Auto Enrolment – Brokers Ireland Say While Commitment To 2022 Start Is Positive Scheme Leaves Much To Be Desired
Thu Oct 31 2019
New Automatic Enrolment Retirement Savings System
Minister for Employment Affairs and Social Protection, Regina Doherty TD, has just published (30th October) an outline of the intended shape of the new Automatic Enrolment Retirement Savings System, due to come into effect in 2022.
While some elements remain to be finalised we now know quite an amount of detail, which you will find on this link: http://m.welfare.ie/en/pressoffice/Pages/pr301019.aspx
At Brokers Ireland we’ve expressed our disappointment, particularly on the charges cap, which will obliterate any chance of consumers being able to access advice for these products.
Commenting on the announcement today (Thursday) by Minister Regina Doherty of Government approval for the auto-enrolment pension scheme to begin, as promised, in 2022, Brokers Ireland said it is very disappointed with key aspects of the scheme as announced because with a limit of 0.5pc on administrative, management and investment charges it will not facilitate independent advice for consumers, and with a 10 year build-up to full contributions many will miss out on having adequate savings built up for retirement.
Rachel McGovern, Director, Financial Services at Brokers Ireland said various studies, national and international, have shown that those who receive financial advice are substantially better off than those who don’t.
“The scheme as announced is very conservative, based on the premise that consumers will not need advice at any time, either on joining the scheme, on opting out, on opting back in, opting to transfer benefits into or out of the scheme, or when taking retirement benefits.
“In that it is very disappointing and in our view will not achieve optimum outcomes for consumers,” she said.
“And in taking ten years, a decade, to build up to the full contribution of 6pc, it will, unfortunately, leave many with insufficient savings to support them in retirement,” she said.
There are five main areas where work is continuing. These are related to the design of the:
- State financial incentive;
- Scope and role of the Central Processing Authority;
- Nature and functions of the Registered Providers;
- Investment framework and funds to be offered by Registered Providers, including, the design of the default fund, and also the pay-out phase; and
- Phasing of implementation.
Brokers Ireland will continue to monitor developments and seek to have our views influence the final shape of the scheme.