Friday 24 January 2020

Bank casts doubt on timeline for new national pension scheme

Bank of Ireland. Stock photo: Getty Images
Bank of Ireland. Stock photo: Getty Images

Anne-Marie Walsh

A major bank has cast doubt over whether a new national pension scheme for up to 600,000 workers will be ready to "go live".

Bank of Ireland said it supports an "aggressive timeline" but believes a proposed deadline for a long-promised automatic enrolment scheme of 2022 is "very ambitious".

It said it "will only be achievable if there was significant political support to prioritise auto-enrolment immediately".

The scheme aims to ensure workers with nothing but the State pension to rely on in old age are not left in poverty.

Please log in or register with for free access to this article.

Log In

The Department of Employment Affairs and Social Protection has announced employer and worker contributions will rise to 6pc, but has not yet decided what it will pay in.

In a submission to the Department of Employment Affairs and Social Protection, Bank of Ireland listed the steps that still have to be taken.

"The structure of the system needs time to be debated by stakeholders; legislation needs to be drafted, debated at committee stage of the Oireachtas, approved, the necessary governance frameworks agreed and operational infrastructure in place to support a 'go live' date of 2022," it said.

It also noted that 310,000 workers aged between 23 and 60 will be left out of the scheme because you have to earn €20,000 or more to qualify. The bank said employers might try to keep earnings below this threshold to avoid having to make contributions by reducing hours or pay.

It said to provide for simplicity, there is a lot to be said for having no lower income threshold with everyone opted in, with the ability to opt-out.

The bank also said it "may be feasible to 'sell'" the plan that means workers will not be able to draw the new pension until State pension age, which will rise to 68 by 2028.

But it said it is "contrary to thinking about modern retirement saving, which is something we are supportive of".

When asked if the bank will bid to become one of the scheme providers, a Bank of Ireland spokesperson said it will review the auto-enrolment tender and assess its potential participation at that stage.

A spokesperson at the Department of Social Protection said the planned rollout is 2022 and State financial incentive for automatic enrolment is one of five areas where work is continuing.

She said a set of options on the design of a State incentive will be prepared for Government within the first three months of 2020.

Irish Independent

Also in Business