Auto-enrolment pension scheme likely to miss ‘ambitious’ 2024 target, officials fear

Officials at the Department of Finance have cast doubt on whether the Government’s landmark auto-enrolment (AE) scheme for pensions will be ready to commence in 2024, describing the target as “somewhat ambitious”.

Work is continuing on legislation to set up the scheme, which is aimed at boosting the number of people with their own pensions amid concern over future pension provision due to Ireland’s ageing population.

Briefing papers for Minister for Finance Michael McGrath indicate that the 2024 target for the commencement of the scheme may slip.

The document outlines how the Government has approved the final design principles of auto-enrolment and how the Department of Social Protection is working towards having a draft Bill ready early this year. However, it adds: “The envisaged commencement of AE is 2024, which at this point seems somewhat ambitious given all that needs to be done.”

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The assessment in the December 2022 document came two months after Minister for Social Protection Heather Humphreys hailed progress in developing the scheme after the Government approved the draft “heads” – or outline – of the legislation.

[ Auto-enrolment pensions: What questions remain about new worker scheme? ]

“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,” she said last October.

The briefing paper also mentions concern among some in the pension industry over plans for the auto-enrolment scheme. “In relation to the design, eligibility, coverage and roll-out of AE, it should be noted that there are a number of concerns being expressed by private pension providers, notably the Irish Association of Pension Funds (IAPF) and Insurance Ireland,” it says.

A separate submission to the Oireachtas on the Government’s auto-enrolment proposals by Insurance Ireland last November says setting up a Central Processing Authority (CPA) to manage the scheme is a “complex project”. It suggests this is “likely to take much longer to implement than the timelines provided for by the DSP [Department of Social Protection] so far.”

It also said the aim for legislation establishing the CPA to be enacted in the third quarter of 2023, “in our experience, is optimistic”.

[ Pension auto-enrolment: what will it mean for me? ]

Under the planned auto-enrolment scheme, most workers will be signed up to a pension scheme by default, though they will be able to opt out.

The scheme has “policy implications” for the Department of Finance, according to the briefing for Mr McGrath.

“The focus of our policy input will be to be supportive while minimising the cost and operational risk for the State arising from the establishment of the Central Processing Authority (CPA) and assist where appropriate on design,” it says.

The department has also been involved in discussions on the tax treatment of auto-enrolment pension funds.