Government confirms delay of pension auto-enrolment

Full press release below:
  • Preferred bidders of investment services procurement competition announced
  • CEO and Board Member positions in NAERSA (National Automatic Enrolment Retirement Savings Authority) advertised
  • Co-location between Letterkenny, Co. Donegal and Dublin
Further milestones have been reached in the implementation of ‘My Future Fund’ – the automatic enrolment retirement savings system due to launch early next year.

With the advertising of the positions of Chief Executive of NAERSA - the new National Automatic Enrolment Retirement Savings Authority - as well as its Board Members, the formal establishment of the new Authority is well underway.

Published by the Public Appointments Service (PAS) on behalf of the Top-Level Appointments Committee (TLAC), the position of CEO will be filled through an open competition with a salary set at Deputy Secretary General level in the civil service.

It is expected that the CEO will be appointed by early autumn.

Separately, between five and eight Board Member positions will be filled in line with the State Boards process.

Commenting today, Minister Dara Calleary said:

“This represents an exciting opportunity for a dynamic and talented person to provide strategic leadership within the organisation responsible for administering this innovative, landmark initiative. In a context that will have a deep and lasting impact on the nation, the Chief Executive will, alongside the Board of NAERSA, set the tone and strategic direction of the Authority and will be responsible for ensuring the success of ‘My Future Fund’ in its initial years.”

As part of the Department of Social Protection and the Government’s continued commitment to balanced regional development, the CEO role will be based primarily in Letterkenny, Co. Donegal. This will also support the Department’s close working relationship with Tata Consultancy Services (TCS), the contracted managed service provider of the scheme, who are also based in Letterkenny. The Board members are expected to meet periodically in Dublin and Donegal.

The Minister added:

“It is important that Government leads by example when it comes to regional development. By basing the CEO of NAERSA, a role of real national importance, as well as NAERSA support staff in Co. Donegal, we are demonstrating our ongoing commitment to balanced regional development.”

In a further milestone announcement, the names of the successful bidders for NAERSA’s investment management services contracts have been released. The preferred bidders are: Irish Life Investment Managers, Amundi and Blackrock.

It is expected these companies will complete contract negotiations this summer, well in advance of the commencement of My Future Fund in January.

Minister Calleary noted:

“My Future Fund is a transformative initiative that will revolutionise how people save for their retirement. This is a landmark policy and these investment management companies, who have been selected after a competitive procurement process, will play a huge role in ensuring that My Future Fund is a success and represents good value for money for all future participants.”

Notes for Editors

More information on the advertised role of CEO, as well as the candidate booklet, can be found at Chief Executive Officer, National Auto Enrolment Retirement Savings Authority (NAERSA) - publicjobs. The closing date for applications is 29th May 2025.

More information on the advertised positions of Board Member of NAERSA can be found at Appointments to the National Automatic Enrolment Retirement Savings Authority (NAERSA) | Minister for Social Protection - publicjobs.ie. The closing date for applications is 6th June 2025.

A range of communications resources on auto-enrolment/’My Future Fund’ more generally are available on gov.ie - Auto-enrolment (www.gov.ie), alongside informational videos on Auto-enrolment explained - YouTube.

Key features of the My Future Fund scheme include:

1) Phased Implementation

  • All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employments, will be automatically enrolled.
  • With the first enrolments set to happen at the beginning of next year, the introduction of My Future Fund will be gradually phased in over a decade, with both employer and employee contributions starting at 1.5%, and increasing every three years by 1.5% until they eventually reach 6% by Year 10 (2035). This steady phasing allows time for both employers and employees to adjust to the new system.
2) Saving Supports

  • Matching contributions will be made by employers to those contributions made by employees. This recognises the value employers gain through their employees having additional security in retirement and assists employees with the cost of accumulating pension savings.
  • The State will also top up contributions by €1 for every €3 saved by the employee. This is in addition to the €3 that will also be contributed by the employer.
  • This means that for every €3 saved by an employee, a further €4 will be contributed to their pension pots by their employer and the State – that is every €3 contribution by an employee automatically grows to €7 before it is invested.
  • These employer and State contributions will incentivise people to stay in My Future Fund and will reduce the cost to individuals of saving for retirement.
  • Contributions will cease from the next payroll after an employee’s total gross earnings exceed €80,000.
3) Choice

