Dáil Éireann Debate, Tuesday - 5 December 2023
350. Deputy Darren O'Rourke asked the Minister for Social Protection if she is aware of the report from the committee on social protection (details supplied) which recommended that the pension investment funds be prohibited from investing in fossil fuels or the arms industry; to outline the Government’s position on this recommendation; if her Department has carried out any feasibility studies; and if she will make a statement on the matter. [53243/23]
View answerThe introduction of a pensions auto-enrolment system is a Programme for Government commitment, and a key priority for me as Minister for Social Protection. The aim of introducing an AE system is to address the pension coverage gap that exists in Ireland, and to help provide for better retirement incomes for workers.
The Joint Oireachtas Committee on Social Protection report of its pre-legislative scrutiny of the Heads of Bill to establish the AE system has been helpful in informing the drafting of the AE Bill proper. The completion of the Committee’s scrutiny of the AE Heads of Bill represents an important step in the legislative process and I look forward to publishing the Bill in the very near future.
The JOC's report builds on the evidence-based research and extensive consultation with stakeholders that the Department has conducted over many years, and which informed the final design of the AE system. This included consideration of different approaches to investment and the application of Environmental, Social and Governance (ESG) principles. Here it should be noted 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. It is important to note that the CPA will not be administering a new State fund, but rather will be administering hundreds of thousands of individual savings accounts that 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.
AE participants should, therefore, enjoy the same investment opportunities as private investors in the current pensions market - which are also state-incentivised through tax relief on contributions. To this end, assets will be invested in the best long-term interests of participants, with the portfolio of investments properly diversified while avoiding reliance on any particular asset. Similarly, with the exception of globally restricted asset types, additional restrictions on particular asset types should be avoided.
In designing high level investment strategies and in contracting for investment services, the Board of the CPA will be guided by the 'prudent person principle', the European Securities and Markets Authority's risk advice, and the need to ensure investments take account of ESG principles. This will be facilitated through legislative provisions in the AE Bill.
I hope this clarifies the matter for the Deputy.
