Dara Calleary (Mayo, Fianna Fail)

Go raibh maith agat, a Leas-Cheann Comhairle. Thank you for your patience. The Government has prioritised the introduction of the automatic enrolment retirement savings fund, which will be known by its brand name, My Future Fund. It is one of our key reform commitments to support workers and has been a key priority for me personally as Minister for Social Protection.

The scheme is necessary to address the pension coverage gap that exists in Ireland, where it is estimated that only 35% of private sector workers are in pension schemes. This pension coverage gap exists despite the fact that successive Governments, over many decades, have provided significant incentivisation through tax relief. If not addressed now, this low level of coverage means that a large cohort of people will, in their retirement, be fully dependent on the State pension and whatever assets they may have otherwise accumulated. For many, this will result in a significant drop in living standards. As well as a pension coverage gap, there is the ongoing challenge of pension adequacy in this country because even where people may be in a pension scheme, many of them are not saving enough to ensure an adequate income in retirement commensurate with their lifestyles.

It is important to note at the outset that the State pension will remain the bedrock of the Irish State pension system, providing retirees with a basic level of income and protecting them against pensioner poverty. I cannot emphasise that enough. In that context, My Future Fund will complement the State pension fund and will provide additional income to future retirees to help secure their standard of living in retirement.

Many milestones have already been reached on this journey. The legislation to underpin this new system, the Automatic Enrolment Retirement Savings System Act, became law in 2024. Following an extensive procurement exercise, Tata Consultancy Services, TCS, based in Letterkenny, has been appointed as the managed service provider of the scheme’s administrative services and is busy building, configuring and testing its systems in line with the scheme’s requirements. Three investment managers - Irish Life Investment Managers, Amundi and BlackRock - have been selected following an extensive public procurement exercise. These companies are busy readying their funds and developing and testing integration with TCS. My departmental officials are currently working closely with in excess of 60 payroll product developers across a range of payroll providers, through the Payroll Software Developers Association, to assist them with the changes they need to make to their software to facilitate the calculation and collection of My Future Fund contributions.

Testing work is in progress with the Revenue Commissioners, which will be providing the vital payslip data. I recently announced the recruitment of a chief executive officer of the new National Automatic Enrolment Retirement Savings Authority, NAERSA, as well as the chair and members of its board. Further staff recruitment is at an advanced stage.

Members of this House will no doubt have seen the eye-catching advertising campaign over the summer that featured scoops of ice-cream with a cherry on top. This was a continuation of the communications work that has been taking place over the past couple of years, which is shifting from direct employer and other stakeholder outreach through webinars and in-person conferences to a paid public awareness campaign. This will continue and intensify over the coming months. A key central point in the communications strategy is the auto-enrolment information hub that is available at . This resource has lots of information, including explanatory videos, to explain the scheme to all types of stakeholders. The system was branded "My Future Fund" as this reflects the purpose of the scheme, namely, to save and invest for the future, while highlighting that these savings will remain the personal property of the participants. This is not a State fund. NAERSA will do the vast bulk of the administration of this scheme. There will be little or nothing for employers to do and there will be no administrative costs for them. The authority, which has statutory independence, will determine who will be enrolled, electronically issue notifications to payroll systems, collect the contributions and pool them for onward investment with investment managers. It will provide online portals for employees, employers and agents to access accounts and services. It will provide a customer support service and ensure compliance with the scheme by following up where contributions are not collected and remitted up to and including the imposition of sanctions, penalties and even prosecutions.

I recently moved the launch date from the end of this month to 1 January 2026 to allow payroll providers and small employers more time to prepare and to align the system with the normal tax year. The design of the scheme is straightforward and easy to understand. For example, from an investment perspective, there is a default strategy whereby participants’ savings are moved from a higher-risk fund to a medium-risk fund to a lower-risk fund as they get closer to the retirement age of 66. The scheme facilitates choice between these three risk levels but does not require a choice to be made by the participant. In addition, the scheme has a "pot-follows-member" approach, which means that where an employee moves from employment to employment over their working lives, they can maintain the same My Future Fund account at all times. Furthermore, the system is automated through payroll software to minimise the administrative burden for employers, especially those who do not have expertise in operating pension schemes. These design features have come about from studying what other countries have done both well and badly with a view to doing everything better here. This is perhaps the main advantage of being the last country in the OECD to adopt such a system.

In terms of the eligibility criteria, those earning in excess of €20,000 per annum across any number of employments who are aged over 23 and under 60 and not already contributing to an occupational or private pension scheme through payroll will be automatically enrolled. It is expected that about 750,000 workers will be enrolled in this way. Participants will be able to opt out after six months of mandatory participation at which time they will get their own contributions back but the employer and State contributions will remain invested in their account. They will also be able to suspend their participation for up to two years. In all cases, where a person opts out or suspends, they will be automatically re-enrolled after two years after which opt-out and suspension options will be available again. Anybody who is outside of these age and income thresholds may voluntarily opt in to the scheme and where they do, their employer and the State will be compelled by the legislation to contribute as if they had been automatically enrolled. Contributions will be made equally by employees and employers with the State providing a top-up of €1 for every €3 saved by an employee. So, in short, every €3 saved by an employee will automatically become €7. Contributions will start at 1.5% of gross pay increasing to 3% after three years of operation to 4.5% after a further three years of operation and finally to 6% in year ten and from then on. This will, in effect, add up to 14% of an employee’s gross earnings and is the very least that international evidence suggests is an adequate rate of saving. This incremental implementation of the contribution rates will allow employees and employers to adjust over time. This money will then be invested as I already mentioned. While NAERSA will ensure all investments will be in line with the prudent person principle and in the best long-term interests of the participants, each of the contracted-for-investment services will be required to have environmental, social and governance, ESG, principles applied to them in accordance with section 74 of the Automatic Enrolment Retirement Savings System Act 2024.

At the end of this investment period, each participant will be able to access their savings pot once they reach the State pension age of 66. In the first few years of the scheme, drawdown products will be limited to a simple lump sum payment because savings pots will be relatively small. Taxation arrangements are being provided for separately in the forthcoming finance Bill and will broadly align with the tax treatment of PRSAs, including the application of the tax treatment of trivial pensions. Further drawdown options may be developed over the coming years alongside the annuity and ARF options that are already available from the pensions market but this will be for NAERSA, which is statutorily independent, to consider and make recommendations on in the future. I have gone through the policy rationale for introducing My Future Fund to try to ensure that everybody has a clear understanding of its key features before contributing to these statements. I truly believe that My Future Fund will be a transformative scheme for this country and will bear great fruit, particularly for our younger generations. I look forward to the statements and to working with Deputies over the coming weeks and months as we roll this scheme out.

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