John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call the Minister, Deputy Dara Calleary, to make his statement under Standing Order 56.

Dara Calleary (Mayo, Fianna Fail)
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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.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I welcome the opportunity to speak this afternoon about auto-enrolment pensions. I acknowledge my dad in the Public Gallery. Both of us have spent a large chunk of our working lives working hard to improve the situation for workers. I genuinely wish I could support the Government's auto-enrolment proposals. Although I am someone who fundamentally believes in decent pensions, I think this is a missed opportunity. One reason is the way the Minister has constructed it while another relates to the current situation. I am sure it is not lost on the Minister that we recently had Private Members' debates on energy costs and child poverty, and on child homelessness. One in five children in this country is growing up in poverty. When housing costs are taken into account, one third of households cannot afford to pay their electricity bills. Poverty is at levels unseen or unheard of, particularly given the wealth within this State.

In the face of that, the Minister has made it very clear that there will be no cost-of-living supports. There will be none of the lifelines that were advanced to people in advance of last year's general election. A cynical person might wonder whether with the election behind us, they will be advanced to those same working people. The Minister needs to understand that notwithstanding the motivation he says is behind this, there are so many people who are literally that close to not being able to make it to the end of the week who will regard this as just another bill. It will be seen as just another thing that has to be paid out of a wage packet that already is not going far enough. That is a worry. People are worried and when they look at how this scheme is constructed, they are more worried.

As the Minister is aware, Sinn Féin proposed that we would use the NTMA to manage the fund on behalf of the State and do more than that and actually use the money in the fund to generate capital projects, invest in renewable energy and make a real difference to offset what people are going to have to put into this. Instead, people are going to have to pay more from wages they are finding it hard to make stretch to the end of the week. I am concerned about the children growing up in emergency accommodation now who will, when they start in the world of work, have to pay into this.

I wonder what the advantages will be beyond those the Minister’s Government and his predecessor have mentioned. We know what the motivation behind that was because the former Minister, Heather Humphreys, received a confidential Government report on how prepared people were to continue to pay the eyewatering rents. The alarm bell sounded not because workers were not going to be comfortable, or indeed able to relax and enjoy their retirement. The alarm bell sounded because there was some question over whether or not they would be able to continue to pay the sky-high rents that are the hallmark of this Government. This Government does things like refusing to ban rent increases, starving the tenant in situ scheme of funds and ensuring the vulture funds making exorbitant profits do not have to pay tax. That is all very well, but the people who are on the business end of that will only view this as another cost. It is just another thing they have to pay for. It should be a good and positive thing to put money aside for your retirement, but the fact people cannot opt out of it is a mistake. The money that is being collected could and should be used to invest in projects that would make a real and meaningful difference. We can look at what workers are having to stretch their wages to pay. Rent is number one for an awful lot of people and they see the motivation of the Government is not about them being comfortable in their retirement but about maintenance of current levels of discomfort. It is about the maintenance of the high rents. It is about ensuring people do not have the comfort in their retirement that they have worked for but that their landlord has the comfort of knowing there will be some money. That is what was motivating the Government.

A Leas-Cheann Comhairle, how much time have we got? Is it three minutes or five minutes each?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Your time is up.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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That is fine. I did not want to take any time from my colleagues. That is all.

Cathy Bennett (Cavan-Monaghan, Sinn Fein)
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You are very considerate.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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I am indeed. It is something which is not spoken of often enough.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am sorry Deputy O'Reilly, but your time is up now.

Ruairí Ó Murchú (Louth, Sinn Fein)
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Yes, but I think there were more people on the list to speak.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Yes. I will continue until six minutes are left and my colleagues will take three minutes each, if that is okay.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Okay, but it is five minutes and three each.

Louise O'Reilly (Dublin Fingal West, Sinn Fein)
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Yes, but there are nine minutes left so we will have three each. I probably will not even take that. I want to use my words to conclude. I think there might have been too much time put up, but we can only go with what is on the clock.

In short, the Government's scheme for auto-enrolment is unfortunately and regrettably a missed opportunity. That it did not take our suggestion to task the NTMA with managing the fund is a missed opportunity. It would have been a chance to put in place secure renewable infrastructure that would make a real and meaningful difference to people who are paying some of the highest electricity bills in Europe. It would have been a chance to invest in social and affordable housing, which would have made a real difference to people who are paying some of the highest rents in Europe. It would have ensured that workers now would not have to pay into a fund they know will be a €1 billion-plus bonanza for the private sector.

The working poor in this State are already put to the pin of their collar. What they hear from the Government is they are going to have to pay more because it is putting up the carbon tax, meaning it will cost more to drive a car even though there is no bus coming. They are going to pay more just for the privilege of living in a house. They are going to have to pay more for groceries, which have gone up by about 30% in the last number of years and now there is another bill. I am sure the Minister can appreciate that people who are on or close to minimum wage, whom we could refer to as the working poor - a phenomenon created by the policies of successive Governments and one which we should not, but do, see in a relatively wealthy state - wonder at the timing of this. They see the memo that went to Government, they know the motivation, they see big business will benefit and they scratch their heads and ask themselves what is in this for them, other than the capacity to maintain their status as people who are barely getting by in the face of exorbitant rents. There is a cost-of-living crisis. Workers need a hand up. They need a break and a cost-of-living package. They need to make provision for their retirement but this is not necessarily the right way to do that. I qualify my remarks, as I did at the start, by saying I am someone who believes in decent pensions and I am the daughter of somebody who believes in decent pensions, but that is not what this is.

Cathy Bennett (Cavan-Monaghan, Sinn Fein)
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Sinn Féin supports an auto-enrolment pension scheme. We believe it is the Government's responsibility to foster a retirement framework that ensures workers are financially secure in their retirement. However, both Fianna Fáil and Fine Gael have a poor track record on retirement policy. While Sinn Féin believes workers should have the right to retire at 65 should they choose to, or continue to work if that is not their choice, the two Government parties would deny workers that right. Even after decades of backbreaking physical labour, those parties are comfortable with asking for more work out of workers who want to retire. While Sinn Féin supports an auto-enrolment pension scheme it is disappointing, though not surprising, that whether through intent, incompetence or through the efforts of the Minister’s predecessor this pension scheme does not prioritise workers’ financial well-being either today or in retirement. In the midst of a cost-of-living crisis workers will see their take-home pay go down and while the Government will allow them to opt out, it is bizarrely delaying their right to do so by six months.

At the same time workers continue to face a cost-of-living crisis that has not abated. There are spiralling rents, increased college fees and Government supports like the energy credit have been withdrawn. Now the Government is going to reach into workers’ pockets and reduce their take-home pay. Instead of investing this money through the NTMA in things like green energy, which the State and wider society and communities could benefit from, private industry has to get its cut. Perhaps it is the Government’s plan that Irish workers can benefit from institutional investment making a fortune on the back of the housing crisis. Of course, that benefit will accrue should the housing crisis continue to be unaddressed, which is a near-certainty under Fianna Fáil and Fine Gael. Auto-enrolment is a good idea. The compulsory removal from ordinary workers’ pockets today is not. Allowing Fianna Fáil and Fine Gael to gift these funds to the private pension industry rather than investing them for the good of workers and the benefit of Irish citizens as a whole utterly exposes where those parties’ priorities lie.

Ruairí Ó Murchú (Louth, Sinn Fein)
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Deputies O'Reilly and Bennett have laid out our particular issues with auto-enrolment. We would all like to be here in support of an idea my party has always been in support of, but the system the Government is talking about is not that. I do not know how many debates there have been since the resumption about the fact people out there are absolutely suffering in a cost-of-living crisis, especially those who are at the middle, and even more so those at the lowest end, when it comes to earnings. We are talking about taking money from them.

