Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697803848053.pdf (Ireland)
Confidential Auto Enrolment Ireland 2022 Tom O’Gorman Head of Distribution, Ireland +353 878516435 tom.ogorman@lgim.com FOR INVESTMENT PROFESSIONALS ONLY Confidential November 2022 Introduction Thank you for sharing the Design Principles for Ireland’s Automatic Enrolment Retirement Savings System published in March 2022.

Legal & General Investment Management (LGIM) is very supportive of your proposals to introduce Auto Enrolment in Ireland and the benefits that this will provide.
As the largest pension provider in the UK with a 22% market share, we have significant experience in supporting Auto Enrolment solutions.

Within this document we have provided comments based on our experience in the UK and also in the Irish Pension market on some of the key areas of the Design Principles for your consideration as you shape the solution in advance of the launch date.

About Legal & General Established in 1836, Legal & General (L&G) is one of the UK's leading financial services groups.
LGIM as investment manager within the L&G Group is recognised as a major global investor, with over €1.5 trillion in total assets under management as at 30 June 2022.

We also provide powerful asset origination capabilities.

Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income.
Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.

Our platform offers our flagship Environmental, Social and Governance funds and can deliver access to more specialist asset classes and managers.

We are committed to responsible actions on sustainability and consider ESG factors to be a key part of our investment process.

We raise awareness of climate issues and take an active stance to drive positive change.
This accords with our approach to active ownership of the assets we hold and commitment to net zero.

Our flagship DC product in the UK, the Legal & General Mastertrust, launched in October 2011, and is now the UK’s largest commercial master trust with £18.9bn of AUM, 1.6m members and 267 employers at end of October 2022.

LGIM has been delivering pension solutions to Irish Pension schemes for over 20 years since 2002.
We significantly expanded our presence in Ireland from 2012 onwards and are a recognised provider of investment solutions in excess of €12.5bn to occupational DC and DB schemes, DC master trust providers and Insurance based pension platforms.

In 2018 we established our management company LGIM Europe in Dublin.

LGIM Europe is regulated by Central Bank of Ireland (CBI) to oversee regulated funds and discretionary mandates for LGIM European client base.
We now have over 40 staff based in Dublin with AUM under supervision of €180bn.

We hope our response is helpful and constructive.

We trust both our leading position in the UK DC market and our strong knowledge of the Irish Pension market will allow us to add valuable input over time.

We would be happy to discuss the points covered in more detail.

Please do not hesitate to contact me if I can be of any further assistance.
Tom O’Gorman 2 | Confidential November 2022 Ireland AE – Design Principles We believe the following features of the Design Principles will contribute to the success of Auto Enrolment in Ireland: • The significant move from an ‘opt-in’ approach to supplementary pension savings to an ‘opt-out’ approach will simplify the process of pension savings for a large percentage of the working population who currently only rely on the State Pension provisions for their retirement income plans.
• operating the AE scheme through the CPA can help mitigate the issue in the UK of small pots i.e.

employees moving from one employer to another, being auto enrolled again each time and a new period of savings beginning.

• The centralised role of the CPA should help deliver an efficient model between the member and all the relevant providers.

• The opportunity to opt out does not apply until after 6 months of savings – we believe this will encourage the savings habit and lead to fewer opt-outs.
• Re-enrolment takes place every 2 years (or after a phased increase in contributions takes place) – this regular frequency sends the right message to encourage pension savers to continue contributions.

• On opt-out, employer and state contributions remain in the member’s pot – will ensure at least some access to retirement provisions.
• After phasing is complete, total contributions will be 14% of earnings (to upper earnings threshold) – this level of contribution savings will provide at least a moderate retirement income for many savers that will support the Pillar 1 State Pension.
3 | Confidential November 2022 Our considerations and initial recommendations We support the timeline and Q1 2024 target for commencement of auto enrolments set by the Joint Committee on Social Protection, Community and Rural Development and the Islands as being a clear signal to improve pension coverage and access to workplace pension for more workers in Ireland.
We note Section 5 “Evolution of the AE system” in the Design Paper and we intend that our comments can be read in this context of evolving the system over time.

1.

Eligibility Criteria: We recognise the importance of encouraging retirement savings habits from a young age and the impact that this can have on retirement outcomes.

There is also an increasing trend for multiple periods of employment in a person’s lifetime, including a gradual phasing into retirement as opposed to a single retirement event.
Recommendations: • • • consider replacing starting age of 23 with starting age of 18 for AE eligibility.

continue to Auto Enrol beyond age 60 to include later life workers.

consideration that eligibility should be from the first Euro earned, rather than the current €20k threshold as this thresholdcan penalise young workers, low earners and disproportionately women 2.
Gender Pension Gap: Despite the success of auto enrolment in the UK, a significant challenge remains in relation to the gender pensions gap, where the average pot at retirement for women is less than half of that of men.

See our article on this subject for further context.

Recommendation: • the Department of Social Protection considers for pension contributions to recognise maternity leave periods.

3.
3.

Multiple employments: Many existing auto enrolment approaches fail to cater for those with multiple concurrent employments.

The proposed centralised approach in Ireland may provide the Central Processing Agency (CPA) the view of all the income an individual receives from multiple employers to address this.

Recommendation: • the CPA could evolve to identify these individuals and trigger Automatic Enrolment based on the combined income amount.

4 | November 2022 Confidential 4.


Pension Drawdown (phase 2) – We welcome the future focus on making drawdown available to the scheme as soon as possible after launch.

