Thursday, 17 December 2020
Department of Employment Affairs and Social Protection
422. To ask the Minister for Employment Affairs and Social Protection the status of the introduction of the auto-enrolment pension during the course of 2021; and if she will make a statement on the matter. [44247/20]
The Programme for Government contains a commitment to introduce a pension auto-enrolment system. The objective of this commitment is to address the low proportion of employees in Ireland with supplementary pension cover, which includes both occupational and personal pensions. In this regard, Ireland is the only OECD country without a mandatory or automatic enrolment supplementary pension system.
The rate of supplementary pension coverage in Ireland is just over 50% of the working population (CSO, Pension Coverage Survey 2019) and this reduces to less than 35% when the private sector is considered in isolation. Many of these people will become reliant on the State pension for all or most of their income in retirement and accordingly, may face a significant unwanted drop in income.
Although the Roadmap for Pensions Reform 2018 to 2023 provided for the development and implementation of an Automatic Enrolment (AE) retirement savings system by 2022, this Government recognises the exceptional strain that both employers and employees are now under. Therefore, the Government will now seek to gradually deliver an AE system, based on the following principles:
- There will be a phased roll-out, over a decade, of the contribution made by workers.
- Matching contributions will be made by both workers and employers and the State will top up contributions.
- There will be an opt-out provision for those who choose to opt out.
- Workers will have a range of retirement savings products to choose from.
- There will be a charges cap imposed on pension providers.
A phased introduction of the system is believed to be achievable in the current situation. As part of this phased introduction, the Automatic Enrolment Programme Management Office (AEPMO), based in my Department, is currently working on developing options for Government to consider in 2021. There are five main areas where work is ongoing so as to produce design options. These areas relate to:
- the scope and role of a central processing authority for the system;
- the nature and functions of registered providers of savings products;
- the investment framework and funds to be offered by registered providers, including the design of the default fund and the pay-out phase;
- the design of the State financial incentive; and
- the phasing of implementation.
In progressing this work, the Department is receiving technical support from the European Commission’s DG Reform which assists EU member states implementing administrative and institutional reforms and this support will continue to be provided next year.
In addition, the Interdepartmental ‘Automatic Enrolment Programme Board’ will be meeting regularly in the coming months to provide the strategic direction for the development of the AE system.
I hope this clarifies the matter for the Deputy.