Good things come to those who wait – so goes the tagline of a famous Irish export, Guinness.
Ireland’s pension sector has been waiting for years for its rules to reflect its shift from defined benefit (DB) to defined contribution (DC). Last month, the latest stage in efforts to bring its rulebook up to date was announced: Automatic enrolment is coming to the Emerald Isle.
Comparisons with the UK system are unavoidable, particularly as the Irish welfare department has chosen to bring in policies that were slow to come to the UK’s rulebook – and some that never got past the discussion stage.
For example, the UK’s Pensions Regulator (TPR) will roll out its authorisation regime for workplace DC providers in October – six years after auto-enrolment. Authorisation comes on top of TPR’s existing responsibilities for all DB schemes and its work on pension scams.
In Ireland, the plan is to set up a new body to oversee all aspects of auto-enrolment. This would include the licensing of providers from the outset. The proposal suggested licensing just four companies offering three funds each, at different risk levels.
Individual savers would select one or be defaulted into a specially designed fund. Whenever a person changed jobs, their savings pot would follow them. The UK spent years debating the ‘pot-follows-member’ concept and never made it a reality.
Ireland’s proposals are open for consultation until 4 November and not due to be implemented until 2022. Much could change – but the country has an excellent opportunity to design a modern, adequate pension system.
Irish alcohol sellers are no longer allowed to claim associated health benefits, so perhaps the Irish could adapt an old Guinness slogan: A pension is good for you.
Nick Reeve, News Editor