For somebody earning €20,000, we could be taking €20 to €30 a month from them. To some people that does not sound like a lot of money but for those who do not have it, it is an absolutely huge amount. We know the inflationary pressures. Anybody who has been to a shopping centre in the last while or anybody who has had to shop for groceries knows exactly what you used to be able to get butter for and what it costs now. A lot of people know it on the basis of the absolutely extortionate levels of rent they pay due to the housing crisis. We have not been able to deal with and put a decent framework in place in relation to energy provision in this State. We have some of the dearest energy costs across Europe, and we know privatisation and many other factors have played a part. I accept not all of this is on the Minister, but it is due to multiple failures to deal with this over multiple years.

At this point in time, we are where we are. It is really difficult if we are going to take money from some of those who most need it. That is combined with the added pressures they are under at this time in relation to the cost-of-living crisis. This is a time when the Government has moved itself back from at least some of the mitigations that have been offered in previous budgets, such as the energy credits. We know the issue for those who have to pay third level fees, some of whom are looking at €1,000 more than for last year. If they have multiple children that could be a number of thousand more.

This is not a particularly good time for that. When we talk about putting frameworks in place and making sure we have a proper system that works, it is absolutely logical to have the State dealing with this money so it can invest in those capital projects that actually pay off in a really big way. We are talking about housing and the absolute mess that is the housing crisis. People have to live with unaffordable houses and unaffordable rents every day of the week. We will be taking money from some of these people without giving them the option fast enough to mitigate some of that pain, at the same time as the Government is set to hammer them in a budget when some of them are still expecting that there will be some element of reprieve. The Minister has to look at this and find a system that will work while also looking after those who are under severe pressure.

Mark Wall (Kildare South, Labour)
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I am glad to get the chance to speak on auto-enrolment which is a very important topic for workers in this country, as has been said by colleagues throughout the House. The Labour Party broadly welcomes the introduction of the auto-enrolment scheme which is very much needed. It will and should provide an uplift to the basic standard of living in the future for workers in this country who cannot afford to pay into a private pension or where their employers do not have an occupational pension scheme in place.

I welcome the appointment of Patricia King as chair of NAERSA. I wish her very well in her role. The Labour Party repeatedly made the case for ICTU representation on the board as the Bill passed through the Oireachtas. ICTU also asked for the Bill to go through as quickly as possible which is also very important for this scheme.

This is a significant policy development as without the scheme's implementation, Ireland would be the only OECD country not to operate an auto-enrolment or similar system as a means of promoting pension savings. We know that pension coverage is a particular concern among young workers, as the Minister mentioned. Figures from the CSO for last year show only 59% of those aged between 25 and 34, and more worryingly 27% of those aged between 20 and 25, have pension coverage. In a cost-of-living crisis, it is no wonder that future planning is not a priority for many young people who are barely getting by. Further figures from the CSO show that 30% of young workers cannot afford that pension.

Auto-enrolment is a policy priority that the Labour Party has long called for and it is welcome to see it finally being introduced. Ireland's voluntary approach to pension savings has simply failed with far too many workers left without pension coverage. I consider the delay in implementing the scheme to be very disappointing. Workers have been waiting too long and already Ireland has to catch up with the rest of the world on this.

We need to be clear on how this scheme will relate to the State pension. We must have assurance that it will never be used to replace any State pension but simply complement it. Similarly, we need assurances that the Government remains committed to achieving a benchmark of 34% of gross average earnings for the contributory State pension as set out in the roadmap for pensions reform.

We need certainty and safeguards for workers that those contributing to the new scheme will not face a means test for the State pension in the future. I have serious concerns regarding the adequacy of the State pension as in this country we have an ageing demographic and the Government has been slow to act in addressing the adequacy of that payment. Figures from the CSO show that the at-risk-of-poverty rate is highest among older people living alone at nearly 26%. Previous one-off measures have masked Government inaction to tackle poverty among older people. When analysing the impact of these measures on reducing the at-risk-of-poverty rate for older people, the rate reduced from 21.1% to 13.3%.

The Minister will be familiar with the Labour Party motion earlier today that called for an end to the one-off measures for everyone in the audience that we have seen in the recent "The Late Late Show" budgets. We need targeted measures. Benchmarking of the State pension is one measure that the Government must take in budget 2026. The Labour Party believes that self-employed people should also be auto-enrolled. This is necessary to ensure that companies are not incentivised to place workers on bogus self-employment contracts in order to avoid the need to pay auto-enrolment contributions. We have seen the proliferation of such contracts in recent years, such as with RTÉ staff, leaving many without pension coverage. As we all know, coverage among self-employed people is already very low.

I have questions regarding the minimum age threshold for inclusion in the scheme, which is currently 23. The minimum age for PRSI contributions is 16. We know that young workers are some of the most exploited workers in society and are far more likely to be in precarious work without pension coverage. The seven years between 16 and 23 would be a significant amount of time during which that young person could be supported to save for a more secure retirement and pension.

When the Bill was being passed through the Oireachtas, the Labour Party repeatedly raised the importance of ensuring that the scheme cannot be sidestepped by employers or ensuring employers are not incentivised to wind up good workplace pension schemes. For example, the Labour Party proposed an amendment that would have stopped employers from winding up or freezing workplace pensions during the ten-year transition period while the scheme was coming into effect, but this was rejected by the Government. As the scheme is now being implemented, we need safeguards put in place to ensure it does not affect jobs for workers and does not create incentives for employers to scale back existing pension entitlements.

The seven-year deadline provided for in the Act for setting minimum contribution rates into existing pension schemes must be shortened. It would be simply wrong if workers were to find themselves with a lower or even no employer contribution all because they had proactively taken steps to save for their retirement prior to auto-enrolment. I call on the Minister to ask the Department of Social Protection to continue to promote this scheme. Just over three quarters, 78%, of employees who are aware of the planned Government retirement saving scheme and are now eligible for it would stay in the scheme if auto-enrolment was in it.

I am particularly concerned about awareness of the scheme among younger people given the figures I mentioned earlier, which show that 81% of those aged between 20 and 24 and not in an occupational scheme are not aware of earnings auto-enrolment, a figure I am sure the Minister would also have concerns about. The Department of Social Protection must target its communication at younger age cohorts; otherwise, the scheme will fail and will not help those who may need it most.

While I welcome the implementation of the scheme, the Labour Party has some concerns. I hope to work with the Minister on the implementation of the scheme. In the last Dáil, my colleague Deputy Ged Nash published legislation to address the lack of transparency on pension charges.

Will the Minister consider that legislation?

Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I have spoken on auto-enrolment previously, but I welcome these statements. I thank the Minister for Social Protection, Deputy Dara Calleary, and his officials for getting this long-promised reform over the line.

My Future Fund is about one simple idea: if you work, you should build a pension automatically, with your employer and the State helping you every day. From 1 January 2026, every employee aged between 23 and 60 who earns €20,000 or more and who is not already in a scheme will be enrolled by default. Contributions will be phased in sensibly, starting at 1.5% both for workers and employers, and rising in steps to 6% over a decade. The State will make a top-up of €1 for every €3 the worker contributes. This means that every €3 a worker saves will become €7, and that is before it is invested. For workers, that is real money compounding quietly in the background while they get on with their lives. Compounding delivers real returns. The secret is to start as early as possible in order to maximise returns over time.

