Eoin Hayes (Dublin Bay South, Social Democrats)

I move amendment No. 1:

In page 11, between lines 11 and 12, to insert the following:

“(a) in section 10(2), by the insertion of the following paragraph after paragraph (b):

“(c) act with fiduciary responsibility to the participants in the scheme in the discharge of its functions.”,”.

This amendment follows on from our discussion on Committee Stage regarding board composition and the responsibilities and profiles of members who are still on the board of the national auto-enrolment scheme authority. The Minister said on Committee Stage that members who have recently been appointed to the board are very capable individuals and will serve with distinction. I agree wholeheartedly with that. I do not doubt the credentials of anyone who has been appointed or, indeed, their ability to fulfil the functions as set out in the primary legislation for auto-enrolment.

My contention on Committee Stage was that we ought to have a more direct relationship between the kind of representation at board level, the participants who have a financial interest in the performance of the My Future Fund and auto-enrolment scheme and the people who sit on the board. I accept that there is an individual on the board who will have knowledge of the interests of workers. While I wanted the representative aspect of such an appointment to be stronger and more direct in terms of appointing an additional person enrolled in the scheme, if the board is to be composed as is, it crucial that we set out very clearly what the responsibility of those members will be to the participants.

As the Minister said in this House on 13 November, the funds entrusted to the My Future Fund will be those of the participants, namely the employees as opposed to the employers or the State. As the Minister stated on that date, "It is not the State's money but each individual's money". I think it prudent that responsibility for managing the money of the participants be made explicitly clear in legislation. That is why my amendment focuses on how the responsibilities of the board to participants in the scheme are elucidated in the Act, and establishing a clear and uncontestable fiduciary responsibility on the board members to act at all times in the interests of participants.

Of course, it can be argued that the code of practice for the membership of State boards contains sufficient guidance on the responsibilities for board members, which I assume all members will be subject to. Clarity on that would be very welcome. The code, however, is not referenced in the Bill, which maintains only that fiduciary obligations exist between board members and State bodies. It does not refer to board members having direct responsibility for the management of funds that belong to individuals. This is a first. On Committee Stage, the Minister was keen to stress that it is the individual participant's money. There is a need here for an added layer of fiduciary responsibility on board members which reflects that fact.

I spoke, on Committee Stage, about the potential to structure this scheme around alternative, non-individuated pension vehicles.

Given that the current structures are being progressed, and the Minister's insistence on the funds remaining those of individual participants, I am arguing we need an extra measure so that the board members understand the very weighty responsibilities contained in the nature of the work they are carrying out, which involves being entrusted with the financial health of millions of people's final years, and that their fiduciary duties are to those people as individuals and not to an aggregated, risk-assessed group, financial strategy or the financial health of a body corporate or State body. That is a first, as I said. As such, it is appropriate that such responsibilities be properly accounted for in the primary legislation.

This gets to a broader point about the preparedness of the Government and of the structures put in place for the launch in just a few short weeks. I would argue we need clarity here about fiduciary responsibility but also more broadly about the board's other responsibilities. We still have not heard about the administration or management fees that we asked about in the Chamber last month. Will this be a board responsibility too, and when will we hear about it? Will it be the board's responsibility to ensure the integrity of the scheme if employers divert employees to less beneficial schemes for them? Will it be the responsibility of the board to provide financial literacy training to participants? Will it be the board's responsibility to craft annuity schemes for participants to purchase with their lump sums? All of these issues lack sufficient clarity. They have been raised with the Minister and were flagged with the Business Committee last month for further discussion in this House. We still do not have clarity on any of them. It appears to me right now that the Minister is not prepared for the launch date on 1 January. This amendment goes some way towards ensuring the board is not as unprepared as he seems to be. I commend it to the House.

See this speech in context