Dáil Éireann Debate, Wednesday - 5 July 2023
126. Deputy Patrick Costello asked the Minister for Social Protection if she will guarantee that the auto-enrolled pension scheme will not invest in fossil fuels or the arms industry; and if she will make a statement on the matter. [32930/23]
View answer127. Deputy Patrick Costello asked the Minister for Social Protection if a minimum percentage of the funds of the auto-enrolled pension scheme will be invested in Irish renewable energy developments in order to work toward our climate action obligations; and if she will make a statement on the matter. [32931/23]
View answerI propose to take Questions Nos. 126 and 127 together.
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.Last year, I published 'The Design Principles for Ireland’s Automatic Enrolment Retirement Savings System', which set out the new system in detail.A dedicated project team in the Department of Social Protection is solely focused on implementing the agreed design, including by drafting the necessary legislation that will underpin it, designing the organisational structures and the technical system to operate it, and communicating this landmark reform to stakeholders and the public.Several workstreams are being progressed in parallel, among which is the drafting of the AE Bill in conjunction with the Office of Parliamentary Counsel, which I expect to publish later this year.The Joint Oireachtas Committee on Social Protection recently published its report on the pre-legislative scrutiny of the Heads of Bill to establish the AE system, setting out 21 observations and recommendations. I am considering these recommendations in the drafting of the Bill, but would note that several of them are already incorporated in the design agreed by Government for implementation in a later phase once the system is bedded in. Other recommendations cannot be accommodated as they would require considerable change to the design already agreed by Government. The completion of the Committee’s scrutiny of the AE Heads of Bill nevertheless represents an important step in the legislative process.Among the recommendations of the JOC are some relating to environmental concerns and the arms industry. In that context, it is important to state that the primary aim of investing AE participants’ funds is to provide a good financial return for them, so that they may have an adequate supplementary income that is over and above the level of the State Pension when they retire.
To manage and administer the AE system, a Central Processing Authority (CPA) will be established. It will procure, through the open financial services market, investment management services on behalf of AE participants. I want to make it clear to the Deputy that the CPA will not be administering a new State fund, but rather will be administering hundreds of thousands of individual savings accounts that are, and will remain, the personal property of the AE participants. The AE project is, in that sense, a State-incentivised personal savings scheme for individuals rather than a new national fund. In that context, the CPA and investment managers will have a duty to, first and foremost, get a good financial return for participants.
In designing high level investment strategies and in contracting for investment services, the Board of the CPA will be guided by both the prudent person principle as well as the need to ensure investments take account of environmental, social and governance (ESG) principles. Such principles would include taking pollution caused by fossil fuels and concerns relating to the arms industry into consideration as part of the overarching, long-term strategy.
I hope this clarifies matters for the Deputy.
