Ahead of the commencement of the Dáil debate on the Automatic Enrolment Retirement Savings System Bill today the Irish Congress of Trade Unions is calling on politicians from all parties and none to “get the bill done.”
General Secretary Owen Reidy said: “Another generation of workers cannot be allowed to have their income and living standards plummet in retirement.
“It is vital that 2024 is the year when we get the pension auto-enrolment bill done and finally bring an end to our failed voluntary approach to pensions saving. It is long overdue. Ireland remains the only OECD country not to operate auto-enrolment or similar pensions saving scheme.”
Mr Reidy said: “The latest Pensions Authority activity figures show a decline in the number of workers with an occupational pension, at a time when more people are in employment than ever before. Given that the State pension is paid at a flat €277.30 a week, workers without the income top-up from retirement savings - two-thirds of today’s private sector workers - are exposed to a significant drop in their normal living standards in old age.
“The introduction of AE in the UK in 2012 has been an extraordinary policy success. The proportion of employees with a workplace pension jumped from 47% to almost 80% today.
“We welcome the provisions in the Bill for a worker representative on the board and to consider expanding AE to younger, lower paid and self-employed workers and death in service cover - all of which Congress called for at pre-legislative stage – within five years of automatic enrolment coming into operation for the first 800,000 eligible employees.
“But we strongly call for the seven-year deadline provided for in the Bill for setting minimum contribution rates into existing pension schemes to be shortened. It will be a bitter pill to swallow for workers who find themselves with a lower or, in cases of personal pensions, no employer contribution* all because they had proactively taken steps to save for their retirement prior to auto-enrolment. More ambition and an amendment are needed.
“While we acknowledge the intention of the Department of Social Protection is for pension auto-enrolment to ‘do no harm’ to existing good occupational pensions, Congress and our affiliated unions will need something more concrete than words of comfort. The Bill must provide firewall provisions to protect against displacement and dilution from employers responding to the cheaper pension auto-enrolment option by closing their workplace pension to new hires or levelling down their pension contributions to the AE set rate**.”
Mr Reidy added: “Politicians have been talking about introducing a mandatory pay-related pensions saving scheme longer than they have been talking about the pension age. Now that we are finally within touching distance of making a meaningful difference to hard-working people’s retirement, it is imperative that all politicians work together to get the legislation passed.”
Notes to editors
*By law, employers are required to provide their employees with access to a personal retirement savings account (PRSA) if they do not provide an occupational pension scheme for their employees. There is no obligation on the employer to make a contribution. The latest CSO report on pension coverage (February, 2024) shows that 1 in 20 (5%) of employees with a pension had a PRSA only. Under the Bill, these workers will not be automatically enrolled or guaranteed a minimum employer contribution to their retirement savings for at least seven years after auto-enrolment comes into operation.
**At pre-legislative stage, Congress had recommended that the service requirement for existing workplace pension schemes (prohibit membership until after the probation period is completed) be reviewed by The Pension Authority and for provisions in the legislation requiring contribution levels and membership trends in existing DC and DB schemes be reviewed annually. In the event of evidence of auto-enrolment resulting in displacement and dilution, Congress had recommended that the AE employer contribution be revised upwards.
