Auto-enrolment pensions will have worse outcomes for women, Irish Life chief claims

Under the plan, some 750,000 workers, aged 23 to 60 who earn over €20,000, will be automatically enrolled in a private pension scheme through a new agency called the Central Processing Authority at the beginning of 2024.

The Government’s plans to introduce an auto-enrolment pension scheme will have worse outcomes for women and widen the pensions’ gender gap, an Oireachtas committee has heard.

Addressing the Oireachtas Joint Committee on Social Protection, Irish Life chief executive Declan Bolger said the Government’s heads of bill on the proposed system “remain silent on a number of key aspects” and workers who will be auto-enrolled onto a pension scheme are “being asked to provide contributions with no certainty as to how they will access their money in future”.

Furthermore, Pensions Authority chairman David Begg said it was essential to “get pensions right”, as an aging cohort of people who have paid private health insurance all their lives may not be able to pay for it in retirement if they don’t have a “decent replacement income”.

The committee is currently examining Government proposals for auto-enrolment pensions, where a worker earning over €20,000 will automatically be enrolled in an attempt to bridge the gap for many private sectors who do not have a pension.

It is envisaged the bill will be introduced to the Oireachtas in early 2023, with the scheme up and running in 2024.

Under the plan, some 750,000 workers, aged 23 to 60 who earn over €20,000, will be automatically enrolled in a private pension scheme through a new agency called the Central Processing Authority at the beginning of 2024.

It will see employers and employees match contributions, with the State adding a top-up of €1 for every €3 put in by workers. So, for example, a €3,000 yearly contribution by an employee would see €3,000 added by employers and €1,000 by the State.

However, Irish Life said on Wednesday the importance of such a scheme “behoves all stakeholders to get it right first time” and there were a number of concerns with the proposals the Government had put on the table.

Mr Bolger said: “While we are all rightly proud of the many achievements of the State in creating infrastructure to improve the lives of people in Ireland, we can all also point to State 'builds', which commenced with the best of intentions but were subsequently bedevilled by unanticipated complexities, increased costs and significant delays.” 

He said the original “strawman” proposals would have been “lower cost and lower risk” for the State and would mean the system was up and running sooner.

Comparisons were made between between the system introduced in New Zealand, which took 18 months, and the system in the UK which took four years.

Mr Bolger said: “The inability to increase pensions contributions will put women in the auto enrolment scheme in a worse position to those within existing occupational pension schemes and will widen the pensions gender gap.” 

His colleague, Irish Life head of public policy Teresa Kelly Oroz said: “It’s a little surprising we’re introducing a scheme where we know we’ll have problems in the future.” 

Mr Begg, meanwhile, said auto-enrolment would not be a “panacea” for all problems in the labour market and that “perfect could be the enemy of the good” in bringing these measures in.

“It’s important to get this thing rolling,” he said. “As we go on, changes can be made later.”