The introduction of an automatic enrolment (AE) retirement savings system is a Programme for Government commitment and a key priority for me as Minister for Social Protection. Implementation of the AE system is well underway, with the Automatic Enrolment Retirement Savings System Bill 2024 now published and a tender process to contract for administration services being well advanced. Enrolment of the first participants is expected to commence in January 2025.
I am aware that the report of the Joint Oireachtas Committee (JOC) on Social Protection on its pre-legislative scrutiny of the Heads of Bill to establish the AE system set out 21 observations and recommendations and that among them are some relating to environmental concerns and the arms industry.
To manage and administer the AE system, a new body, the National Automatic Enrolment Retirement Savings Authority (NAERSA) will be established. It will openly procure investment management services on behalf of AE participants. In this regard, it is important to note that the Bill does indeed provide for environmental, social and governance (ESG) concerns such as those highlighted by the JOC. They feature in terms of the investment rules applicable to contracted service providers set out in Section 74 and the obligations of the State under international agreements on environmental sustainability and climate change that must be taken into account under Section 75. The State’s obligations with regard to relevant international agreements, although not specified in the Bill, would include the Sustainable Finance Disclosure Regulation, the UN Global Compact and the Paris Agreement. The inclusion of these measures will therefore ensure that ESG concerns are well represented in the AE system.
I want to make it clear to the Deputy that the NAERSA 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 retirement savings scheme for individuals rather than a new national fund. In that context, it is important that we treat AE participants' money on a par with those invested in occupational or supplementary private pension schemes and that we do not force AE participants' investments into overly concentrated or niche risk profiles. To safeguard against this, the legislation also provides for a set of investment rules that at a high level include the ‘prudent person principle' that already applies to other pension schemes as regulated by the Pensions Act and the IORP II Directive.
I hope this clarifies matters for the Deputy.
