Ireland’s government will push ahead with plans to introduce an auto-enrolment programme in 2022, the country’s minister for employment affairs and social protection has said.

Regina Doherty told an industry conference yesterday that the Department of Employment Affairs and Social Protection had recieved more than 100 written responses to its consultation employer and employee representatives, pension industry bodies, academics and advocacy groups.

Doherty said: “While, as a general principle, we have identified a unanimous consensus on the need for increased retirement savings, there is also a diverse range of views on the preferred manner and means of delivering the auto-enrolment solution.

“The feedback received during the consultation process will be used to inform the preferred operational structure for automatic enrolment.”

The department published its plans for introducing auto-enrolment last year as a set of “straw man” proposals, designed to generate discussion and ideas rather than as firm policy. The consultation closed in November.

Given the fundamental issues to be ironed out, industry opinion has been that 2022 was an ambitious deadline for bringing auto-enrolment into operation, but the minister said she expected the system to be operational by this deadline.

Regina Doherty

Regina Doherty, minister for employment affairs and social protection

Doherty has previously described auto-enrolment as “perhaps the most fundamental policy reform in a generation” for Ireland’s pensions sector.

Under the proposals, first presented in August 2018, employees would initially contribute 1% of salary to the scheme, matched by employers. This would escalate by 1% a year for both parties for the first six years, while the state would contribute a further 2%. By 2028, the total contribution for each member would be 12% of salary a year.

New members joining after the system opened in 2022 would pay the same percentage as everyone else.

Diverse range of feedback

While Ireland’s pensions industry broadly supported the proposals as a way of increasing private pension savings, several groups voiced concerns.

The Society of Actuaries in Ireland said the default investment fund should be diversified, since the government’s recommendation of a low-risk fund was unlikely to provide an adequate income at retirement.

Roma Burke, partner and actuary at LCP in Ireland, said she had reservations about the effective abolition of the 40% rate of tax relief for higher-rate taxpayers.  

There was also criticism of the exclusion of certain groups of workers, including those under 23 or over 60, those earning below €20,000 a year, and the self-employed. These would not be automatically enrolled but would be able to opt in to the system.

An estimated 65% of Ireland’s private sector workforce has no private pensions savings, and Ireland is one of only two OECD countries without a mandatory earnings-related element to retirement saving.