Dáil Éireann Debate, Monday - 11 September 2023
1012. Deputy Aengus Ó Snodaigh asked the Minister for Social Protection what steps have been taken to ensure that the Oireachtas Committee on Social Protection recommendation that the new automatic enrolment pension scheme should be prohibited from investing in fossil fuels or the arms industry is complied with; and if she will make a statement on the matter. [38016/23]
View answer1013. Deputy Aengus Ó Snodaigh asked the Minister for Social Protection what steps have been taken to implement the Oireachtas Committee on Social Protection recommendation that a minimum percentage of the new automatic enrolment pension funds should be invested in Irish renewable energy developments in order to ensure our climate action obligations. [38017/23]
View answerI propose to take Questions Nos. 1012 and 1013 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 now focused on implementing the agreed design. Several workstreams are being progressed in parallel, including the drafting of the AE Bill with the Office of Parliamentary Counsel, which I expect to publish this year, as well as tendering for administration and investment services, and communicating this landmark reform to stakeholders and the public.
Earlier this year, the Joint Oireachtas Committee on Social Protection published its report on the pre-legislative scrutiny of the Heads of Bill, setting out 21 observations and recommendations, and completing an important step in the legislative process. I would note that several of the recommendations are already incorporated in the design agreed by Government, while other recommendations cannot be accommodated as they would require considerable change to the design. Consideration of the remaining recommendations is ongoing while the drafting is progressing.
It is important to note 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 retirement 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 retirement 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, climate action considerations such as investment into renewable energy developments, 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.