My Future Fund will tackle a very real gap. Too many private sector workers still do not have occupational pensions. We cannot leave people to face a sharp drop in living standards on retirement, reliant solely on the State pension or whatever savings they can scrape together. My Future Fund fixes the defaults. It is opt out rather than opt in, and the pot follows the member when he or she changes jobs. It involves simple, low-cost investment options with a lifecycle default, with light administration duties for employers via NAERSA. Employers will process payroll deductions and the authority will do the heavy lifting, including in respect of eligibility, enrolment, collection, investment and compliance.

Crucially, the scheme is fair and flexible. People can opt out after six months or pause later. If they do so, they get their contributions back but the employer and State contributions continue working for them. That is a powerful nudge to stay the course. We know this model works. If we look at the United Kingdom, since auto-enrolment began in 2012, employee pension participation has climbed to approximately eight in ten workers, with fewer than one in ten opting out. Millions who were not saving are now saving, many with an employer match that simply did not exist before. Poland’s pension scheme, PKK, shows similar momentum, especially when it comes to periodic re-enrolment. By contrast, Italy’s one-off soft default in 2007 lifted coverage only modestly. The lesson is clear therefore: persistent, well-designed defaults beat one-off nudges.

I welcome the decision to align the start with the tax year and to give SMEs and payroll providers the time to get systems right from the get-go, which will deliver confidence from day one. This is a long-term, forward-thinking reform. It rewards work, shares responsibility between workers, employers and the State and builds household wealth steadily and fairly. If we stick to the plan, keep fees low and communication clear and periodically review adequacy, in ten years’ time, hundreds of thousands more people will face retirement with security, dignity and choice.

Shane Moynihan (Dublin Mid West, Fianna Fail)
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Cuirim fáilte roimh an deis seo labhairt ar cheist na bpinsean agus an phleanáil fhadtéarmach atá taobh thiar de pholasaí dá leithéid seo le cinntiú go mbeidh slándáil agus cinnteacht airgeadais do dhaoine amach anseo nuair a éiríonn siad as obair.

At the outset, I pay tribute to the Minister for prioritising the introduction of My Future Fund as a landmark policy in terms of how we, as a country, prepare our citizens and population for achieving and ensuring security in retirement. When he took office, it was clear that he prioritised this. He made it clear and gave certainty to both businesses and workers that the introduction of PRSI from 1 January 2026 was a priority for him. I am happy that it is going to be implemented.

The context in which this scheme is being designed shows a need for it. At present, 35% of workers have access to private sector pensions. That represents something of a demographic time bomb for us and for the financial security of those people in the future. Auto-enrolment, while allowing participants to opt out, is a large step towards ensuring their financial security. The design of the scheme has much to recommend it, including its flexibility and the fact it travels with the worker, avoiding the need to switch or open new pension schemes if workers move to different jobs throughout their careers, which we know they do, especially in the private sector. The tenure for which people hold jobs is a lot shorter than was the case 20 or 30 years ago. It is important that there is portability and flexibility in the design of any pension product.

For small businesses and lower paid workers, the introduction of an auto-enrolment scheme like this, with the incentives that exist, such as State and employer support, shows that we are aware of and alive to many of the burdens that are being placed on small and medium businesses. It is important to recognise that while this is a worthwhile policy, we are making an ask of smaller businesses and lower paid workers to make sure it succeeds and provides them with financial security.

While the overall design of the scheme is something I am very much in favour of - it is put together very well - I encourage the Minister to ensure that he keeps an eye on the management fee structure relating to it. A decision will be made on the overall level of the management fees involved in the next seven to ten days. Currently, it is stated that the total cap will be 0.5%. While that sounds very small to many of us, if someone were to take 0.5% of the value of a person’s house over his or her lifetime, it would amount to a large amount of money. I encourage the Minister to look at models like the National Employment Savings Trust in the UK, which has a mandated pension fund fee of 0.3% in order to ensure that the burden we are asking of lower paid workers and employers is not necessarily made to allow for investment fund managers to make a lot of money on the back of the costs that we are asking those workers and the businesses to bear. That that should be taken into account. I encourage the putting in place of such a measure in order to make the scheme a sustainable and affordable option for people in the future and to ensure that their contributions to such a scheme are well registered and received and that fees are kept as low and competitive as possible. Ultimately, it is about making sure people keep the most amount of money they can as they enter into retirement. That must be reflected in the fees that are payable.

Donna McGettigan (Clare, Sinn Fein)
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We in Sinn Féin agree with the concept of an auto-enrolment pension scheme. There is no doubt that, with an ageing population, provision will have to be made for such a scheme in order to supplement the State pension. However, this is the wrong scheme at the wrong time. It is vital that any enrolment scheme is properly designed and managed for the benefit of the people when they retire. There may be a very good reason why people are not already signed up to the pension scheme. They simply may not be able to afford to do so. For the Government to decide that it can take the money from them at a time of a cost-of-living crisis is outrageous. In-work poverty remains a serious problem in this State and the Government’s policy significantly contributes to this. There is an unacceptable risk that this auto-enrolment pension scheme will exacerbate that problem.

Throughout the State, there are pockets of persistent disadvantage, including in my constituency of County Clare. People are working hard but are still struggling to pay their bills. Rents and mortgages, food and fuel prices and the cost of everything else are increasing constantly. In late summer, there are extra expenses relating to back-to-school costs. During the winter, there are extra fuel costs. Taking a set amount of money from workers’ wages every week could inflict suffering on families. Taking any proportion of their incomes would make their struggle even more difficult.

It is unacceptable that workers have to wait six months to opt out and must then wait for a refund of money they could not afford to pay in the first place. The Government will be inflicting significant hardship on low-paid workers. Perhaps €20 or €30 does not mean anything to the Minister of State, but it is a lot for the people I know. Workers must be allowed to decide for themselves whether they can afford to pay contributions to a pension scheme. Making it compulsory for any amount of time completely fails to take into account the stress low and middle income earners are under. This also comes at a time when the Government is rowing back on the cost-of-living supports that are vital to keeping people’s heads above water.

Another problem with this legislation is that it would hand the money to the private pension industry, whose main priority is profit. It will be left in control of not only workers’ pension contributions, but also those of the employers and the State. This is potentially a huge cash cow being handed to private companies for them to profit from. This will amount to nearly €1 billion in the first year alone and up to €2 billion in subsequent years. We believe that any contributions made by those who can afford to do make them should be invested by the State for the benefit of the people. For example, investment in renewable energy sources would result in lower energy bills for everyone, which would offset the money people have to spend on their pension contributions.

We accept that an auto-enrolment scheme will be needed, but this is not the right scheme and, during a cost-of-living crisis, it is not the right time.

Liam Quaide (Cork East, Social Democrats)
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I thank the Minister of State, Deputy Grealish, for being here. The Social Democrats' views on the auto-enrolment system have been well articulated by my colleague Deputy Gannon in previous Dáil debates, particularly in April of last year. We very much welcome the concept but have concerns which I will go into in some detail.

Every worker should have access to a retirement income capable of providing them with a decent quality of life as they age. There are many positives to auto-enrolment. Certainly, a greater role for the State in ensuring workers can retire with dignity is inevitable and something we should all embrace.

