Richard Bruton (Dublin Bay North, Fine Gael)
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711. To ask the Minister for Employment Affairs and Social Protection if she has considered suggested innovations in the management of the pool of funds generated by the auto-enrolment scheme, whereby the individual's pot would continue to be managed in a single pool, and drawdowns could be made at a smoothed rate rather than the market value of the moment, given that this approach could allow pooled savings to be invested in higher yielding investment categories and could avoid individual management fees; and if she will make a statement on the matter. [55278/22]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The proposed investment approach referred to in the question has been considered by officials in my Department and discussed with other relevant Government departments and agencies. It's worth noting that, to my knowledge, the proposal has not been tested in a market setting (i.e., that no commercial pension scheme has adopted the approach proposed) and consequently, there is a lack of evidence as to observed outcomes. It's also worth noting that if such an untested proposal was adopted for the AE system, the returns promised may not be realised, and this considerable risk would be borne by the AE participants themselves.

Earlier this year, the Government approved the final design principles for the new Automatic Enrolment (AE) system. Implementation of the AE system is now well underway, with the first enrolments expected in 2024. The investment approach agreed to by Government will see most participants placed in a default fund, which will be based on a life-cycle investment strategy using a pooled contribution and returns approach. Using this approach, each of the scheme's participants will achieve the same level of financial return as every other participant in accordance with their level of contribution. Participants who wish to exercise their own choice within the AE system will have three other fund types to choose from.

The investment approach set out in the design principles document is based on objective research and robust evidence in terms of real-life outcomes. The design has also been informed by international experts provided through the European Commission’s Technical Support Instrument, which assists EU member states implementing administrative and institutional reforms.

I hope this clarifies the matter for the Deputy.