Richard Bruton (Dublin Bay North, Fine Gael)
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244. To ask the Minister for Employment Affairs and Social Protection the target of income adequacy in old age; the contribution which she hopes that auto-enrolment will make to achieving that; and by what date she expects people retiring to have reached that target. [13551/24]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The introduction of an automatic enrolment (AE) system is a Programme for Government commitment and a key priority for me as the Minister for Social Protection. Implementation of the AE system is well underway, with the first enrolments expected late this year.

Without specifying a target figure, one key objective of AE is to improve income adequacy in retirement. The other key objective is to improve pension coverage overall. Without action, large numbers of people may face a significant and unwanted reduction in their living standards in their retirement years if they were to become solely reliant on the State Pension for their income. The AE system will therefore complement the State Pension, which will remain the bedrock of the Irish pension system.

Income adequacy in retirement is generally measured through the term ‘replacement rate’, which means the proportion of pre-retirement income that can be achieved by people in retirement. It is generally agreed that people on lower incomes need higher replacement rates than those on higher incomes if they are to maintain satisfactory living standards in retirement. For those on lower incomes, the State Pension can already provide a reasonable replacement rate in retirement.

When fully implemented, the overall contribution rate in AE will be 14%, consisting of 6% per employer, 6% per employee, plus a 2% State top-up. This rate is in line with OECD and ESRI analysis on the minimum level of contribution that is required to provide an adequate level of income replacement in retirement, when taken together with the State pension.

I hope this clarifies matters for the Deputy.