Dáil Éireann Debate, Tuesday - 29 November 2022
71. Deputy Alan Farrell asked the Minister for Social Protection if she will provide an update on the work of her Department with regard to the auto-enrolment workplace pension scheme; and if she will make a statement on the matter. [59236/22]
View answerI apologise to Deputy Stanton but I did not have the information in front of me. There was only one substitution. I think his application was late. I will go back to him now.
I am taking this question on behalf of my colleague, Deputy Alan Farrell. He is seeking from the Minister an update on the work of her Department with regard to the auto-enrolment workplace pension scheme, and a statement on the matter. This is a very progressive scheme and it is very welcome. I am giving the Minister an opportunity to comment on it.
The introduction of a pensions auto-enrolment system is a programme for Government commitment and a key priority for me as Minister for Social Protection. As the Deputy will know, under auto-enrolment, employees will have access to a workplace pension savings scheme, co-funded by their employer and the State. For every €3 workers pay into it, they will have another €4 credited to their account, and the contributions will then be invested. The additional €4 consists of €3 from the employer and €1 from the State. This will be supplementary to the State pension and will be of particular benefit to the estimated 65% of people working in the private sector who are not currently paying into a supplementary pension scheme. That is estimated at approximately 750,000 people.
In March last, following Cabinet approval, I published the document, The Design Principles for Ireland's Automatic Enrolment Retirement Savings System, which sets out in detail what the new system will do and who will be able to access it. It is envisaged that the enrolment of the first auto-enrolment participants will commence in early 2024. Working towards that date, the focus is now solely on implementing the agreed design, including by drafting the necessary legislation that will underpin it, designing the organisation structures and the technical system to operate it, and communicating this landmark reform to stakeholders and the public.
To this end, the general scheme for a Bill establishing the auto-enrolment system was developed, brought to Government and approved in July. The Bill is now being drafted by the Office of the Parliamentary Counsel and I hope I will be in a position to publish it early next year. I have also submitted the general scheme of the heads of the Bill to the Oireachtas joint committee and I am told the committee has commenced pre-legislative scrutiny and called for submissions from relevant stakeholders. I look forward to the committee's report and to engaging with the Oireachtas in a debate on the Bill in early 2023.
I thank the Minister for all the work she and her officials have been doing on the system. The system is very progressive, important and welcome. Does the Minister have any idea of the initial cost to the State, year on year, when the system will be introduced in 2024, and in 2025, 2026 and so on? Has any work been done on that yet? Perhaps it is premature for the Minister to know that.
Of the 65% or 750,000 people who have no private pension at the moment, can they opt in to the system as it develops or does it only apply to people when they start a new job and only from the very beginning?
Auto-enrolment has been talked about for decades. The auto-enrolment train is now on the tracks and is leaving the station. The design has been finalised. Anybody who does not have a private occupational pension will be automatically enrolled. People are joined up and there are breaks allowed for different reasons. I do not have all the information in my head as it is getting late, but a person can opt out for a period, such as six months. We will put people back in again and we will keep putting them in. As Deputy Stanton will appreciate, and I know myself, there is never a right time to start a pension. When we start off, we want to have money to enjoy ourselves. Then when we have children, we must look after them and then we have to educate them. There is never a right time, but we are going to start this now.
I ask the Minister about the cost. Can people who are already working opt in to this system as they move forward? I have seen some literature which has given rise to some confusion in that regard.
The Minister referred to investing the pension into a managed fund. Is she happy that it will be safeguarded and will be robust, people will not lose the money in that fund and the State will back it up as well?
It has been raised with me that some people may have personal retirement savings accounts, PRSAs. The exemption of participants and employers from auto-enrolment based on their engagement with existing occupational pension schemes and PRSAs will likely be based on minimum requirement standards. My officials are currently working out the detail of how this will work for the purposes of the legislation, and in terms of the automation of the system. My understanding and preference is that no participant should be in an occupational or supplementary pension scheme that leaves him or her less well off than he or she would be under auto-enrolment. We have to work on those details as the legislation is being drafted. I have the design in place and it has gone to the Oireachtas joint committee. If the committee has some suggestions, I will be happy to hear them. If I can make the system even better, I will be happy to do that as well. It has started now, which is the most important point. The train is on the track.
