POLITICIANS HAVE BEEN called on by the Irish Congress of Trade Unions to “get the bill done” ahead of the auto-enrolment pension scheme being debated in the Dáil later.
The Automatic Enrolment Retirement Savings System Bill will reach its second stage today, where the principles of the scheme will be outlined and debated.
The scheme will apply to almost 800,000 workers between the age of 23 and 60 who are employed but not enrolled in an occupational pension scheme, and drawdown will be aligned with the State Pension.
It’s understood that Social Protection Minister Heather Humphreys wants to have the Bill enacted as soon as possible so that the new system can commence and first contributions can start on 1 January, 2025.
It will be gradually phased in over the course of a decade starting on 1 January.
Ahead of the Bill reaching the second stage in the Dáíl later, the Irish Congress of Trade Unions has called on “politicians from all parties and none to ‘get the bill done’”.
Its general secretary Owen Reidy remarked that “another generation of workers cannot be allowed to have their income and living standards plummet in retirement”.
The landmark scheme is designed to allow workers to begin saving for their pension earlier and to ensure that people are not left on just the State pension when they retire.
Reidy said the bill is “long overdue” and that it’s “vital 2024 is the year when we get the pension auto-enrolment bill done and bring an end to our failed voluntary approach to pension saving”.
Reidy pointed to the UK, where a similar scheme was established in 2012, and labelled it an “extraordinary policy success” and noted that the proportion of employees with a workplace pension in the UK jumped from 47% to today’s figure of close to 80%.
A new authority, named the National Automatic Enrolment Retirement Savings Authority, will be established to manage the system and Reidy welcomed provisions in the bill for a worker representative on the board.
He also welcomed provisions in the Bill to consider expanding the pension scheme to younger, lower-paid, and self-employed workers within five years of automatic enrolment coming into operation for the first 800,000 eligible employees.
However, Reidy warned that the bill “will be a bitter pill to swallow” for workers with personal pensions with lower or no employer contributions or for those who had “proactively taken steps to save for their retirement prior to auto-enrolment” by accessing a PRSA.
Employers are required to provide their employees with access to a personal retirement savings account (PRSA) if they do not provide an occupational pension scheme for their employees, and there is no obligation on the employer to make a contribution.
Latest CSO figures from February of this year show 5% of employees with a pension have a PRSA only.
Under the Bill, these workers will not be automatically enrolled or guaranteed a minimum employer contribution to their retirement savings for at least seven years after auto-enrolment comes into operation.
Reidy said “more ambition and an amendment are needed” and that the seven-year deadline provided for in the Bill for setting minimum contribution rates into existing pension schemes needs to be shortened.
Despite these concerns, Reidy called on politicians to work together to get the legislation passed and remarked that “we are finally within touching distance of making a meaningful difference to hard-working people’s retirement”.
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