Louise O'Reilly (Dublin Fingal West, Sinn Fein)
Link to this: Individually | In context

142. To ask the Minister for Employment Affairs and Social Protection whether he has any plans to adapt auto-enrolment to cater for self-employed people; if he has any plans to provide an alternative for them; if he will outline the options of unemployed people; and if he will make a statement on the matter. [62186/25]

Dara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context

The Programme for Government contains a commitment to introduce the Automatic Enrolment (AE) Retirement Savings System. The aim of introducing AE is to address the employee pension coverage gap that exists in Ireland and to provide employees with greater comfort and security regarding their retirement income. The new system - to be known as My Future Fund - will commence from 1 January 2026. The implementation of My Future Fund will pave the way for around 750,000 employees to be brought into a retirement savings scheme for the first time and I look forward to its implementation.

As the focus of My Future Fund is on providing employees with a retirement savings scheme, it is designed on the basis of an employer-employee relationship and the contributions are also defined in terms of that relationship. The automatic enrolment and re-enrolment processes of My Future Fund are designed around an employer's operation of a payroll system (either manual or automatic and either by themselves or by an agent). Accordingly, it will not apply to the self-employed as currently designed and implemented. That is because there isn't an employer-employee relationship and so some different design around contributions would be required. Payments to self-employed individuals do not usually follow normal payment cycles and do not usually occur through a payroll system, and so finding a mechanism for automatically enrolling such individuals would need to be developed. Additionally, payments to self-employed individuals can be very varied and can change dramatically over years - where people take little money in the early years of their business and so may not meet eligibility thresholds, and where they take considerable amounts in later years and seek to maximise their contributions, which may be in excess of the thresholds in My Future Fund. In the Department's analysis of auto-enrolment systems in other countries, it wasn't evident that the self-employed were successfully included in their designs because of these considerable differences. Accordingly, an entirely different type of system would be needed for self-employed individuals.

Self-employed people usually engage with financial matters more readily than employees, and quite often, pension planning is a part of the overall financial planning of their enterprise. In that context, it's worth noting that the self-employed already have access to supplementary pension coverage in the commercial market, e.g., through Personal Retirement Savings Accounts, and can avail of generous tax reliefs from the State when contributing to such personal pension products.

The current focus is on implementing and bedding in the system for approx. 750,000 employees. In publishing the "Design Principles for Ireland’s Automatic Enrolment Retirement Savings System" in 2022, the Government set out how the system may evolve in the future, and as part of that, included consideration of broadening the system to include those outside the ‘employee’ cohort such as the self-employed and the non-working while noting that both may require different models of contributions. These matters will, in time, be considered by NAERSA, as part of its analysis and research role, and may form part of any recommendations it may make to the Minister accordingly.

I hope this clarifies matters for the Deputy.