One aspect of the auto-enrolment scheme which was never sorted out as the legislation passed through the Oireachtas and which I would like to raise again is where the funds from the scheme - which are the public’s money - will be invested. I know that this issue was raised previously and that as the legislation went through the Houses, colleagues proposed amendments which would have restricted the scheme from, for example, investing in fossil fuels or the arms industry, but these were not accepted by the Minister at the time, Heather Humphreys. Those amendments should be reconsidered. Pension funds are among the largest investors in our financial system. They control vast sums of capital. Where they choose to invest has real consequences. By directing money away from polluting industries or companies that ignore workers’ rights, pension funds can exert real pressure and help change corporate behaviour. For many years, there was growing recognition of this responsibility, with pension fund managers adopting ESG principles. However, there is now evidence that some funds are rowing back and are placing less emphasis on conscious investment and more on short-term returns. This is a worrying trend. Given their scale, pension funds should be a force for positive change, not contributors to environmental destruction or poor labour standards.

Quite likely influenced by Trump’s "greed is good, regulation is bad" hypercapitalist mentality, there is growing evidence that some investment and pension fund managers are scaling back their commitments to ESG principles. Certain large US institutions have reduced emphasis on climate commitments and some European pension funds are revising their exclusions to include companies with defence business. In addition, proposals under the EU’s corporate sustainability reporting directive could, if adopted, remove a significant proportion of companies — potentially up to 80% — from mandatory sustainability reporting. Taken together, these developments show we cannot rely solely on the discretion of investment and pension managers to ensure that funds are directed responsibly, avoiding companies that pollute, disregard workers’ rights or are involved in the arms industry. Strong regulatory oversight and clear ethical commitments are essential to protect people and our natural world.

The joint Oireachtas committee on social protection's pre-legislative scrutiny report from 2023 recommended that the forthcoming auto-enrolment retirement savings scheme — dubbed My Future Fund — would prohibit investments in fossil fuels and the arms industry. Additionally, the committee suggested allocating a minimum percentage of funds to Irish renewable energy developments to support the nation's climate action goals. In response, the then Minister, Heather Humphreys, introduced an amendment requiring NAERSA to produce statistical data on the types of investments held by investment management providers. While this amendment aims to enhance transparency, it falls short of the committee's recommendation for explicit investment restrictions. This approach is insufficient. Given the scale of the fund and its potential impact, we need robust safeguards to ensure public money is not invested in companies that contribute to environmental degradation or engage in activities contrary to our ethical standards.

In 2018, Ireland became the first country globally to commit to divesting public funds from fossil fuel companies, marking a significant milestone in our environmental policy. It is imperative that we uphold this commitment and ensure that My Future Fund aligns with our climate and ethical objectives.

I urge the Government to revisit discussions from the passage of the pensions Bill concerning the expansion of the pension scheme to include individuals not initially covered. A particularly significant group to consider is family carers. According to the 2021 census, approximately 300,000 people in Ireland provide unpaid care. This marks a notable increase over the past six years. These carers often face challenges in maintaining consistent employment due to their caregiving responsibilities, leading to gaps in their pension entitlements. This situation disproportionately affects women, who are more likely to take on caregiving roles, thereby aggravating gender inequalities in pension provision.

On Committee Stage of the Automatic Enrolment Retirement Savings System Bill in the Seanad, Senator Higgins tabled an amendment advocating for a report outlining measures to ensure that individuals engaged in care work outside the formal labour market are supported by the new pension system and have equitable access to its entitlements. Although this amendment was not accepted at the time, I urge the Government to reconsider its merits. Addressing this issue is crucial to ensuring that family carers, who play an essential role in our society, are not left financially vulnerable in their later years. I urge the Minister of State to address these aspects of the pension auto-enrolment system, which are clear ethical shortcomings in what is overall a welcome initiative.

Eoin Hayes (Dublin Bay South, Social Democrats)
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I endorse everything my colleague Deputy Quaide said. My secondary school history teacher is a wonderful man named Mr. Burke. He ignited in me a passion for history and politics. In his class, I learned about the invention of much of the welfare state in Germany in the late 19th century. It is hard for a society to imagine what things were like in previous eras but one of the welfare state's greatest contributions to life in the past two centuries have been the lifting of the elderly from poverty.

Before addressing auto-enrolment, I want to acknowledge that at this very moment there are people outside this building on hunger strike. They were put to work as children in industrial and reformatory schools and have called for some pension recognition for their child labour. As dark and unconscionable as that chapter in our history is, they are right to call for financial security in old age after falling victims to the crimes of a State that was supposed to protect them. I urge the Minister of State to meet with them and to meet their demands.

I welcome the Government's taking wider pension provision for our population seriously. Auto-enrolment can be part of securing the financial future of our society, but it is not a panacea and I would like to outline some of the outstanding risks it presents and, in some cases, deepens. First, in the middle of a cost-of-living crisis, reducing low-paid workers' take-home pay by between €300 and €1,200 per year may be devastating for many households. I do not need to remind the House of the devastating poverty figures we are already seeing. The number of children in consistent poverty has doubled in the past 12 months and 300,000 households are in energy arrears. What is the Government's plan to help those who, through the auto-enrolment scheme, will face issues in paying household bills or fall further into deprivation? It does not appear to have one, certainly not one that will keep up with inflation.

Second, another significant gap in the auto-enrolment scheme is the exemption of the self-employed on lower incomes. The gig economy workers, "solarpreneurs", the woman selling flowers on Grafton Street, the man with a van, the hard-working people delivering our meals — they deserve State support too and to exclude them from generous State subsidies in auto-enrolment seems grossly unfair and downright neglectful.

Auto-enrolment effectively State-mandates a permanent shift of the financial risk of old age from the State to the individual. As a constituent in Ranelagh asked me, if investment returns from their pension do not keep up with inflation, what do they do then? There are significant risks in using investments as the only vehicle for pension provision. I remember clearly the angry pensioners throwing eggs at the 2009 annual general meeting of AIB when they realised their hard-earned money had evaporated into the ether of the bank's recklessness and the financial crisis. Over the past 50 years, it has been fundamentally assumed that pension investments will in the long run generate returns beyond the rate of inflation, creating a good nest egg for those in old age. However, it is not certain this trend will always continue and there have been many examples in history where this has not been the case for investors, be they pensioners or otherwise. Is it prudent for us to believe the next 50 years will be like the last? I doubt it.

An opportunity to expand the investment capital of the State has been missed. We need domestic funding for home building. The Social Democrats have proposed such a fund, namely the homes for Ireland savings account, which would have invested in solving the largest problem our country faces - building homes. Why not put the additional savings toward such a worthy societal goal?

The greatest risk of auto-enrolment is it becomes an excuse to dismantle the welfare State in favour of major financial gains for pension funds and those who own them.

Will the fact that we have mandated every person in the country to fund their own pensions become an excuse to scrap the State pension all together? Our world before the welfare state was marked by a life that was cruel, brutish and short. Sometimes life is still like that, but the great contribution of the welfare state has been to temper its worst effects, especially for the most vulnerable. We would be the most unwise generation since the industrial revolution if we were to start dismantling it.

Joe Neville (Kildare North, Fine Gael)
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The issue that we are here to speak about is something that has been a national topic for many of us who have stood outside schools recently. We saw the importance of pensions and what they mean to caretakers and school secretaries. What we are talking about here, however, is across the board; it represents a sea change in how we look at pensions for the nation. From a State perspective, we need to give out pensions where we can, but what we must also do is look beyond that. This is what we are trying to do here.

