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Fears of new delay in roll-out of national pension plan


Thousands of people are set to rely on the State pension when they retire.

Thousands of people are set to rely on the State pension when they retire.

Heather Humphreys

Heather Humphreys


Thousands of people are set to rely on the State pension when they retire.

MOST pension advisers expect another delay in the roll-out of an auto-enrolment pension system for those who only have the State pension to rely on when they retire.

The promised system has already been delayed several times.

When it is eventually launched it is expected that it will be marketed to workers as a scheme with an SSIA-style top-up to help them put their own pension in place.

Special Saving Incentive Accounts (SSIAs) were available to open between May 2001 and April 2002.

As well as earning interest, they featured a State-provided top-up of 25pc of the sum deposited.

They proved to be hugely popular, prompting a frenzy to open an SSIA account.

Marketing an auto-enrolment system as having an SSIA top-up is expected to make it more appealing than explaining that pension investment gets tax relief from the State.

The proposals for the auto-enrolment scheme also involve a key role for a central processing authority being based in the Department of Social Protection.

It would collect the funds and hire four fund managers to invest them.

If the Cabinet Sub-Committee on Economic Recovery approves the outlines of the plan it is likely to be brought to Cabinet before Christmas by the Social Protection Minister Heather Humphreys.

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But more than 90pc of pension advisers polled by the Independent Trustee Company expect that the new system will not be delivered next year as promised.

The survey found that 56pc of pension advisers believe there will be a delay of one or two years.

Another 38pc expressed the view that auto-enrolment will “not happen”.

The survey sought to gain insight into attitudes towards the State’s pension policy changes that look set to take centre stage later this year or during 2022.

Following a raft of delays, the Government promised to delivery auto-enrolment next year.

It has been expected to be introduced for around two decades now.

The aim of the scheme is to provide an extra income during retirement for at least some of the 900,000 workers who would otherwise rely solely on a State pension.

Ireland is one of only two Organisation for Economic Co-operation and Development (OECD) countries without a mandatory earnings-related element to retirement.

This is despite the low level of pension coverage here.

Under the planned auto-enrolment scheme, employers would be obliged to introduce and automatically enrol their employees in a workplace pension scheme.

The employer, the employee and the State would all contribute a percentage of an employee’s salary to help fund their retirement.

Independent Trustee Company’s Glenn Gaughran said the findings of the survey give a sense of what a thorny issue pension provision has become.

He said this was particularly since the last election when the Government chose to defer the planned increase in pension age to 67 by establishing a pension commission.

“The strategy effectively enabled the Government to avoid making a logical but unpalatable policy decision.

“Pension advisers are concerned that auto-enrolment will face the same decision-avoidance measures by Government, as its implementation will involve financial pain for both workers and employers,” he said.

Mr Gaughran said most other countries have long since grappled with the need to bring in supplementary pensions for those who are set to rely on the State pension.

Around three quarters of employees in the private sector will end up completely reliant on the State pension.

He claimed the auto-enrolment scheme planned for this country is a watered-down version of those seen elsewhere.

This is because the self-employed, all workers on incomes below €20,000, and all of those over the age of 60 will be excluded from the scheme, he said.

The Government has blamed the “exceptional strain” caused by the pandemic for the latest delay in rolling out the retirement income scheme.

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