Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697804031511.pdf (Ireland)
Opening Statement by Tim Duggan, Assistant Secretary General at the Department of Social Protection to the Committee on Social Protection, Community & Rural Development and the Islands On The Draft Heads & General Scheme of the Auto Enrolment Retirement Savings Scheme Bill 2022 Good morning everybody.

As the Committee is aware, in Ireland we have had a voluntary approach to supplementary pensions for many decades now.
In short, it has not succeeded in getting the majority of private sector workers into such schemes.

Although the latest CSO data suggests approx.

56% of workers are in schemes, this reduces to approx.

35% when the private sector is considered in isolation.

If not addressed, this low level of coverage means that people will either be dependent on whatever State pension they can qualify for and/or will have to rely on assets accumulated otherwise.
This may result in many people suffering a significant drop in living standards in retirement.

There is no obvious correct way to address this problem – various options exist, and they range from an entirely State provision (essentially an extension of the existing State Pension) to an entirely commercial provision (such as all employees being mandated to take out a PRSA and all employers being mandated to contribute to them).
In its Programme for Government published in 2020, the Government announced that it would tackle this problem by gradually delivering a pension auto-enrolment system, taking account of the exceptional strain that both employers and employees were under at that time and since, based on a number of principles – 1.

Matching contributions would be made by both workers and employers and the State would top up contributions; 2.
There would be a phased roll-out, over a decade, of the contribution made by workers; 3.

There would be an opt-out provision for those who choose to opt out; 4.

Workers would have a range of retirement savings products to choose from; and 5.

There would be a charges cap imposed on pension providers.
Following detailed political consideration in late 2021 and early 2022, the Government published its final design principles of the auto-enrolment system in March of this year in line with those Programme for Government commitments.

That Design Principles document, which has been furnished to the Committee, is the basis for the Draft Heads and General Scheme of the Auto Enrolment Retirement Savings Scheme Bill 2022 referred to you by Minister Humphreys and which you are now considering.
The first thing to say about the design that has been settled on by Government is that it is evidence-based following years of research, consultation and experience.

In that regard, because Ireland is the last OECD country to implement a mandatory or quasi- mandatory retirement savings system, we have learned from approaches and implementations elsewhere – we’ve seen what’s worked well and what hasn’t.
Based on that, we issued a Strawman proposal in 2018 which in turn facilitated a comprehensive public consultation around the country that included focus groups, public meetings, surveys and submissions.

Furthermore, the Department has engaged with numerous domestic pensions and investment experts.
And finally, the Department has engaged with international pensions experts under the auspices of DG Reform in the European Commission which has brought much understanding and expertise to the design considerations.

The second thing to say about the design is that it must be easy for people and employers to engage with and understand – so that they can trust it and buy into it.
This is why the design –  has a State organisation at the heart of the system managing its administration and overseeing investment of funds;  uses a State top-up as an incentive rather than tax relief;  allows people to opt-out or suspend their engagement at various junctures;  starts contributions at a relatively low rate and very gradually increases them to a sufficient rate over a decade;  includes various parameters around age and income;  gives people direct online access to their account to see their pot and its performance in real-time;  allows people to exercise choice but never requires them to do that – so they don’t have to become experts in investment and pensions;  facilitates default options that will result in good outcomes; and  seeks to minimise the administrative burden and legal responsibility for employers.
The third thing we can say is that because of the quite dramatic demographic shifts facing the nation over the coming decades and the financial pressures that will accrue from such changes, it is critically important to get people into supplementary savings as soon as possible.

That means we need to keep the initial implementation as straight-forward and as simple as possible – and we know from experiences in other jurisdictions that such an approach will be suitable for the vast majority of participants.
That is why, in the initial phase, the design –  is focussed on employees in an employer-employee arrangement and does not include the self-employed because of the particular complexities dealing with that cohort;  is leveraging interfaces with payrolls to facilitate the maximum automation capability;  uses static, easy-to-understand contribution rates;  focusses on investment (so that people’s money can begin to grow immediately) and defers treatment of pension drawdown arrangements (as, in the main, they won’t be required for some years); and  seeks to leverage the technology and expertise that already exists in the commercial market rather than reinvent the wheel.
The Design Principles also sets out how future phases and reviews will consider almost all aspects of the system, based on actual learnings of how it is working in practice and on additional features and flexibilities people may desire.
The Draft Heads seek to deal with all of these matters, and in addition, set out conditions and courses of action with respect to –  Communications with various stakeholders and participants;  Dealing with complaints and appeals;  Supervision of the scheme;  Ensuring compliance with obligations especially with respect to contributions and the timing of same;  Ensuring that employees are free to make their own choices; and  A range of other practical administrative matters.
I hope the combination of the Design Principles paper and the Explanatory Notes in the General Scheme have given the Committee the information it needs to consider these provisions but my two colleagues Clare Dowling and Ciaran Diamond here with me and I are more than willing to address any queries, clarifications or concerns you may have.

Thank You.