What is proposed represents a significant step. It was brought in by one of the candidates for in the presidential election, Heather Humphreys, when she was Minister. When it comes in, My Future Fund will provide the opportunity for 800,000 people to avail of pensions in a way that they have never done before. It is one of the most important social reforms of our generation and will give every worker in Ireland the security of a pension for the future. When I joined the workforce, I was one of those people who, after college that my 20s were going to last forever. When they hit their 30s, you think they will also last forever. Unfortunately, once you hit your 40s, you realise that this might not always last forever. It is not that you begin to see the finishing line, but you know that it is there. This is something I began to focus in on at that point. I say that as a trained accountant who should have known better. In such circumstances, we need to ensure that what is proposed becomes mandatory across the board.

For the first time, hundreds of thousands of people will be added. In the long run, this will help tackle inequality, especially for those lower and middle-income workers who might be outside the State net. These are people who need that help. What is going to happen will be simple, transparent and fair and will be done at the behest of the employer. That will be important. As the previous speaker so elegantly alluded to, this has not always been the opportunity down through the centuries. In the modern world of the 21st century, we now have the opportunity to ensure that poverty does not await as they finish their working lives. We hope not to see elderly people in Ireland working in McDonald's like their counterparts across the sea who, tragically, who worked all their lives and who have had to continue to work into their 70s. That is something we are trying to do away with.

Auto-enrolment will strengthen our economy by boosting savings and enabling people to look forward to the future. It will level the playing field so that all employers contribute. As someone who has worked with employers, I am conscious that they are concerned about costs. We need to allay their fears and ensure that we support companies in other ways. If we do this properly, we can support companies and employees. Ultimately, this is an investment in the State and its people. It is also an investment in their future and in fairness.

This is a balanced reform. It will protect and respect workers. More importantly, however, it will help to secure Ireland's future.

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I welcome the auto-enrolment scheme. My Future Fund is a key aspect of the programme for Government. I commend the Minister on the work he has done to date on bringing it forward. If we look to our counterparts across Europe, the UK, for example, introduced auto-enrolment in 2012, Italy did so 2007 and Estonia in 2002. It is about time that we moved towards auto-enrolment. The thing about it is that is will ensure people's security in old age. For far too long, we have seen pensioners, particularly those on the State pension, struggling to heat their houses and pay for their groceries. Auto-enrolment expands pensions to the wider population. Only 35% of private sector workers have pensions. That is extremely worrying when we have a growing population and an ageing population. Having that security net of a pension in the future ensures that when people reach older age, they will be able to live in some comfort and not be worrying about when the next pay cheque is coming or from where the next few euro are coming.

When we look at the investment strategies, we can see that there are to be four strategies and one default strategy. What is critical is that those who have signed up to auto-enrolment and employers are made aware of where their money is being invested. Many people will know that private pensions are spread throughout numerous equities and companies. When we speak about boycotting certain companies and the ethics of other companies as well, it is critical that the people who are enrolled in these pension schemes are aware of where their money is invested. They need to rest assured that it is not invested in unethical companies or in companies that do not align with their moral thinking. That is a key aspect of the investment strategy which needs to be considered if it has not been considered to date. I ask that the relevant information be given to everybody who is being auto-enrolled.

There is a natural fear among businesses in relation to auto-enrolment and the costs that come with it. However, there is an additional difficulty for the hospitality industry. We saw another restaurant announce closure in Dublin yesterday, namely Big Mike's in Blackrock. The challenges being faced by cafés and restaurants throughout the country are making it far more difficult to sustain the hospitality sector. The auto-enrolment scheme represents an additional cost for them. I ask the Minister of State that there be sustained involvement with the hospitality sector to ensure that it is insulated to ensure that this additional cost will not come at a greater cost to those in the sector in terms of the viability of their businesses.

This is a positive a step. I welcome it. As I said, it is about time it happened. However, two key aspects need to be considered in the context of auto-enrolment. The first relates to the public being made aware of where their money is being invested and the second is that the hospitality sector and businesses in general are listened to and considered, particularly in the context of the additional costs.

Cathal Crowe (Clare, Fianna Fail)
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I thank the Minister of State for taking this debate. The auto-enrolment scheme is very important. It will mean that Ireland will not longer be a laggard in the European Union. As Deputy Ó Cearúil said, many other countries have brought this in, some as far back as a decade ago. We are catching up. The introduction of this in the new year will see hundreds of thousands of people who are not on pension plans now being able to avail of something when they reach pensionable age. That is quite important.

I do, however, have something of a contrarian view on some aspects of what is proposed. There is not a week that goes by that the owner of some local small business comes to one of my clinics and talks about how difficult it is to do business. I have heard that during my six years as a TD but I probably hear it now more than every because of the multiple costs involved. TDs on both sides of the House are nodding because we are all hearing this at constituency level. There was an inevitability about auto-enrolment happening. It has to happen. In budget 2026, which is only a couple of weeks away, we have to include certain measures that loosen the collar for businesses and allow them to breathe again and flourish. In my home village, the shop and pub are gone. There is nothing to replace them. I see businesses closing on the high streets of Ennis, Shannon and Limerick city. There are too many vape and kebab shops. The type of businesses that were the stock of town centre streets seem to be either going out of business or are really struggling. We have to deal with that in budget 2026.

I have read all the detailed notes on auto-enrolment, but I have not seen sufficient clarity on where apprentices will stand in all of this. I thing of the many 20- and 21-year-olds who are slogging it out doing difficult work, particularly in the wet trades. They are certainly not earning €20,000 per annum. Auto-enrolment will be optional for them. Everything is quite uncertain for them. They are treated as tradesmen and tradeswomen. They are expected to go out and work as hard as everyone else, but they do not get the benefits of doing so.

I fear that some of this could be used as a bit of a carrot in the context of the school secretaries and caretakers dispute. This is not the way to deal with that.

If we were to look at it through one lens, we could say this offered a pathway to pension, but I would contend, as someone who spent 16 years as a school teacher and as the staff liaison person between secretaries, caretakers and the school body, this is not the way to solve their grievance. They are very worthy of a proper pension befitting the work they have carried out for years and will carry out for many years to come. This should not be the magic wand for that. Their ask is very specific. It is before the WRC and we cannot prejudice what is there but they ask that they be treated as civil servants. That is the campaign I support and this issue needs to be kept separate and outside the net of what auto-enrolment is.

Willie O'Dea (Limerick City, Fianna Fail)
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I apologise, as I have a frog in my throat. I come here today to bring something to the Minister's attention and, more importantly, to the attention of workers who have not yet been signed up to a company pension scheme. It has come to my attention that there are a number of brokers and pension providers who are approaching companies, particularly small ones, to advise them that they can avoid the auto-enrolment scheme by signing their workers up to a pension scheme now. I urge employers to reject those approaches. I would like the Minister to bring the matter to the attention of workers and their trade union representatives because anything these providers are offering now that will obviate the need to enrol workers into the auto-enrolment scheme will leave them infinitely worse off, in 99.9% of cases anyway.

Lower paid workers who are paying tax at the marginal rate of 20% will lose 5% on the tax side. Of course, it is the opposite case for people who are paying tax at the 40% rate, which represents about 30% of the people who will be auto-enrolled. What the people on the upper echelons will gain from that will be easily outweighed by two other fundamental differences between those private schemes and the auto-enrolment scheme as proposed by the Minister. First, the State scheme will be infinitely safer. There will be more flexibility. The scheme will be dealing with regulated funds and regulated companies and will be overseen by the Pensions Authority. Second, the question of the fees will be fundamentally different. The fees these private operators charge - usually about 1% per annum - will be infinitely greater than the fees the auto-enrolment organisation will charge those particular workers. Fees make a huge difference. It is estimated that some of the fees charged by these private providers in the past reduced the final value of the fund by 30% to 35%, which is enormous. I have seen numerous cases where people who contributed to their pension schemes all of their lives found the schemes were worth little or nothing at the end but the providers, who were taking commissions, got their commissions year in, year out as the funds depleted year in, year out. I say to workers that, if they are approached now in advance of 1 January to sign up to a pension scheme, beware those snake oil salesmen who, for short-term benefit for themselves, are trying to bring about a situation where workers will be much worse off in retirement than they would otherwise have been.

