I welcome the opportunity to correct a misunderstanding that appears to have made its way into the mainstream media since the Government announcement on 29th March 2022 of the final design of the auto-enrolment retirement savings system for Ireland.
The Deputy will be interested to know that the UK's National Employment Savings Trust (NEST) does not in fact have a charges cap of 0.3%. The legislative charges cap set by the UK government is considerably higher at 0.75% of fund value. Within the boundaries of that charges cap, NEST imposes an annual management charge of 0.3% of fund value, but it also imposes contribution charges of 1.8%.
NEST is a public corporation set up to administer auto-enrolment pension schemes and is accountable to Parliament through the Department for Work and Pensions. While it is expected to eventually become self-financing through members' charges, it currently isn't and hasn't been since its inception in 2008. Nor will it be for at least another 15 years. Instead it will be using an administrative loan provided to it by the UK taxpayer through the government which is repayable from 2038 - which in turn will have to come from charges on members funds.
There are several UK auto-enrolment pension providers, including NEST, and they all have different charging structures. These include, but are not limited to: annual management charges, contribution charges, employer service charges, monthly administration charges, flat fees and switching charges. None of those additional charges will apply in the Irish AE system, which will be capped at a straightforward 0.5% of assets under management and will cover all administration and investment services charges.
In establishing the Irish AE system, we will conduct an open tendering process in a highly competitive market and, therefore, we fully expect the final charges in the Irish AE system to be considerably less than the ceiling rate of 0.5% and, accordingly, considerably less than those typically charged in the UK.
I hope this clarifies the matter for the Deputy.
