The Joint Oireachtas Committee on Social Protection has now published its report on the pre-legislative scrutiny of the Heads of Bill to establish the AE system, setting out 21 observations and recommendations. I am considering these recommendations in the drafting of the Bill, but would note that several of them are already incorporated in the design agreed by Government for implementation in a later phase once the system is bedded in. Other recommendations cannot be accommodated as they would require considerable change to the design already agreed by Government. The completion of the Committee’s scrutiny of the AE Heads of Bill nevertheless represents an important step in the legislative process.
Among the recommendations of the JOC are some relating to environmental concerns and the arms industry. In that context, it is important to state that the primary aim of investing AE participants’ funds is to provide a good financial return for them, so that they may have an adequate supplementary income that is over and above the level of the State Pension when they retire.
To manage and administer the AE system, a Central Processing Authority (CPA) will be established. It will procure, through the open financial services market, investment management services on behalf of AE participants. I want to make it clear to the Deputy that the CPA will not be administering a new State fund, but rather will be administering hundreds of thousands of individual savings accounts that are, and will remain, the personal property of the AE participants. The AE project is, in that sense, a State-incentivised personal savings scheme for individuals rather than a new national fund. In that context, the CPA and investment managers will have a duty to, first and foremost, get a good financial return for participants.
In designing high level investment strategies and in contracting for investment services, the Board of the CPA will be guided by both the prudent person principle as well as the need to ensure investments take account of environmental, social and governance (ESG) principles. Such principles would include taking pollution caused by fossil fuels and concerns relating to the arms industry into consideration as part of the overarching, long-term strategy.
I expect to be in a position to publish the AE Bill in the Autumn and to commence its passage through the Oireachtas immediately thereafter. Enactment of the AE Bill will then facilitate the AE system to start in the second half of 2024.
In a written response to a question from Green Party TD Patrick Costello, she said the legislation to underpin the establishment of the CPA is currently being drafted.
She expects to publish it in the autumn “and to commence its passage through the Oireachtas immediately thereafter”.
She said: “Enactment of the AE Bill will then facilitate the AE system to start in the second half of 2024.”
The Government will implement a Total Contributions approach, aiming to better match a person's contributory pension with the contributions they have made. This approach will also incorporate credited contributions, guaranteeing that individuals who take breaks from work to provide care for their loved ones are not put at a disadvantage.
The new Government plans to introduce a pension auto-enrolment system, taking into consideration the significant pressure currently faced by both employers and employees. The aim is to gradually implement an automatic enrolment scheme based on the following principles:
- Matching contributions will be made by both workers and employers, with additional contributions from the State.
- The rollout of worker contributions will occur in phases over a ten-year period.
- An opt-out provision will be available for those who choose not to participate.
- Workers will have a selection of retirement savings options to choose from.
- There will be a cap on charges imposed on pension providers.
Implementation of the AE system has been gathering pace since then, with the first enrolments expected in the latter half of 2024.
It is my intention to publish the AE Bill during this current session of the Dáil, with initiation of its passage through the Oireachtas immediately thereafter. This will be a major milestone in progressing towards the implementation of AE.
Not a chance of it being ready in any part of 2024, unless Revenue management the collection of the pension payments.What's taking the government so long to do this, they have been talking about it forever. Now it's pushed back to end of 2024.
Will you still be able to have a prsa with tax relief and also an auto enrolled pension with government top ups?
What's taking the government so long to do this, they have been talking about it forever. Now it's pushed back to end of 2024.
Will you still be able to have a prsa with tax relief and also an auto enrolled pension with government top ups?
More Oireachtas correspondence here from 6 Nov, uploaded 14 Dec
Seems to be 2 big issues now arising re
1)regulating the pesion scheme; and
2) potential for employers to need to have two parallel systems between the occupational schemes and the AE scheme
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