Irish government approves key auto-enrolment provisions

first_imgThe Irish government has decided on and published key elements of the design of its new auto-enrolment defined contribution (DC) pension savings system scheduled to come onstream by 2022.Most of the elements are based on the proposals that were set out in the government’s “strawman” document published last year.This was followed by a wide-ranging public consultation process that included contributions from experts internationally, as well as economic analysis by Ireland’s Economic and Social Research Institute.  Regina Doherty, minister for employment affairs and social protection, said the decisions that had been taken by the government were underpinned by the principle that the system “first and foremost operates in the best interests of savers”.  She highlighted the ‘pot-follows-member’ design as a key feature of the auto-enrolment system.“This means that an employee’s pension contributions will be collected in the same pension ‘pot’ even when an employee changes employer, or if the employee has multiple employers,” she said. “This is one of the critical lessons that we learned from examining similar systems internationally.”Key provisions include:* Automatic enrolment to apply to all those in employment between 23 and 60 and earning at least €20,000 per annum and not in an equivalent employer’s scheme;* Opt-in for employees under 23 or over 60, or earning under €20,000 p.a.;* Contributions are compulsory for the first six months of membership, followed by a two-month opt-out period and some limited savings suspension periods;* Employers have to make a matching (but tax-deductible) contribution at a specified rate, with a qualifying earnings ceiling of €75,000;* Minimum contributions start at 1.5% of salary, increasing by 1.5 percentage points every three years to a maximum of 6% at the start of Year 10;* The state will set up a Central Processing Authority (CPA) to approve providers and collect and distribute contributions;* Employees to choose their provider (if not, the CPA will do so), achieving a “pot follows member” approach;* Providers must offer a limited number of standard investment choices, including a default;* Providers’ charges for administration and investment capped at 0.5%.The government is sticking to 2022 as the start date for auto-enrolment, in spite of failing to meet most of its interim deadlines by the start of 2019.Timeline questionedJerry Moriarty, chief executive, Irish Association of Pension Funds (IAPF), said: “Experience elsewhere shows auto-enrolment is effective in increasing coverage. The targeted contribution rates go some way towards achieving a reasonable level of adequacy.”However, he added: “It is good that it is moving on, but 2022 still seems ambitious, particularly with some key decisions to be made.”He said one of these decisions is the nature of the state contribution: “Strawman suggested a direct contribution, but it might be done by tax relief.”Another of his reservations was that the operation of the CPA is still “somewhat unclear”.Moriarty said: “Putting the CPA in place is the first key step as they will be approving providers, setting the criteria for providers and will also need the infrastructure to collect contributions. That will be challenging in order to have the first employees enrolled in 2022.”Meanwhile, the exemption from providing auto-enrolment for members of an existing scheme which meets prescribed minimum standards and contribution levels will be key for pension schemes, he warned.Moriarty said: “The issue for existing schemes will be what those prescribed minimum standards will be, and many schemes may need to increase their contribution levels.”Furthermore, he observed: “There is still detail required on who is covered, such as when and how often that is determined. It has the potential to be reasonably complex, particularly with issues like suspensions.”last_img read more

Minister Henry apologises but quibble on details

first_imgOpposition walkout… Opposition Leader says explanation “nonsensical”Responding to the claims made by the Opposition People’s Progressive Party (PPP) about their allegedOpposition Leader Bharrat Jagdeo expressing his displeasure on Wednesday night at D’Urban Parkmistreatment at the recently held independence flag raising ceremony, Minister within the Education Ministry, Nicolette Henry, on Friday said the Party members left the D’Urban Park event while her officials were trying to have them seated together as requested.On Wednesday evening, Opposition Leader Bharrat Jagdeo expressed disappointment that his Party was left embarrassed when members turned up at the D’Urban Park arena to be a part of the activities, but could not because most of the Members of Parliament (MPs) were left standing without any seats.He said effort was made to correct the situation, but after some 30 minutes standing, nothing was done. They all dubbed the situation disrespectful, and the group, led by Jagdeo, walked out of the event.But on Friday, Minister Nicolette Henry, who had responsibility for the staging of the event, said the parliamentary Opposition was invited to all state events and confirmed its attendance to the flag raising ceremony.She said after accepting the invitation, the Opposition was briefed by her on Tuesday, May 24, on the time of arrival, entrance to be used and seating arrangements. Based on the arrangement, the Opposition Leader was expected to be seated in the Presidential Section with all other past Presidents and Prime Ministers. All other PPP members were to be seated in the other VIP section.According to Henry, the Opposition Leader did arrive, but not at the time he was expected to. He also used an entrance that he was not supposed to use.Explaining the details of what transpired on Wednesday evening, Minister Henry said Jagdeo arrived at 21:55h and used the South Western entrance (Hadfield Street).She said had it not been for the Police insistence on using the North-western entrance, this would have resulted in the Opposition and President Granger arriving on the tarmac at the same time.According to her, the other members remained standing in the passage and had indicated that they would only sit when they could be assigned seats together. However, according to her, this was not told to the usher.“Upon my arriving in the Presidential Section, the Opposition Leader indicated there were concerns with the seating. I assured him I will address this immediately, so I proceeded by personally asking other invited persons to give up their seats to ensure the Opposition members were all seated together.”She said as soon as the persons began to give up their seats, the Opposition walked out.“In the circumstances, I wish to state that as the organiser of this event, I apologise for any inconvenience, embarrassment or distress this incident may have caused”, Henry said in a statement on Friday.But Jagdeo, immediately told Guyana Times that the Minister’s response was “nonsensical.” In fact, most of the things she stated were untrue, the former Head of State said.Meanwhile, the PPP/C in a statement issued on Friday afternoon said that Minister Henry’s statement on the incident is “a poor effort to extricate the Government from the disrespectful treatment of the parliamentary Opposition.”According to the Party, the Minister seemed to have difficulty comprehending the issue at hand. “The Minister gave all assurances on May 24 to the Leader of the Opposition and a large group of PPP/C MPs and again on May 25, with the Chief Whip [Gail Teixeira] that seats for all PPP/C MPs and their spouses were reserved for the flag raising in the VIP section and that “we should not worry, everything was taken care of,” the statement said.According to the Party, the Minister was advised that the PPP/C MPs were attending the event in one bus to reduce any logistical problems.last_img read more