Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael)
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16. To ask the Minister for Employment Affairs and Social Protection if she will report on the progress on introducing the auto-enrolment pension programme; and if she will make a statement on the matter. [5013/22]

Bernard Durkan (Kildare North, Fine Gael)
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This question, which is in the name of Deputy Carroll MacNeill, seeks to ascertain the progress in respect of the auto-enrolment pension scheme.

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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I thank the Deputy for asking this question. The programme for Government commits to introducing a pensions automatic enrolment system. The objective of this commitment is to increase the proportion of employees in Ireland with supplementary pension cover, which includes both occupational and personal pensions.

According to figures from the Central Statistics Office, CSO, the rate of supplementary pension coverage is around 56% of the working population. This is based on the Pension Coverage Survey 2021. It is estimated that this figure reduces to less than 35% when the private sector is considered in isolation. As a consequence of this low supplementary pension coverage rate, many retirees may suffer an unwanted reduction in living standards when they retire.

The Government, recognising the exceptional strain that both employers and employees are under as a result of the Covid-19 emergency, will seek to gradually deliver an automatic enrolment system. This will be based on the following principles: there will be a phased roll-out over a decade of the contributions made by workers and employers; matching contributions will be made by both workers and employers and the State will top up those contributions; there will be an opt-out provision for those who choose to opt out; workers will have a range of retirement savings products to choose from; and there will be a charges cap imposed on pension providers.

My Department has finalised a proposal on the overall design of the auto-enrolment system and I intend to bring that to Government for formal approval very soon.

Once the final design is agreed it is intended that the necessary legislative organisation and process structures for implementation will follow over the course of this year and next, as set out in the economic recovery plan for 2021. I hope that I have clarified the matter for the Deputy.



Deputy Bernard J. Durkan:From the interest shown to date by the employers and employees, is the Minister satisfied that adequate progress is being made, that sufficient interest is being generated and that the scheme will meet its anticipated targets in due course?

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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As we know, the State pension provides a basic level of income and an effective protection against pensioner poverty. It is not designed or intended to secure full pension adequacy for all retirees in the sense of replacing employment income on retirement. One does have a situation where people have a sudden drop in their income and that is where one needs to have a supplementary pension.

Only 35% of private sector employees have a pension. The fear is that when those people reach retirement they will have a huge reduction in their living standards so I am going to bring a proposal to Government, in February, to finalise the design of the auto-enrolment system. People will have to sign up to the auto-enrolment system and the employee, employer and the Government will all contribute towards it. I am trying to design the system so that it is fair and attractive. The system must be attractive so people will want to enter into it because I know that when I was in my late 20s and early 30s a pension was far from what I was interested in. Instead, I was interested in getting a deposit on a house.

Bernard Durkan (Kildare North, Fine Gael)
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Again, the emphasis must be on generating and retaining interest in the system. It is true that inadequate provision has been made in many cases. Is it possible to take into account the emergency need to ensure that those who have no provision become involved in their own interest at the earliest possible date to cover the age group to which the Minister has just referred?

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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Yes. Everybody will have to sign up to the system and people will get the choice to opt out at certain stages. We have looked at international experience and, in general, when people sign up for a pension most of them continue. Some younger people will think that if they have saved money and put it into a pension pot for five or six years that they should be allowed access the money. I believe that there is no point having a pension pot and accessing it in order to pay a deposit on a house. I know that dipping into the pension pot sounds very attractive but there is no point in doing that and we must make a pension scheme attractive. We have done a lot of work in the Department on pensions. I have brought a proposal to a Cabinet committee and I will bring it to Government in February because we just have to get on with it and do something about pensions. I am very conscious of the need and I want to do that.