  • The system will be voluntary but will operate on an ‘opt-out’ rather than an ‘opt-in’ basis.
  • Eligible employees will be automatically enrolled/‘opted-in’ but will have the choice after six months participation to opt-out or suspend participation.
  • Employees will have a range of three retirement savings strategies with different risk/return profiles to choose from.
  • Where employees do not exercise choice, a default strategy based on what is known as a ‘life-style’/’life-cycle’ investment profile will be provided.
4) Simplicity

  • Administrative costs and burdens are to be kept to an absolute minimum for both employers and employees through the establishment of NAERSA to administer the system.
  • Employers will not have to invest in the establishment or procurement of an occupational scheme for their own business. They will simply be required to facilitate payroll deductions and transfer the applicable contribution amount.
  • Importantly, people moving between jobs will not have to change pension scheme or join a new scheme. They will remain members of the My Future Fund on a ‘pot-follows the member’ basis. In addition, people with multiple employments will have their pension savings consolidated into one ‘pensions-pot’.
  • Services will be provided and supported through an easy-to-use online channel where participants will see their savings pots grow quickly and substantively.
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the automatic enrolment retirement savings system due to launch early next year.

They are no longer talking about September or the start of next year.
 
Just so I'm clear, is the following correct???

(1) NAERSA​

is a new State agency (yet another one!!) in charge of Auto-Enrolment? (even though there is already a Pensions Authority)


(2) NAERSA will manage the collection of contributions from employers

(3) NAERSA have appointed an IT company / consultancy firm called Tata Consulting Services (TCS), which had earlier taken over Pramerica Financial Services firm in Donegal. Tata will set up the software / front-end / back-end, etc.

(4) the contributions will be passed to fund managers, who will offer a small range of funds. Amundi, Blackrock and Irish Life according to the Business Post.
 
Protocol said:
Just so I'm clear, is the following correct???

(1) NAERSA​

is a new State agency (yet another one!!) in charge of Auto-Enrolment? (even though there is already a Pensions Authority)
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Yes. Although the pensions authority is more of a regulator and it wouldn’t make sense to give them a job of collecting and managing the funds.
Protocol said:
(2) NAERSA will manage the collection of contributions from employers

(3) NAERSA have appointed an IT company / consultancy firm called Tata Consulting Services (TCS), which had earlier taken over Pramerica Financial Services firm in Donegal. Tata will set up the software / front-end / back-end, etc.
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I think so. Personally, I find it bizarre that the government is locating the state agency near to where the private sector provider is rather than the other way round. It makes it very difficult for the government to switch provider at a future point.

Protocol said:
(4) the contributions will be passed to fund managers, who will offer a small range of funds. Amundi, Blackrock and Irish Life according to the Business Post.
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Yes. I haven’t read the Act, but I assume Tata are involved again at drawdown phase.
 
applies to workers aged between 23 and 60 who earn at least €20,000 per annum across one or more jobs,
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I'd never noticed that bit before. Sounds like a nightmare to administer. But then again, Revenue would be able to do it since they already handle that sort of thing....
 
My understanding is private companies are being used, so the government is not to blame if the scheme or pension funds go pear shaped. It would save a fortune in ongoing collection and enforcement costs to have Revenue collect contributions.

Contributions are (now) being averaged across the fund providers. The fund providers are only managing the funds, they have no knowledge or dealing with the pension contributors.

NAERSA/TCS will manage all dealings with the public.
 
  • Employees will have a range of three retirement savings strategies with different risk/return profiles to choose from.
  • Where employees do not exercise choice, a default strategy based on what is known as a ‘life-style’/’life-cycle’ investment profile will be provided.


