Financial advisors say deadline for automatic pension plan enrollment will not be met

Financial advisers say the government will miss its deadline to introduce a self-enrolling pension scheme for workers who have no private retirement income coverage.

Less than two months after Social Protection Minister Heather Humphreys announced that up to 750,000 people would be automatically enrolled from January 2024 in a scheme that would see them contribute to a private pension, more than three-quarters of councilors in the sector said the government will not have enough time in the next 18 months to put the new regime in place.

And a quarter of them say the sweeping reform of the government’s pensions policy, designed to ensure that every worker has reasonable financial resources in retirement, may never happen at all.

“Despite the fact that last month the final design principles for the auto-enrollment retirement savings system for Ireland were announced, much of the industry does not seem convinced that auto-enrollment will soon be operational,” said Glenn Gaughran, business development manager at Independent Trustee Company (ITC), which conducted the survey.

“In fact, nearly one in four financial advisers we asked said it would be 2026 before it was available to workers – or possibly never at all.

The ITC interviewed 100 financial advisers for its survey.

Mr Gaughran said a lot of work was still needed in terms of fine-tuning the design of the system, with the government needing to secure at least four fund management companies to run the system.

“Based on our assessment, the early years are likely to be loss-making for participating providers, so they are likely to seek a long-term commitment from the government to provide these services,” he said.

The industry is also divided on the likely impact of self-enrollment on the broader pension market.

The larger group doubts there is a ripple effect. About one in four expect that a government information campaign in favor of self-enrolment could raise awareness and even increase voluntary retirement savings. However, others fear that people currently saving more in occupational pension schemes will simply rely on automatic enrollment, which will see a maximum of 14% of gross salary invested.

Previous GRA and Ministry of Finance Engage Information Services Department on e-Levy Implementation
Next AM Best revises outlook to positive for Dubai Insurance Company (PSC) – InsuranceNewsNet