I wish the NTMA was operating this scheme. While I compliment the previous Minister, Heather Humphreys, and the present Minster, Dara Calleary, for bringing the scheme to its present level and finalising it after a 30-year delay-----

Verona Murphy (Wexford, Independent)
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Thank you, Deputy. The time is up.

Willie O'Dea (Limerick City, Fianna Fail)
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-----nevertheless, the former's reasons for not using the NTMA were contradictory.

Verona Murphy (Wexford, Independent)
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I thank the Deputy. The time is up.

Barry Ward (Dún Laoghaire, Fine Gael)
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I was listening to this debate. I was watching it on the television in my office and had to come to the Chamber to make sure I was listening to the correct debate because some of the comments I have heard today seem to be entirely at variance with what is actually being proposed in this policy and this scheme. I have heard it described as "anti-worker" when in actual fact this is exactly the kind of measure we need to put in place, particularly for low-paid workers, who were the ones who, according to some Deputies, were being particularly disadvantaged. They are also the people who are outside the net where they might avail of a pension.

Contrary to the assertion by some TDs earlier that this was an attempt to dismantle the welfare state or that we were trying to shift the burden of pensions from the State to the individual, that is not what is happening here at all. In fact, what this is is an empowerment measure. It specifically targets those with lower incomes because they cannot avail of this in their own right. Instead of shifting that burden, it gives them power to deal with their own futures when they retire and it comes at a cost to the State as well.

The State is contributing a huge amount to this scheme and the workers benefit in that regard. People should not be afraid of this scheme. This measure will safeguard the future of workers in this country well into the future at a time when we are approaching a situation where we will have more and more people who are drawing pensions and fewer and fewer people who are working. We have to safeguard against that situation.

We have a situation where people are complaining and have the notion that we cannot depend on pension funds. Yes, regulation is an important part of this. Careful regulation and careful monitoring of the fees that go into the fund and where the moneys are invested must all come with this. Opposition TDs who are giving out about the scheme would have a situation where ordinary workers were dependent on the State to not cut pensions in the future or to increase pensions in line with inflation and the need for pensions, which has been a perennial problem in every state. Instead, what we are doing is creating an investment vehicle to safeguard the future of those people.

Far from being a measure that is anti-worker, auto-enrolment is a measure that is pro worker. It is a measure that is pro worker to the cost of employers. There is no doubt about that because, while the State contributes, so do employers. As somebody who has previously been an employer, I think that is the way it should be. I recognise there is a cost to business. I represent a constituency where Big Mike's closed. It is not the only restaurant in Blackrock to close in recent weeks. Fellini's in Deansgrange closed as well. I regret both closures. They did not close because of auto-enrolment and no business will close because of this. It might be an extra cost, but what is costing small businesses are things such as the regulatory regime, insurance, VAT and the increased cost of the products they are selling. They are the challenges businesses really face, so let us be honest about this. Those people want to employ workers who will be safe into the future. That is what auto-enrolment is about. It is about ensuring that, when those people do come to retirement, step down and stop working, there will be a fund there to make sure they are well looked after. That is a good thing. It is not about politics. Credit is due to former Ministers, Willie O'Dea and Heather Humphreys, and those who have worked on the scheme in the past. It is due to them but it is not about politics. It is about workers' rights.

Albert Dolan (Galway East, Fianna Fail)
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Today, I welcome the introduction of My Future Fund. This is Ireland's new system of automatic enrolment into pensions. This is one of the most important social reforms for a generation. For too long, too many workers, particularly in the private sector, have faced the prospect of reaching retirement with only the State pension. We know that only about a third of private sector workers currently have a supplementary pension. Auto-enrolment changes that and it does so in a way that is fair, simple and sustainable.

From January 2026, every employee aged between 23 and 60 who is earning over €20,000 a year and not already contributing to a scheme will be automatically enrolled. Employers will match what the worker puts in and on top of that, the State will add €1 for every €3 saved. That means that, for every €3 the worker contributes, the total becomes €7 before it is even invested. That is a powerful return that will grow steadily over the course of a career.

The contributions themselves will be phased in gradually, from 1.5% at the start, rising step by step to 6% by 2034. That phasing in is important because it gives households time to adjust and small businesses time to plan. It is reform done at a sensible pace with fairness at its core. The long-term benefits are enormous. Workers will build real financial security, employers will be contributing to a stronger and more resilient workforce and the State will be reducing future pressures on public finances. For society as a whole, it means fewer people facing hardship in older age and more people able to look to retirement with dignity and independence. This is also about simplicity. The "pot follows the member" model means that, as people change jobs, their pension pots go with them. There will be no more lost accounts or scattered small savings. Default investment options will de-risk over time but choice will remain for those who want it. Administration is being taken on by the new National Automatic Enrolment Retirement Savings Authority, which will make the process as light as possible for employers.

In the decades ahead, this reform will transform how people experience retirement in Ireland. It will lift the quality of life for future generations, give people confidence about their financial security and demonstrate, in a very practical way, the way of partnership between working, employer and State. Auto-enrolment is not just about pensions; it is about building a fairer, stronger Ireland where hard work is always rewarded and where people can look to the future with confidence.

Michael Collins (Cork South-West, Independent Ireland Party)
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Let us speak plainly about the Government's new auto-enrolment pensions scheme, which is due to begin next year. On the surface, it is being sold as a measure to help people save for retirement but after a closer look, it has all the hallmarks of another USC in the making, a so-called temporary charge that workers are still paying 14 years later. Under the scheme, employees and employers will each be forced to contribute 3% of gross wages. What will the Government contribute? A mere half of 1%. That is not a partnership. It is a raw deal. Workers and small business are being asked to shoulder the load while the State pays the least. Employers, particularly small and medium businesses already under pressure, will face major new costs with the present economic uncertainty. Is this really a wise decision? Employees will be automatically enrolled whether they like it or not. Yes, they can opt out after six months but only to be dragged back in every two years. That is not choice. That is entrapment. For employers, the consequences of slipping up are heavy. There are heavy fines, prosecutions and layers of red tape that make running a small business even harder.

The central question is if the scheme will replace the State pension. Ministers say it will not but these are the same politicians who promised to abolish the USC and we all know how that turned out. Workers are right to be sceptical unless there is a cast-iron guarantee that auto-enrolment is a top-up and not a replacement. People will rightly fear that the State pension is being hollowed out. Independent Ireland believes that, as a basic principle of new policy measures, people will need certainty, fairness and, above all, fairness. The scheme as I see it fails on all three counts. I call on the Government to come clean even at this late stage to put guarantees in place and stop shifting the burden onto the shoulders of workers and small businesses.