What exactly does this mean?

It sound like savers will not be presented with a menu of funds to choose from?

For example:
all equities fund
mixed funds with various shares of equities
all bond fund
 
ClubMan said:
That's what it looks like from what I've seen/read - i.e. one can choose from now, medium, high or default risk strategies but not the specific funds/asset allocations themselves.
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I imagine that is so the fund providers can be changed, re-tendered for etc and a new fund manager can switch in with similar high, medium, low risks fund offerings and are not required to provide a specific fund
 
99% of NEST contributors do not express a fund choice which includes the usual suspects and even a Sharia fund. These 99% are allocated to Target Date Funds (TDFs) which are "lifestyled" to the calendar year that they reach State Pension Age, I think there are 40 TDFs but in essence they are just different mixes of low, medium and high risk funds. Note that NEST has a bizarre nanny approach to young new entrants - by easing them into the high risk over 5 years (I think).
We are taking a slightly different approach. We will have the low, medium and high risk funds and members can pick and mix these but the default (presumably over 95%) will be in high risk until 15 years before retirement age then a one-off switch to medium risk and 5 years from retirement another one-off switch to the low risk. (Without getting into the rabbit hole of lifestyling, these one off switches give a hostage to fortune.)
One expects that our AE will have similar demographics to NEST but at 10% its metrics.
After a dozen years NEST has £40bn AUM. So our AE will be around €4bn by 2040. The AMC for investment services is capped at 10bps. So that is a total €4m AMC between the three fund managers!! Admittedly they are not required to do any actual fund management as the mandate is for passive investment.
 
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Will contributions flow like this:

(1) worker/payroll ------ directly to chosen fund in chosen fund manager

or like this

(2) worker/payroll ------- tens of thousands of deductions flow into NAERSA account, then each week/month, NAERSA pass the accumulated contributions to the three fund managers
 
Protocol said:
(1) worker/payroll ------ directly to chosen fund in chosen fund manager
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Well there is no sense of a "chosen" fund manager. The funds are split equally between the three.
Protocol said:
(2) worker/payroll ------- tens of thousands of deductions flow into NAERSA account, then each week/month, NAERSA pass the accumulated contributions to the three fund managers
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I think it must be like this. A member's holding in a fund is a central concept - NAERSA will be managing that and passing on contributions to the fund managers on an equal basis. Actually it will be more like NAERSA channels money into the three funds and the investment managers manage their third of each fund.
Note that the Strawman had the concept of 4 providers who would handle the full member relationship and would therefore compete for members. Thankfully they ditched that, effectively conceding that competition between providers at the retail level is specious and would really just degenerate to a competition in marketing and distribution. My guess is that the investment managers will be next to invisible to the members and easily replaced by NAERSA.

By the way, we still don't know what the member charges will be.
 
Presumably "high risk" means equities and the default seems to be 70% allocated to US, no wonder the US markets are so richly valued.
And "low risk" means government bonds and they don't look anything like low risk with the shenanigans in the bond markets now regarding first US and now Japanese debt.
 
Duke of Marmalade said:
Well there is no sense of a "chosen" fund manager. The funds are split equally between the three.
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I am trying to get this clear in my head.

The employee chooses one of three "investment strategies".

Will one of these three be "100% worldwide equities", like an ETF tracking worldwide equities?

Who decides the asset allocation in the three strategies?


There are three fund managers. Will it be one fund manager in charge of one investment strategy?
 
@Protocol
All is revealed in the attached RtF.
I think the paragraphs most relevant to your queries are:

RtF for Ivestment Managment of AE said:
Participants’ contributions will be pooled by NAERSA in accordance with the risk level chosen or assigned e.g. the contributions of a 54 year old who has not chosen an investment risk level will be allocated to the moderate risk strategy along with the contributions of everyone else who has either chosen or been assigned to the moderate risk strategy.

