I am pleased that the Government recently approved significant elements of the design for our proposed automatic enrolment retirement savings scheme. These include key decisions on the target membership, the contribution rates, the policies on opting-out and re-enrolment, the administrative arrangements and organisational approach, and the investment options.
As stated in A Roadmap for Pensions Reform, the Government proposes to begin implementation of this system, which we know affectionately as automatic enrolment, by 2022. This will see a transition from the current purely voluntary system to one which will, subject to certain parameters, automatically enrol employees into a quality-assured retirement savings system. The saver will maintain the freedom of choice to opt in or opt out.
The Government has decided that a new central processing authority will be established by the State to administer the automatic enrolment system. Proposals are being finalised by my officials on the appropriate scope and role of this central processing authority, which I hope to bring to Cabinet very early in January. The proposal will include an assessment as to the extent to which existing public infrastructure could be used to carry out some or all of the functions that will be needed to operate the automatic enrolment system.
While an approach allowing for an early drawdown for a mortgage deposit, for example, may appear reasonable and improve the attractiveness of saving for some people, the core policy objective of introducing automatic enrolment, including the employer and Government subsidies, is to ensure people have adequate savings when they reach 66, 67 or thereafter. Allowing people to access their pension savings early for non-pension purposes would inevitably reduce the value of the future fund available to them, and given that the combined value of employer and Government contributions to the pensions savings scheme will exceed those of the workers, it could distort the housing market. That is the view of some of our advisers. However, the Government has decided that a limited number of savings suspension periods will be facilitated for members who wish to cease making their contributions temporarily for exactly the reason the Deputy described, namely, that they may be saving for their house. These savings suspension periods could be used for people with children going to college or for whatever reason, but they are limited in their scope.