Heather Humphreys (Cavan-Monaghan, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In March I announced that Government approval had been given to the final design principles for the auto-enrolment (AE) retirement savings system. A detailed explanatory paper on the new system has been published on www.gov.ie.

Under the design approved by Government AE savings will be contributed by employees with a matching contribution from their employer and a 33% contribution by the State. While contributions will start at a low level of 1.5% of salary, it is intended that ultimately, after ten years, the employee will pay 6%, the employer will pay a matching 6% and the State will 'top-up' contributions with a further 1%. This means that for every €3 contributed by the worker a further €4 will be added to their AE savings account.

The system is expected to become operational in early 2024 and will automatically enrol approximately 750,000 employees at the outset. Implementation of the AE system is now well underway, with a project team in the Department of Social Protection progressing a range of individual elements of a detailed project plan.

Most recently, the Government approved a General Scheme for an Automatic Enrolment Retirement Savings System Bill. Just last week, I wrote to the Joint Oireachtas Committee for Social Protection, Community and Rural Development and the Islands, in order for that Committee to commence pre-legislative scrutiny of the Heads of the Bill.

A core objective for the AE system is to provide quality assured investment services, and pension products at low cost to AE participants. To this end, a maximum permitted annual administration and investment management charge will be capped at up to 0.5% of assets under management. In establishing the Irish AE system, we will conduct open tendering processes in a highly competitive market. As a result, we fully expect the final charges in the Irish AE system to be less than the ceiling rate of 0.5%. Low unit operating costs shall also be achieved through economies of scale, which is one of the key reasons behind establishing the Central Processing Authority (CPA). By acting as a ‘bulk’ purchaser, the CPA will help to achieve these economies of scale, thereby benefitting the participants in the system.

I hope this clarifies matters for the Deputy.