Nessa Cosgrove (Labour)

Cuirim fáilte roimh an Aire. I welcome the opportunity to contribute on the discussion on auto-enrolment. As we all know, the best time to start a pension is as early in one's career as possible. However, the reality for too many people, particularly low-paid workers and those at the beginning of their working lives, is that there is no spare capacity in the weekly or monthly budget to pay for pensions. I know that from personal experience. As a low-paid youth worker for years, it is only in the last few years that I have been able to afford to contribute to a pension. The lack of affordability has led to low rates of pension uptake among younger workers and those who remain on low wages throughout their working lives. An estimated 811,000 workers currently have no occupational or private pension provision. In previous years, many of those people would be condemned to poverty in their old age.

The voluntary nature of pension provision in the past has failed low-paid workers.The Labour Party has been supportive of the introduction of an auto-enrolment pension scheme for many years. It has been well overdue. Having the voice of Patricia King on the board of the new National Automatic Enrolment Retirement Savings Authority demonstrates that members' interests will be at the heart of the new authority. Having a large State fund gives additional security and investment potential to a pension scheme.

I would like to see these benefits extended to younger workers aged between 16 and 23, who are currently excluded from the scheme, as even small amounts contributed during these early years would have a disproportionately beneficial impact upon the pension amount available at the end of a working life. If 16-year-olds are old enough to make PRSI contributions, then surely they are old enough to be included and entitled to the benefits of auto-enrolment.

Having a large State fund that is managed according to strict ethical guidelines could also have a beneficial impact upon the ethical approach taken towards pension funds across the whole of the free market. This is an opportunity for us to say that we do not want our collective retirements built upon the profits of companies that profit from fossil fuel exploitation, war or pornography benefit or that benefit from child or slave labour. The introduction of this scheme has much to be commended, but some protections and reassurances are required. We need to be clear on how this scheme will relate to the State pension, that it will complement and not replace the State pension. Similarly, we need assurances that the Government remains committed to achieving a benchmark of 34% of gross average earnings for the contributory State pension, such as was set out in A Roadmap for Pensions Reform. We need certainty and safeguards that the workers contributing to the new scheme will not face a means test for the State pension in the future.

We also believe, crucially, that self-employed people should be included in auto-enrolment. This is necessary to ensure that the companies are not incentivised to place workers on bogus self-employment, which we know only too well in this House, in order to avoid needing to pay auto-enrolment contributions. We have seen the proliferation of such contracts in recent years, such as among RTÉ staff, leaving many without pensions. Coverage among self-employed people is already too low. As the Bill progressed through the Oireachtas, as a party, we repeatedly raised the importance of ensuring that this scheme cannot be sidestepped by employers or ensuring that employers are not incentivised to wind up good, existing workplace pension schemes. For example, we as a party proposed an amendment that would have stopped employers 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 to ensure that safeguards are put in place, that this will deliver for workers and does not create incentives for employers to scale back existing pension entitlements.