Sections

Irish auto-enrolment 'a bit of time away', minister concedes

Related Categories

The introduction of auto-enrolment in Ireland will likely be postponed until the country’s economy recovers and its Social Insurance Fund is no longer running a deficit, the minister for Social Protection has said.

Discussing the potential for a mandatory or quasi-mandatory second-pillar pension system, Joan Burton said she believed auto-enrolment would be a more viable option for the country, despite a recent OECD report on the Irish pension system branding auto-enrolment a more costly and second-rate policy.

Speaking at the Irish Association of Pension Funds annual benefits conference in Dublin this week, the Labour TD admitted that any such reform would need to go hand in hand with an emphasis on security of individual savings, as the recent use of assets from the National Pensions Reserve Fund to prop up the country’s ailing banking sector would “probably loom quite large in people’s minds”.

Burton also said the economic circumstances to make an auto-enrolment system viable were probably “still a little bit of time away”.

“Nonetheless,” she added, “it is important that, as a government, we formulate a response on this critical issue where we have seen other countries we would regard as markers for Ireland successfully introduce initiatives to address the question of supplementary pensions.”

The minister strongly indicated that the launch of auto-enrolment would see a reduction of current tax burdens to balance out the increased cost of second-pillar pension saving, saying there was a possibility for the “recasting” of the current universal social charge structure to support both the state pension and private provisions.

However, Burton said it was important to bring the Social Insurance Fund – used to cover the state’s social protection spending and currently running a deficit – back into a surplus before such steps could be considered.

“What we do need to have is an adequacy of funding for the state retirement pension, and, currently, there is an actuarial deficit of over a billion per annum in the state pension Social Insurance Fund,” she said. “We need to address that over a period of time.”

She appealed to social partners to work with the government on the eventual design of the new system.

“It would need both government and industry and employers and unions to come together to agree on the best possible framework with the highest degree of security, obviously keeping costs as low as possible but also having the security as a paramount issue given our recent financial history in this country,” she said.

Security and cost was an issue repeatedly touched on by the minister, who said an auto-enrolment system would need to offer “secure identification of whatever savings someone put in to a supplementary pension”.

She also noted that the Department of Social Protection would soon be looking to appoint members of the new Pensions Council, the consumer-focused body tasked with advising the government on pensions policy.

Burton reiterated that the Council’s first task would be to look into the level of pension charges and advise if she needed to take further action to lower costs.

“This is an area that obviously has the highest priority,” she told delegates.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • IN-2454

    Closing date: 2018-08-01.

Begin Your Search Here