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State Pensions

Dáil Éireann Debate, Thursday - 24 June 2021

Thursday, 24 June 2021

Questions (333)

Claire Kerrane

Question:

333. Deputy Claire Kerrane asked the Minister for Social Protection the status of plans to introduce auto-enrolment; and if she will make a statement on the matter. [34089/21]

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Written answers

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.

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