan:

That is true of everything, is it not?

Johnny Guirke (Meath West, Sinn Fein)
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No. I am not talking about tax. I am talking about the investments that auto-enrolment funds make and how much of that will actually go to the participants when they reach retirement age and how much will be held back, whoever holds it back.

Mr. Tim Duggan:

There is no holding back of anything. There will be a tax treatment of it once it matures, in the same way there is with existing occupational pension schemes or personal retirement savings accounts. There is a tax treatment that has to be set in law and published. This is no different, and it has already been set in law and published that these accounts will be treated for tax purposes in precisely the same way as PRSAs are treated today.

Johnny Guirke (Meath West, Sinn Fein)
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What happens if the participant dies?

Mr. Tim Duggan:

It becomes part of their estate.

Johnny Guirke (Meath West, Sinn Fein)
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Their estate.

Mr. Tim Duggan:

Yes. All of it. The impact on the State pension is nil. I have been serving in the Department through successive Governments that have been involved in this project and in progressing it and every single one of them to date has said that the contributory State pension is sacrosanct, it is the bedrock and it is never going to be touched. It remains separate and it has nothing to do with auto-enrolment. The State pension is about giving people provision to keep them from poverty. The auto-enrolment system is supplementary to enhance their quality of life in retirement on top of the State pension. This has never been wavered from in any Government I have served, but, obviously, I cannot predict future Governments. I think those were all the Deputy’s questions.

Johnny Guirke (Meath West, Sinn Fein)
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There was the question concerning the biggest issues the Department itself had encountered with it.

Mr. Tim Duggan:

Since going live, we have not really encountered any major issues at all. I think the biggest query to NAERSA has been around opting in. When we categorise the queries, the biggest one has been on opting in, funnily enough. That was not expected. We have not had any major issues to deal with at all.

Johnny Guirke (Meath West, Sinn Fein)
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You would not expect a big dropout. I was actually listening to the radio the other morning about it, and I forget who was on, but no big dropout is expected in six months’ time, which is the first time people can do it, so that is good.

Mr. Tim Duggan:

Yes. I hope there will not be. When people see the value they are going to get, how much they will put in, how much it will grow and, hopefully, that they may get some investment return on top of that - when people see the €100 they put in become €350 or €400 without doing anything - that will be good. Hopefully, the moneys will be higher for some people. It is hard to think of where else you can get returns like that. Hopefully, people will see the immense value it is giving them and stay in it.

Johnny Guirke (Meath West, Sinn Fein)
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I thank Mr. Duggan.

John Paul O'Shea (Cork North-West, Fine Gael)
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To follow up on Deputy Guirke’s point, in terms of a death, does the fund go fully into the estate or is it only a proportion of it?

Mr. Tim Duggan:

All of it goes into estate. It is an asset.

John Paul O'Shea (Cork North-West, Fine Gael)
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That is perfect. In relation to the opt-out in six months’ time, will Mr. Duggan remind us about it? If somebody opts out, they can reclaim what they paid in themselves and what is left is the Government’s investment and the employer's investment, which are left until the person reaches 65.

Mr. Tim Duggan:

Yes, and any investment return there has been in those six months stays there. The whole lot stays invested. The person just literally gets back the contributions they made over the six-month period. That will be on that occasion. In three years’ time, when the rate increases from 1.5% to 3%, people will again be able to opt out six months later. On that occasion, however, what they will get back will be the difference between the 1.5% and the 3% for that six-month period because it will be assumed they were fine with the 1.5% contribution all along. Therefore, they will literally get 1.5% for the six months back, because that is the difference between the rate they were on and the new rate. That will only happen two other times after that, and then opt out will only be available for new entrants to the scheme six months after joining. After that, people will only be able to suspend, which will mean they will not get their money back. They will just stop contributing to it later.

John Paul O'Shea (Cork North-West, Fine Gael)
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What is your priority for the next three months for the auto-enrolment scheme? Is it to try to get more people to opt in or just to try to get in the remainder of employers who are still outside or what is it?

Mr. Tim Duggan:

I thought you meant personally. I was going to say "sleep".

John Paul O'Shea (Cork North-West, Fine Gael)
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I think Deputy Guirke gave you two years off there. He will bring you back then.

Mr. Tim Duggan:

I am looking forward to the date. The primary focus of NAERSA will be getting all employers registered and making sure they comply with their obligations.

That has to be the primary focus. The second is to ensure that people do exactly what we have been discussing and realise the value and benefit of remaining in the scheme, so that when the opt-out window comes in the summer, people will not be tempted to avail of it. That will be the focus of NAERSA. The Department, along with NAERSA, will start looking at some of those policy measures. The most immediate measure, in our view, is allowing additional voluntary contributions. There are a few tricky aspects around that such as who do we allow, how do we allow them and at what rate would the State top them up? There is all of that kind of thing. It pushes us into a different landscape, because we will probably be dealing with people personally rather than through their employer, and consequently we may need more personal information, for example, bank account details and things like that. It depends on how AVCs are facilitated. There is some work to be done to tease that out, but we are really keen to start facilitating AVCs as soon as possible.

We had not considered pushing the whole opt-in thing as a major priority, but now that we see the take-up, we might actually put some effort into that as well and try to encourage people that are outside the thresholds to at least look at it and see what it could do for them. The final thing we will be pushing quite a bit over the next while is facilitating transfers, because quite a number of people have raised that with us. A person may have a pot already from another job they had a number of years back. They are now in auto-enrolment because they are in a job where there is no scheme and they are wondering if they can add that pension to the scheme? People will be particularly tempted to do that when they realise that the asset under management investment charge is so low compared with what they may be paying elsewhere. These are the things we are going to concentrate on.

