Speaking at the Brokers Ireland Financial Broker Conference in Maynooth recently, the Minister for Employment Affairs and Social Protection Regina Doherty T.D. said that there has been very encouraging support and real engagement from stakeholders during the recent national consultation process for a new ‘Automatic Enrolment’ Retirement Savings System in Ireland. Engagement had been sought with a ‘strawman’ proposal for a new Auto Enrolment model.
Describing progress to date, the Minister said that over a hundred written submissions have been received from a diverse range of interest groups including employer and employee representatives, pension industry bodies, advocacy groups, academics and interested individuals. In addition to the written submissions, a series of regional public consultation seminars was held in Dublin, Galway and Cork. Participants at these seminars were also invited to take part in an on-line survey on the structure and design of the system.
The Minister indicated that she expects Automatic Enrolment to be developed and operational by 2022 and emphasised that consultation with stakeholders will continue and will be vital in building consensus across all sectors of society so as to decide how the new system will be best delivered.
Automatic Enrolment is perhaps the most fundamental policy reform in a generation in terms of retirement savings provision. The new system will, when implemented, enable people to save and accumulate sufficient assets to maintain better personal living standards in their retirement. In this way, the combined use of public pensions and private retirement savings allows employees, employers and the State to each play a part in addressing the provision of improved retirement incomes.
The initiative needs to be seen in the context of the Roadmap for Pensions Reform 2018-2023 which encompasses major reforms of future State, private and public service pension provisions. The Government has confirmed the State pension is, and will remain, the bedrock of the pension system and a protection against poverty. However, the State pension is not designed or intended to deliver full income adequacy in retirement. To achieve such an outcome, it is recognised that most employees should supplement their State pension income with personal retirement savings. Yet just 35% of the private sector workforce has private pensions coverage and Ireland is one of only two OECD countries without a mandatory earnings related element to retirement saving. Under the new system, whilst employees will be supported by both their employers and the State in saving for their retirement, those who do not wish to avail of these supports will retain the freedom of choice to opt out.