Paul Gogarty (Dublin Mid West, Independent)
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I have a number of questions regarding the auto-enrolment scheme. I welcome the broad thrust of the scheme. The idea of people starting from an early age making contributions towards their pensions as they reach retirement age is a good one in principle, as is the sense of making the employers contribute. However, as Deputy Collins said, there is an issue with the State not contributing enough. I see from the website for the scheme that the National Automatic Enrolment Retirement Savings Authority will be the independent body set up. I would be grateful if during his contribution the Minister could elaborate on this independent body, what sort of oversight it will have and also who monitors it. I have had constituents mention to me in the past that some of their pensions were wiped out during the economic downturn. My main query or fear on behalf of constituents who raised this with me is what will stop this from happening again if at some stage we go into a downturn. People thought their money was set aside and was safe. Is there a copper-fastened guarantee to ensure this money will not be eaten into down the line and that it will be ring-fenced for what it is supposed to be? In this respect, I am curious as to why it is being called a saving scheme rather than a pension scheme. I know Members of the House on the Government side are calling it a pension but it is being called a saving scheme on the website and in that context I wonder why because it is contributing towards the pension.

Paul Lawless (Mayo, Aontú)
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I welcome the auto-enrolment scheme. It will be very positive for a lot of workers across the country. I question the delays in relation to it. It is such an important aspect for particularly middle- and low-income earners and I urge the Government to prioritise its roll-out. However, I have some concerns. These concerns relate to compliance and to SMEs. SMEs are already struggling with the cost of insurance, the cost of doing business, the cost of energy and all of that and I hope this would not be another cost for SMEs. There should be a careful analysis in the years ahead. I appreciate that this is a scheme that will be rolled out incrementally. That is a positive thing but I urge the Government to tread carefully. Also in respect of compliance and the setup costs, I urge the Government to ensure support is available for SMEs, particularly very small companies, to assist with the various elements of compliance that will be necessary as regards an employee leaving a company, re-enrolment and employees opting out. All of that type of stuff should be led by the Government.

I will also highlight the self-employment sector. The self-employed individual is in many ways the forgotten citizen of this State. He or she is a second-class citizen of this State and the auto-enrolment scheme will do nothing for the self-employed person. I urge the Minister to develop a similar scheme that will assist a self-employed individual in this regard. I know this auto-enrolment scheme does not facilitate or give an opportunity for the self-employed person to receive a pension in this way. In that sense, it is unfair because the self-employed person is paying so much tax but does not receive the benefit of social welfare and so on when he or she falls on hard times in the same way that he or she would if an employee of a company. In this case, we could have examples where there is a very small company, that is, a self-employed person, who will not receive the matched funding that an employee can. That is unfair. I urge the Government to develop a scheme that facilitated the self-employed. There is no question that these self-employed individuals are second-class citizens in this State and this auto-enrolment is another example.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Go raibh maith agat a Cheann Comhairle and Minister. I welcome auto-enrolment. It has been a long time in the making but it is great to see that it is finally going on the blocks. I agree with Deputy Gogarty that it is really a saving scheme at this stage rather than a pension scheme. This is mainly because the pensions bit has probably not been worked out yet but the thrust is to get people contributing to the future, which is fair enough.

Regarding fees, I read the note the Department has on its site, which reads:

Charges will be set and fully explained nearer the launch date of 30th September 2025, but it is expected they will comprise -

• A modest weekly flat fee to cover the running of NAERSA’s administrative costs, and
• An investment management charge based on a percentage of participants’ savings ...

The site also reads: "The State is taking a number of steps to ensure that the money invested on your behalf stays as safe as possible". It sets out a kind of profile of low-risk investment and supervision. It is all quite flat in terms of profile and it is conservative. That is fair enough at one level for pensions, but for a 25-year-old construction worker who is contributing to a scheme like this for the first time and has a risk appetite, we really should be incentivising some level of investment performance rather than just leaving the money in place somewhere and having such low expectations for how the money would perform.

There are a couple of things about the scheme. I think it should be put online. Make it a big, centralised, standardised scheme with standard processes, standard interfaces for people putting information into the scheme about themselves and employers, and standard reports coming out. Standardise everything, have minimum manpower running the scheme, and have it computerised and as efficient as possible. That is how it would run. I imagine it will be quite standardised.

With regard to the size of the fund, it will get very big because, over time, there will be a huge amount of savings invested and tied up in the scheme, and rightly so. That is the way it should be, but there could be temptations for those in the future to try to access it and use it as a rainy day fund. It is very important that we legislate so that the fund cannot be used for anything else but that it belongs to the punters who put the money in and, thankfully, the State that would have contributed.

My final point goes back to the point of savings. There is not a whole lot of detail on the benefit side. I can understand that in terms of where we are now, but it is important that we at least address this in some way so that punters will understand what they will see coming out once they put money in.

Peter Roche (Galway East, Fine Gael)
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I thank the Minister for his statement. Like others, I welcome the scheme, which is going to give greater security to people entering into retirement. It is an important and necessary ambition. Too many people, particularly those in the private sector, risk reaching retirement age with only the State pension to rely on. In principle, I think the concept is good.

However, in my engagement with businesses right across east Galway, they have raised concerns. I have met many of business owners, including those running shops, cafés, garages and SMEs. While they are not opposed to the idea of pensions for their employees, they are deeply worried about how the scheme might impact on them financially. These are businesses that do not have the luxury of dedicated HR departments. They are family-run or community-run operations where the same person is managing stock, dealing with suppliers and, of course, serving customers. For them, the additional administrative burden of auto-enrolment feels a little bit daunting. Many tell me that they have little or no communication about what exactly is required of them.

Beyond the administration, the financial concern is even greater. As mentioned by other Deputies, many of them are operating on very tight margins and even a modest additional cost can tip the balance. Employers are asking if this new obligation will mean they have to cut back on hours, delay taking on new staff or reduce other forms of support for employees. They worry that what looks like a small percentage increase on paper could in reality be the straw that breaks the camel's back.

I know the Department has pointed to the phased introduction of the contributions, with a ten-year lead-in period, as evidence that businesses will have time to adapt. That is broadly welcome but from what I am hearing on the ground, the message is not really landing. The communication campaign, the buses, the adverts, and the online content are simply not reaching the many shopkeepers in rural Ireland and those micro business owners who are already juggling a dozen other responsibilities. What is needed is direct and targeted outreach to SMEs so they can be mindful of the unintended consequences that may emerge. Unless this is implemented with sensitivity to the realities facing both employers and employees, it risks breeding resentment rather than reassurance. Employees in certain circumstances say that they would prefer extra take-home pay now over pension contributions, and they cite tight weekly budgets.

I thank the Minister because, overall, I think that people will have time to adapt and inform themselves. I welcome the concept in principle and I welcome the scheme.

Tony McCormack (Offaly, Fianna Fail)
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I welcome the introduction of auto-enrolment and the new My Future Fund. This is an important reform, as too many workers today have no pension savings beyond the State pension. People deserve peace of mind that, when they retire, they will not face a big drop in their standard of living. With contributions from employees, employers and the State, auto-enrolment is a fair way to achieve that.

I wish to highlight the series of challenges for small- and medium-sized businesses. SMEs are the backbone of our economy. There are no employees without employers, yet in a short space of time, SMEs have faced an increase in the minimum wage, extra paid sick days and an extra bank holiday. Some workers see the extra sick days as extra holidays. There are also rising costs across the board. Each of these policies might be manageable on its own, but together, and introduced so quickly, they are putting huge pressure on small businesses. These are the very businesses that will now be asked to take on the extra cost of auto-enrolment.

The Government has tried to support businesses, and I welcome that, but I believe we need more targeted help for SMEs as auto-enrolment is rolled out. This could mean phasing in supports, temporary reliefs or other measures that give small employers the breathing space they need. I support My Future Fund. It is the right thing for workers but we must also protect small businesses that employ those workers. If they cannot survive, then the system has failed before it has even started.