If appropriate investment options are aligned to a drawdown position at retirement and provide for ” to and through” retirement solutions, this can avoid the need for investment changes at the point of accessing benefits, and associated transaction costs.
Recommendation: • development of a drawdown fund to accommodate member post retirement choices.

5.

ESG Integration: In our Irish defined contribution saver research, 65% of respondents from Ireland thought that climate change would have a bigger long-term impact than COVID, and 92% affirmed that if they knew that their pension was encouraging companies to have a positive impact by investing more in them, it would make them want to be more involved and find out more.
Recommendation – • ESG integration should be a key feature of the investment approach for Auto Enrolment Ireland including the default fund.
5 | Confidential November 2022 Legal/Compliance LGIM Managers (Europe) Limited (“LGIM Europe Ltd”) is authorised and regulated by the Central Bank of Ireland (CBI) as an Alternative Investment Fund Manager (AIFM) under the European Union (Alternative Investment Fund Managers) Regulations 2013 as amended (AIFM Regulations) and as a UCITS management company under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I.

No.
No.

352 of 2011) (the “2011 Regulations”).
In accordance with Regulation 7(4) of the AIFM Regulations, LGIM Europe Ltd is also authorised to provide management of portfolios of investments, including those owned by pension funds and institutions for operational retirement provision in accordance with Article 9(1) of Directive 2003/41/EC, in accordance with mandates given by investors on a discretionary, client-by-client basis, and non- core services comprising of (i) investment advice and (ii) receipt and transmission of orders in relation to financial instruments.
LGIM Managers (Europe) Limited is responsible for investment management but will delegate day-to-day portfolio management to Legal & General Investment Management Limited (LGIM) in the UK.

LGIM is authorised and regulated by the Financial Conduct Authority (FCA) and head office is located at One Coleman Street, London EC2R 5AA.
6 | Confidential November 2022 LGIM Europe Disclaimer and important legal notice The information contained in this document (the ‘Information’) has been prepared by LGIM Managers Europe Limited (‘LGIM Europe’), or by its affiliates (‘Legal & General’, ‘we’ or ‘us’).

Such Information is the property and/or confidential information of Legal & General and may not be disclosed by you to any other person without the prior written consent of Legal & General.
No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the Information, or any other written or oral information made available in connection with this publication.

Any investment advice that we provide to you is based solely on the limited initial information which you have provided to us.
No part of this or any other document or presentation provided by us shall be deemed to constitute ‘proper advice’ for the purposes of the Investment Intermediaries Act 1995 (as amended).

Any limited initial advice given relating to professional services will be further discussed and negotiated in order to agree formal investment guidelines which will form part of written contractual terms between the parties.

Past performance is no guarantee of future results.
The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested.

The Information has been produced for use by a professional investor and their advisors only.

It should not be distributed without our permission.
The risks associated with each fund or investment strategy are set out in this publication, the relevant prospectus or investment management agreement (as applicable) and these should be read and understood before making any investment decisions.

A copy of the relevant documentation can be obtained from your Client Relationship Manager.
Confidentiality and Limitations: Unless otherwise agreed by Legal & General in writing, the Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice.
Any trading or investment decisions taken by you should be based on your own analysis and judgment (and/or that of your professional advisors) and not in reliance on us or the Information.
To the fullest extent permitted by law, we exclude all representations, warranties, conditions, undertakings and all other terms of any kind, implied by statute or common law, with respect to the Information including (without limitation) any representations as to the quality, suitability, accuracy or completeness of the Information.
Any projections, estimates or forecasts included in the Information (a) shall not constitute a guarantee of future events, (b) may not consider or reflect all possible future events or conditions relevant to you (for example, market disruption events); and (c) may be based on assumptions or simplifications that may not be relevant to you.

The Information is provided ‘as is' and 'as available’.
To the fullest extent permitted by law, Legal & General accepts no liability to you or any other recipient of the Information for any loss, damage or cost arising from, or in connection with, any use or reliance on the Information.
Without limiting the generality of the foregoing, Legal & General does not accept any liability for any indirect, special or consequential loss howsoever caused and, on any theory, or liability, whether in contract or tort (including negligence) or otherwise, even if Legal & General has been advised of the possibility of such loss.
Third Party Data: Where this document contains third party data ('Third Party Data’), we cannot guarantee the accuracy, completeness or reliability of such Third- Party Data and accept no responsibility or liability whatsoever in respect of such Third-Party Data.

Publication, Amendments and Updates: We are under no obligation to update or amend the Information or correct any errors in the Information following the date it was delivered to you.
Legal & General reserves the right to update this document and/or the Information at any time and without notice.

Although the Information contained in this document is believed to be correct as at the time of printing or publication, no assurance can be given to you that this document is complete or accurate in the light of information that may become available after its publication.
The Information may not take into account any relevant events, facts or conditions that have occurred after the publication or printing of this document.

Telephone Recording: As required under applicable laws Legal & General will record all telephone and electronic communications and conversations with you that result or may result in the undertaking of transactions in financial instruments on your behalf.
Such records will be kept for a period of five years (or up to seven years upon request from the Central Bank of Ireland (or such successor from time to time)) and will be provided to you upon request.

LGIM Managers (Europe) Limited is a UCITS and AIF management company with MiFID II top up permissions, it currently operates a branch in Italy, with plans to open further EU branches in Germany, Netherlands & Sweden in the future.

Registered in Ireland No.

609677.


Registered Office: 33/34 Sir John Rogerson’s Quay, Dublin, 2, Ireland.

Authorised and Regulated by the Central Bank of Ireland No.

C173733.

7 |