Claire Kerrane (Roscommon-Galway, Sinn Fein)
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333. To ask the Minister for Employment Affairs and Social Protection the status of plans to introduce auto-enrolment; and if she will make a statement on the matter. [34089/21]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The Programme for Government commits to introducing 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.

The rate of supplementary pension coverage in Ireland is around 55% of the working population (CSO, Pension Coverage Survey 2020) and it is estimated that 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.

Implementation of an Automatic Enrolment (AE) system will see a transition from the current and purely voluntary system to one where employees, subject to certain parameters, will be automatically enrolled into a quality assured retirement savings system.  This Government, recognising the exceptional strain that both employers and employees are now under as a result of the Covid-19 emergency, will 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.

My officials continue to work on the design of the AE system.  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.

The development of these policy proposals is at an advanced stage and, as set out in the recently published Economic Recovery Plan 2021, the overall design of the system will be decided later this year. Thereafter, the necessary legislative, organisational and process structures will follow through over the course of 2022 and 2023.

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.

I hope this clarifies the matter for the Deputy.

Claire Kerrane (Roscommon-Galway, Sinn Fein)
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334. To ask the Minister for Employment Affairs and Social Protection the status of work to allow those without a full PRSI contribution record to continue to make contributions beyond pensionable age. [34090/21]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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Calculation of a person’s entitlement to State pension (contributory) is based on their social insurance record from their date of entry into insurable employment until pension age, currently 66 years.  Any employment after a person’s 66th birthday is not reckonable for pension purposes nor is the employment liable to any PRSI contributions.  Continued employment beyond pension age does not affect a person’s eligibility for State pension (contributory).

From April 2019, all new State pension contributory applications are assessed under all possible rate calculation methods, with the most beneficial rate paid to the pensioner. 

As the Deputy is aware, a Commission on Pensions has been established to examine a range of issues with respect to the State Pension and options for the Government to consider and I assume that this is the work to which the Deputy refers. 

The Pensions Commission was established to examine sustainability and eligibility issues with the State Pension system and the Social Insurance Fund, in fulfilment of a Programme for Government commitment.  Details of the Commission’s work, such as minutes and agendas, are available on its website, pensionscommission.gov.ie.  I expect that, in accordance with its Terms of Reference, the Commission will be submitting its report on its work to me in the near future.  The Government intends to take action having regard to the recommendations of the Commission within 6 months of receipt of the report.

I hope this clarifies the position for the Deputy.