Carol Nolan (Offaly, Independent)
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I welcome debate on this critical issue. It is a long time coming. The then Minister, Heather Humphreys, pointed out a number of years ago on Second Stage that auto-enrolment had been spoken about in Ireland for 25 years since the former Minister, Seamus Brennan, first raised it. That being said, I think that a lot of concerns remain around the new regime and how fair, costly or impactful it is actually going to be in practice. There are a number of issues around workers who are earning just over €20,000 losing money to mandatory contributions for the first six months without opt-out flexibility. Of course, this hits low-income families the hardest. Mr. Colm Fagan, former president of the Society of Actuaries in Ireland, has said that it means the administration fee for auto-enrolment for someone with €20 in his or her account would be the same for the person with €2,000 in his or her account. He described the regressive proposal as a disaster for low-paid and temporary workers. The Government's own website asks whether if a person's earnings go below €20,000 a year, will he or she stay in the scheme. The answer provided on the website is "Yes". If a person has been enrolled and his or her earnings subsequently go below €20,000 per year, he or she will stay in the scheme. We need to look further at this particular factor because it seems unfair.

There are the standard concerns around the administrative workload and burden for small businesses. As I understand it, even with minimal setup, employers must match contributions up to 6% of payroll by 2034. How will this not add to the burden of cash-strapped SMEs already trying to navigate energy costs? I also understand that there are ongoing concerns about the scheme and how it will deal with self-employed workers who earn under €20,000 and under-23s who will be sidelined, leaving freelancers without coverage. An additional concern raised during the debates last year - perhaps this could be clarified - is about how auto-enrolment may shift reliance from the universal State pension to private pots, with pro rata calculations under the total contributions approach risking lower payouts for part-time or career gap workers, particularly carers and women who fit into that bracket.

Has that point been dealt with and is there a solution for that particular issue? I would be grateful if the Minister could revert to me with clarity and a reply on that specific point.

The last point I wish to make is that we know there will be no boost to overall retirement adequacy. It has been mentioned that despite the fanfare, the scheme does not raise the inadequate State pension baseline of €13,000 per year, leaving 20% of over-65s, especially renters, in poverty. That is another very real issue that exists.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Ceann Comhairle, the Business Committee and the Chief Whip, the Minister of State, Deputy Butler, for giving us the opportunity to discuss auto-enrolment today. There are specific worries I will engage with Deputies on over the coming days, to answer queries.

I welcome the support for the overall concept of a pensions auto-enrolment system. The aim of introducing auto-enrolment is to once and for all solve the pension coverage gap that exists in Ireland, and to provide for better retirement incomes for workers in the long term.

One of the key points raised today is the potential burden on employers that is being associated with auto-enrolment. First, the establishment of NAERSA ensures that the administrative burden will be minimised, particularly as the scheme rolls on. There will be some burden in the initial stages of inputting the information and giving it to NAERSA but those employers who have payroll providers who do that for them will be able to work with them. The work of NAERSA will then ensure that the ongoing administrative burden will be absolutely minimised.

Second, to come to a point raised by an Teachta Ó Muirí with regard to fees, one of the things we have found during the procurement process for the investment managers is that by going to the market with 800,000 potential pension holders, as opposed to each of those 800,000 potentially going individually, we have considerably reduced the administration fees that otherwise would have been charged. I also picked up the Deputy's points with regard to the excitement of the scheme or otherwise. There are high-risk options available to younger savers, with medium risk and lower risk as you advance in age and come closer to retirement. The option is there for people to go for higher-risk investments and that is one of the reasons we went to an open procurement system for investment advisers. Some people say this could have been done by the NTMA but giving options and lower fees to savers was a key issue.

I wish to remind Deputies that on the design of My Future Fund, which has been referred to, I will re-emphasise that the phasing-in of contribution rates will happen over the course of a decade, starting at a very low 1.5% of gross pay for the first three years and gradually rising to 6%. For the employer, this approach gives very clear certainty as to the rates that will be applicable so as to facilitate the gradual absorption of these labour costs, which will ease the burden on those employers in implementing this crucial return.

I understand about the costs. There is a never a good time to add a cost but we have to grasp this nettle once and for all. We are the last country in the OECD to introduce an automatic enrolment scheme. Right now, we have four workers for every person over the age of 66 in this country. By the time we get to 2050, which is not that long away, we will have two workers for every person over the age of 66. I understand, and I want to re-emphasise to Deputy Nolan that the non-contributory State pension will still be the bedrock of our pension system. Auto-enrolment is not meant to displace those contributions and services. I will also respond with regard to her specific query.

Deputy Lawless mentioned the self-employed, and we have introduced pension options with extra contributions for the self-employed in recent years. We will continue to increase the supports available to self-employed people through the social protection system over the course of this Government and beyond.

I would also point out that for any employer who cannot offer an occupational pension at the moment, auto-enrolment and My Future Fund will create a more level playing field for them with regard to trying to attract good workers in what is a very tight jobs market. Moreover, employers will benefit from participating in My Future Fund by enhancing their employees' sense of well-being with regard to them having some security with respect to their post-employment retirement. ESRI research indicates that over the longer term, auto-enrolment will be good for the economy and retired people will have more disposable income than they would have had otherwise. In turn, this will sustain consumer demand and business revenue as that population ageing happens.

A number of Deputies have asked us about monitoring. This will be subject to monitoring by the Pensions Commission and the Financial Services Ombudsman, so there will be external monitoring. NAERSA is statutorily independent of the Oireachtas, and I have appointed a very strong and experienced board to ensure the initial stages of auto-enrolment are led by a board and executive team who have experience, strength and who, in particular, have experience of the introduction of complex projects. I think the board reflects that. The level of interest in being on the board and in applying for the staff positions in NAERSA gives Deputies an indication of the overall interest in auto-enrolment and, in particular, the overall interest in the success of auto-enrolment.

Many Deputies raised issues around the values of the investment portfolio. While all investments have to be made in accordance with the prudent person role and in the best long-term interests of each of the participants in the scheme, each investment strategy will have specific environmental, social and governance, ESG, requirements. That is laid out in sections 74 and 75 of the Act. Section 74 requires the investment management providers to take into account the long-term impact of investment decisions on environmental, social and governance factors. Section 75 of the legislation is also of particular note, as it provides for a number of provisions that must be included in the contracts we are currently concluding with the investment management providers. These include that any investment management service providers must make a provision in their risk management system to take account of the risks that arise through environmental, social and governance factors; that they must conduct, at intervals of not more than three years, an assessment of the risks that arise from environmental, social and governance factors, and report to NAERSA on that assessment; and prepare, and from time to time revise, a statement describing how considerations arising from ESG factors would affect the investment decisions. In the future, consideration may be given by the board of NAERSA to expand investment options as part of the review of the system, which is required by section 43 of the legislation. This is in line with the typical trajectory of how retirement savings providers develop, whereby they generally start off with a limited number of investment options and gradually expand to alternative offerings once their asset base is sufficiently developed.

Much of this, a Cheann Comhairle, is technical. Much of it might seem inaccessible but it is a hugely important policy. Over the coming weeks and months we will be ramming home the communications on this. I have picked up from many Deputies today the concerns that many employers are saying they have not heard. We will work with NAERSA, Revenue and colleagues in payroll across the system to ensure that communication gets in, and that it will get to workers. Yes, there will be a deduction in their take-home wages but that is a deduction that is being made in the best interests of their future, a future post retirement, and their living standards post retirement. By taking part in My Future Fund they are making an investment in that future, which will pay back to them in the years to come.

Verona Murphy (Wexford, Independent)
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I thank the Minister. We will suspend for five minutes.