Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697803934324.pdf (Ireland)
Opening statement by Moyagh Murdock, CEO Insurance Ireland, to the Joint Oireachtas Committee on Social Protection, Community and Rural Development and the Islands on 8th February 2023 Cathaoirleach, Committee Members; good morning.

I am delighted to be with you today to contribute to the Committee’s discussion on the General Scheme of the Automatic Enrolment Retirement Savings System Bill 2022.

My name is Moyagh Murdock and I am the Chief Executive of Insurance Ireland.
I am joined today by my colleagues Jacqueline Thornton, Director Regulation and Policy Development, Ruth NicGinneá, Advocacy and Public Affairs Manager and Nadya Lazarova, Manager of Regulation and Policy Development.

Insurance Ireland is the representative body of the Irish insurance industry.

We represent 133 members providing cover to more than 25 million customers in more than 110 countries.

Our members employ 28,000 people in Ireland and contribute €1.6 billion in tax income per year to the economy.
Ireland is the fourth largest market for insurance in the EU and the biggest exporter of insurance services.

Insurance Ireland appreciates the engagement by the Committee and its members with its initial submission on this issue in November 2022.

The General Scheme of the Automatic Enrolment Retirement Savings System Bill 2022 is a milestone in the joint efforts of all stakeholders to develop an automatic enrolment scheme for Irish workers.
Insurance Ireland and its members supported the development of the system from the beginning and endeavoured to share experiences and learnings of decades of pension scheme provision.

The objective of automatic enrolment is to increase an individual’s pension provision and support all citizens in achieving a good standard of living in retirement.

To deliver on this objective, the scheme will need to be inclusive, flexible and future-proof.
Inclusive: the future automatic enrolment regime needs to include those who need it most.

The General Scheme assumes a scope of people in formal employment between 23 and 65 years of age and with an income of more than €20,000 annually.

The limitation of access for people of young age and with a low income particularly exposes more vulnerable households and individuals.
Citizens starting their career immediately after school or college will miss out important years of contributions and benefits for their retirement.

There have been many reports showing the benefits that the extra years of saving for retirement has over the life of the pension.

Such individuals might also be hit by the €20,000 income threshold as lower formal qualifications often coincide with lower income levels.

Notwithstanding an individual’s age, people with lower incomes in general, e.g.
people working in the care sectors, will be the second major group losing out on the scheme.

The third group of people which might be disadvantaged from the current provisions of the General Scheme are people working part-time.

This will particularly impact people caring for their children and families, who are often women.
The gender pay and pension gap are already a substantial challenge for our society and while automatic enrolment is not the answer to closing this gap, it should not be allowed to crystallise the issues by excluding all efforts women can take to close the gap for themselves, or indeed for their employers to do so.

The system should support efforts from women to ensure the adequacy of their pension in retirement and employers seeking to support these efforts.
The lack of flexibility on top ups, transfers or clarity on the state credit while on periods of maternity and carer leave is concerning.

1 A new pension regime which requires significant input from tax payers should neither ignore the social challenges we are already facing, nor should it fortify them.
The foundations of automatic enrolment will be in place for decades to come, and it should be ensured now that the system is flexible enough to cater to changing working patterns and societal demands over the coming years, particularly to these more vulnerable cohorts.
While we appreciate that automatic enrolment is not designed to eradicate these issues, it should at the very least be in a position to offer the same flexibility to policyholders that is available in established Defined Contribution schemes already.
Flexible and fair: the future auto enrolment regime needs to respond to members’ needs With the publication of its Strawman for Automatic Enrolment in Ireland in 2018, the government had reached a milestone in this project and gained broad support from public and private businesses and organisations.
The final Design Principles which were published in March, as well as the General Scheme of the Automatic Enrolment Retirement Savings System Bill 2022 which we are discussing today, included a number of material changes to the Strawman and the envisioned structure and working of the automatic enrolment system.

These changes resulted in unforeseen consequences from what was originally proposed – some of which I have already touched upon.
An additional challenge is the broadening of the role of the Central Processing Authority (CPA).

The Strawman envisioned that the CPA would act as a processing centre, to interact with employers, collect contributions etc, and the actual pension provision would be delivered through the existing pension infrastructure, with the associated consumer protection and any liabilities of such delivered through regulated pension providers.
The Design Principles however, proposes the creation of a State-run Pension Provider as the CPA.

According to the General Scheme, the CPA will make all decisions of the pension scheme – including investment choices and protection of policyholder assets and will also be responsible for all liabilities.
This is a material change and can only result in significant increase in cost and time resource compared to the Strawman, requiring experienced pension professionals from Board level down in an already stretched employment market.

Future-proof: Avoid the creation of a major public organisation and liability The Irish Fiscal Council set out in May 2022 that the automatic enrolment fund would potentially accumulate €21 billion in contributions after 10 years.
Thereby, the CPA will become the largest provider of financial services in Ireland.

The design and build of the proposed CPA will be a complex project which, in our view and the experience of our members, is likely to take much longer to implement than the timelines provided for in the automatic enrolment Design Principles.

The establishment of the CPA in this role is also in contrast to successfully operating automatic enrolment schemes in other countries.
Rather than creating new and unproven structures, we suggest building on the lessons learned in other countries and to leverage the solutions already in place elsewhere.

Finally, the General Scheme lacks sufficient detail on what happens for scheme members at their retirement.

The automatic enrolment system expects employees to invest in a pension with no knowledge of how they will be able to access their fund when they need it.

Such uncertainty adds to our considerable concerns about the new regime.
Conclusion Insurance Ireland and its members strongly support the introduction of automatic enrolment in Ireland.

We have long called for such a system.

However, we would appreciate if 2 Committee members would reflect on our feedback so that we can ensure that the new regime is as successful as possible.

A “let’s start now and fix it later”-approach is not optimum.

Major decisions will have to be taken ahead of the introduction and implementation of the regime.
The future regime does not only need to be effective and efficient.

It will need to be inclusive, flexible and future-proof to deliver for Irish society.

Thank you very much for this opportunity to present our position and I look forward to answering any questions you may have.

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