JUST 6% of Ireland’s pension advisors have faith in the Government’s stated plan to roll out Auto Enrolment (AE) in 2023.
In a survey undertaken by leading pension trustees, Independent Trustee Company (ITC) of more than 100 of Ireland’s leading pension advisors throughout the country, it was found that 56% believe there will be a delay of one or two years, while a further 38% say auto-enrolment will simply “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.
Glenn Gaughran of ITC, commented: “The survey reveals that over half (56%) of respondents feel that delays to the planned rollout are inevitable and believe that Auto Enrolment will be deferred by a couple of years.
“A further 38% feel very sceptical on the topic, believing that no action will take place at all; rather than implementation will be successively kicked down the line via reports, reviews, and commissions.
“The findings give a sense of just how much of a thorny issue pension provision has become, particularly since the last election when the Government chose to defer the planned increase in the pension age to 67 by establishing a pension commission and asking it to draft a report on the matter.
“The strategy effectively enabled the Government to avoid making a logical but unpalatable policy decision. Pension advisors 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.”
Under the planned Auto-Enrolment scheme, employers would be obliged to introduce and automatically enrol their employees in a workplace pension scheme, with the employer, the employee and the State all contributing a percentage of an employee’s salary to help fund their retirement.
Mr Gaughran continued: “Most other countries have long since grappled with the fact that over half of employees in the private sector will end up completely reliant on the State pension and so have introduced these types of auto-enrolment programmes, to varying success, to try bridge the pension gap.
“As it is, Ireland’s Auto Enrolment plans are a watered-down version of those seen elsewhere, with all self-employed, all workers on incomes below €20,000, and all of those over the age of 60 excluded from the scheme.”
On lack of reform, Mr Gaughran commented: “The Government cannot continue to avoid reforming our outdated pension system and it must accept that brave decisions will need to be made to ensure adequate pension provision for future generations.
“People are living longer, leaving a corresponding fiscal challenge for our current and future taxpaying generations to carry the burden of pension provision for more senior ones. Eurostat places the average life expectancy for Irish males at 81 and at 85 for females, meaning that persons could be in receipt of their pension for anything from 15 years to 20 years plus. Reform will be necessary to secure sufficient resources to match our increasing longevity.”