John Paul O'Shea (Cork North-West, Fine Gael)
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I thank Mr. Duggan. We will take a final comment from Deputy Hayes.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I thank Mr. Duggan for the comment on the State pension and that being sacrosanct. It is really important for us as politicians across the Oireachtas to acknowledge that this is not a replacement. This is something to give people additional security beyond what is already available to them. I could not agree with him more in terms of the returns. Given the way that the banks in Ireland give interest on savings, most people are not used to getting any return on anything. This is a really worthwhile step and I am glad it is happening.

I wish to go back to one of the things the witnesses talked about. The are new composite funds that are being designed and they are linked specifically to indices. Will Mr. Duggan or NAERSA come back to us with any modelling that is available on expected returns on the basis of those composites? I know that is possible; it is something I have done in the past. I would like to see what some of the expected returns are. Obviously, they are not something that needs to be a commitment in any way to anyone, but what they indicate based on that historical data?

Second, it does strike me that if these are composite indices funds and there is no active management, it is quite a pretty penny the investment managers are making if they are not actually doing anything themselves and are instead just tracking the market. There is a question here about what is reasonable for investment managers to make if the job is just tagging to a particular market. Is that not something the public agency could do itself? That is not the purpose of the scheme and it is not how the scheme is set up right now, but if that is the design and there is no active management whatsoever by the investment managers, it seems strange to pay them virtually anything.

Mr. Tim Duggan:

The Deputy is not suggesting that four bps is expensive, is he?

Eoin Hayes (Dublin Bay South, Social Democrats)
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No, I am not suggesting it is expensive at all.

Mr. Tim Duggan:

It could not be cheaper.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I am just saying that if it is composite indices, you can do that yourself. You can do that on E*TRADE or Revolut. If this is composite indices and set initially for seven to ten years, that is not a particularly onerous obligation on any investment manager. There are people who graduate in financial mathematics from UL who could do that. I have some concern that, given what Mr. Duggan has told me about the design of these funds, that would be strange, honestly.

Mr. Tim Duggan:

That is a gross misrepresentation.

Eoin Hayes (Dublin Bay South, Social Democrats)
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It is based on Mr. Duggan’s comments.

Mr. Tim Duggan:

These are funds that have gone through an approval process with the Central Bank and are being regulated by the Central Bank, and they are UCITS funds under UCITS regulation. There are costs to setting them up, to managing them, and in making sure that-----

Eoin Hayes (Dublin Bay South, Social Democrats)
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Not in perpetuity. This is a scheme that is going to exist in perpetuity.

Mr. Tim Duggan:

There are costs in perpetuity in ensuring they are balanced with the risk ratings to which they are pinned. There are costs associated with it. It is easy to glibly say you could do that yourself. You could for yourself, but to do it for 763,000 people and provide them with the assurance that is needed under regulation is an entirely different matter. Therefore, it is worth having professionals doing that. The charge that has been applied to these is so low that it is almost ridiculous to discuss it, to be honest. This is the lowest that has ever been charged for an investment fund, regardless of the nature of the management of it, in the history of the State.

Eoin Hayes (Dublin Bay South, Social Democrats)
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That is not saying much, given that the State has not been very good at managing capital in the past. There is a really important point here, that if there is no active management and this is only passive, if the fund is being designed a priori and money is just being put into it, then what is the value for money for the State and for the individual? That is a fair question.

Mr. Tim Duggan:

It is a lot more than would be the case otherwise. Most PRSAs are passively tracking, unless somebody is-----

Eoin Hayes (Dublin Bay South, Social Democrats)
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Most PRSAs do not have 750,000 people and are not State-mandated, right?

Mr. Tim Duggan:

Yes, but 100 bps is the normal charge on investment, and it is the exact same thing.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I understand Mr. Duggan’s point. I am saying that as a State-mandated scheme where there is no active management, you cannot make certain changes, and where these things are being set up additionally, it is different from a PRSA and how people think about their occupational or private schemes more generally. It is actually worthwhile to consider that there might be better value for money opportunities if these things are pre-designed. That is a fair point to make, and it is a fair point that any financial analyst would make.

Mr. Tim Duggan:

I do not, to be honest.

Eoin Hayes (Dublin Bay South, Social Democrats)
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That is fair enough. Mr. Duggan is allowed to disagree.

Mr. Tim Duggan:

The charges are so low.

Eoin Hayes (Dublin Bay South, Social Democrats)
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Let me disagree with something Mr. Duggan said as well, which is that it was a success to give employers the regulation. It is actually completely foreseeable that employers would have looked for other schemes. It is completely foreseeable. Anybody with two heads would have seen it. That is why certain actors in the market tried to do that. To Mr. Duggan’s point that most people were not in any occupational scheme, that was the point. People were going to those employers saying they were going to have to get into auto-enrolment so why not do this other thing? That is completely foreseeable. More generally, the question of how the Department has managed the expectation of employers and employees is a real question for the Minister. How he does that properly is something that we need to take further.

John Paul O'Shea (Cork North-West, Fine Gael)
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As the Minister is not here to respond, maybe we will get those questions to the Dáil rather than the committee when there are Department officials here. That finalises our contributions for today. I thank the officials - Mr. Duggan, Mr. Spellman and Mr. Diamond - for their contributions today and for providing the briefing materials in advance of the meeting. It is very much appreciated.