AE will operate on a ‘blind account’ approach, whereby NAERSA is the sole investor and the Investment Management Providers do not have sight of the individual AE participants’ account details. As set out in Section 72 of the AE Act, where there is more than one Investment Management Provider, contributions assigned to a risk level will be divided equally between the providers. In this case, a participant’s contributions allocated to an investment strategy/fund type will be divided equally among the three successful Investment Management Providers funds for that investment strategy. This means that the three sets of notional AE funds (high, medium and low risk) will use nine actual funds managed by the three Investment Management Providers.
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Annex 1 (attached) is also helpful
 

Attachments

  • DSP AE - Investment Management RFT.docx
    649.6 KB · Views: 81
  • 1_DSP AE Annex 1 - Funds Specification Summary.pdf
    87.6 KB · Views: 80
Protocol said:
Okay. But we seem to know what the fund managers will get paid? AMC capped at 10 bps.
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Yes @Protocol , but asset management is only a small proportion of the total cost of running the scheme. Looking at the NEST example, the overall charge on members is around 0.5% of AUM (split between 1.8 % of contributions and 0.3% of AUM). The cost of asset management is just over 0.1% of AUM (£43.2m in 2024 for AUM of €40.64bn at year end). Total operating costs in 2024 were £226.8m The NEST scheme had a cumulative loss (cost of administering the scheme, including cost of asset management, less charges against members' accounts) of over €1 billion at 31 March 2024. At that point, it was just breaking even on current year basis (after more than a decade in existence). It plans to repay the amount advanced by the state eventually.
To quote from a recent contribution by Brian Woods on LinkedIn:
"With c4m active members, it (NEST) is starting to pay its way and will ultimately pay back the State's investment. NEST has five times as many members as the Government's estimate of the total target population in Ireland. A NEST type mud flap is not economically viable for Ireland IMHO. There are nuances though. AE will be a state monopoly in Ireland albeit competing with conventional schemes. It has a one third higher State incentive for standard rate taxpayers. Also, as I understand it, AE will be operated on a "one pot for life" mantra. We are badly missing a thorough analysis of these economic and behavioural aspects - with little over half a year to go."
I can't add much to those insightful comments.

PS: A final thought: in the early years the cost of asset management is only a tiny proportion of the overall cost. In NEST's case, the cost of asset management was 19% of total admin costs in 2024. That was after more than a decade in existence. It accounted for just 10.6% of total operating costs in 2023; however, there were one-off costs of almost £60m in 2023 (relating to a failed attempt by NEST to extricate itself from TCS, which the Irish DSP thinks is the best outfit to administer the scheme. NEST found to their cost that TCS is the only realistic administrator for such schemes worldwide, so they had NEST over a barrel. They'll also have the DSP over a barrel, but that's a story for another day!).
 
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@Protocol @Colm Fagan
I have deleted earlier erroneous post. We are given an indication of the likely scale of the funds under management.
Part1: Introduction to RtF said:
Automatic Enrolment will ensure that all eligible employees will be able to save for retirement without the need for every employer setting up and administering an occupational pension scheme. It is estimated that the total amount in retirement savings in the AE system (excluding investment returns) may amount to around €21 billion in assets under management within 10 years, although the actual value will be dependent on a wide range of variable factors including, but not limited to, labour market developments, economic developments, personal choices of participants, investment market performance etc. Accordingly, Tenderers will need to make their own determinations of the potential value of the system over the contract periods possible.
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So they are projecting that it will be half as big as NEST with its 13m members i.e. 16 times the target population for Ireland's AE. Given that it will be toxic for higher rate taxpayers - that looks very ambitious to me.
So the carrot that has been dangled for our three winners is a third share of 1 per mil of €21bn, i.e. €7m p.a. each, within 10 years. I wonder what the legal status of this carrot is. Maybe that is part of the dreaded "significant pushback" that the DSP itself anticipates whenever the penny drops on the toxicity of AE for higher rate taxpayers.
 
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@Protocol
picture of how it works (€7 becomes a €30 pot - I counted :) )
1748011268039.png
 
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