New opt-out pension scheme will turn present system 'on its head' - Humphreys

A new opt-out pension scheme will turn the present system "on its head". 

That's according to the Minister for Social Protection, Heather Humphreys, who today (October 10) announced government approval of an Automatic Enrolment scheme to simplify the pension decisions of Irish workers. 

Under the General Scheme of the Automatic Enrolment (AE) Retirement Savings System Bill, employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State. 

Although participation is voluntary, it operates on an ‘opt-out’ rather than an ‘opt-in’ basis. 

Speaking about the news, Minister Humphreys said, "The delivery of Auto Enrolment has been a key priority for me since my appointment as Minister for Social Protection. Earlier this year I published the final design principles for the Automatic Enrolment Retirement Savings System for Ireland. 

"Since then, a lot of work has been undertaken in progressing its implementation. This includes the drafting of the Heads of Bill which I am pleased to say have now been approved by Government. This represents a historic milestone in the journey towards enabling people who are currently without occupational pension coverage to save for their retirement.

"After decades of talking about Auto Enrolment in this country, I am pleased to say the AE train is now very firmly on the tracks and leaving the Station ahead of its introduction in early 2024." 

Seven hundred and fifty thousand workers will be enrolled in the new scheme on a voluntary basis initially, with workers given the ability to opt-out or suspend participation for periods of time. 

The scheme will include matching employer contributions and a State top-up, meaning for every €3 saved by a worker, a further €4 will be credited to their savings account. 

Minister Huphreys concluded: "People are living longer and healthier lives and through AE I want to ensure they can enjoy their retirement years with some financial security. I know for many people retirement seems a long way away and they think they have a lot of time before they need to think about a pension. Pensions are complicated and so we all tend to put it on the long finger – it’s something I’ll get round to next year or maybe even the year after. 

"AE is a generational reform in the Irish pensions landscape. It will combat pension inertia by turning the present system on its head to one where people will have to consciously 'opt-out' of supplementary pension coverage rather than 'opting in. It is intended not just to get people saving earlier but to support them in that saving process by simplifying the pension choices and importantly by providing for significant employer and State contributions as well.”