IT IS A priority of Government to get the new pension enrolment system “up and running”, according to Social Protection Minister Heather Humphreys.
The Committee on Social Protection today published its report scrutinising Government plans to put in place an auto-enrolment scheme for pensions – recommending a two-year delay in order to allow businesses prepare.
It also recommends that teenagers as young as 16 who are working should be automatically made to start saving for a pension.
In a statement to The Journal, Humphreys’ said it is a priority to get the auto enrolment system set up, stating that the implementation of the new system “is well underway, with the first enrolments expected in 2024″.
“Auto-enrolment has been talked about for 20 or 30 years and the Minister is determined to make sure it happens under this Government.
“As we are one of the last countries in the EU to introduce AE, we have been able to take learnings from other countries in terms of what has worked well and what hasn’t,” said the statement.
While the statement said the committee’s report will be given consideration the minister’s priority is to “get this up and running” .
Under the current timeline, the Government is seeking to have the scheme in operation by 2024, with it set to apply to approximately 750,000 workers throughout the country.
The auto-enrolment scheme will apply to the approximately 750,000 workers who are between the age of 23 and 60 who are employed but are not enrolled in an occupational pension scheme.
The current plan for the scheme is that employees will contribute into the pension pot, with their contributions set to be matched by their employer as a percentage of the employee’s gross income.
This contribution will then be topped up by the State.
Currently, the Government plans to phase in the contribution rates over several years.
These rates are as follows:
The report published today has a number of recommendations that it says should be adopted under the new scheme, including the two year lead in time once the legislation is in place.
Cathaoirleach of the committee, Independent TD Denis Naughten, said that this was recommended after hearing evidence that it would be difficult to implement the scheme in a short term.
Currently, proposed legislation to introduce auto-enrolment would see the scheme introduced from early 2024. The Government are seeking to pass the legislation through the Oireachtas before the end of the year.
“From the evidence that we heard, it was put to us that it would be very challenging to achieve within that period of time,” Naughten said,
“There’s also a need to ensure that employers are prepared for this and the decision of the committee, having heard evidence – both oral and written – was that there should be a two-year lead in time for this.
He added that this would give both the Department of Social Protection and employers time to prepare for auto-enrolment.
“The important thing is, in relation to this, is that we get this scheme in, that it is fully functioning and operational as quickly as possible.”
The committee also recommended that the proposed low income threshold of €20,000 be removed. Under the proposed legislation, people who earn under €20,000 would not be auto-enrolled in the scheme.
It agreed that this threshold would penalise younger workers, low income earners and disproportionately women.
There were also recommendations made as to where the money can be invested, with the committee saying that funds should not be invested in either the fossil fuel or arms industries.
Green Party TD and leas cathaoirleach of the committee Marc Ó Cathasaigh said that as countries continue to move away from fossil fuels, longer term investments in the industry will not be seen as sensible.
“I think, in any case, over a 20 year time horizon – which is what you’re talking about in pension investments – I think that fossil fuels are going to be proved to be a bad investment over that type of time period,” Ó Cathasaigh said.
There were also recommendations that more money be invested into Irish funds, rather than primarily being invested abroad.
“Some of the benefit of that investment should remain within [Ireland] and also that some of that money should be put to use, particularly in attaining our climate goals.
“Things like investment in the likes of renewable energy for example,” Ó Cathasaigh said.
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