IRELAND - Seamus Brennan (pictured), minister for social affairs, is considering automatic enrolment as a possible solution to Ireland's pension crisis.
A spokeswoman for the department of social and family affairs confirmed that Brennan had asked the Pensions Board to include an assessment of the automatic enrolment “opt-out” sytem in its forthcoming strategy report, due for completion within the next month.
But Brennan, who commented on the possible solution at the launch of pension Ombudsman Paul Kenny’s first annual report, would prefer a voluntary system, she said.
“He (Brennan) has made a statement saying that if necessary he would go as far as mandatory if it helps to solve the pensions crisis, but it certainly wouldn’t be his preferred way,” she said.
“He would rather people go into it voluntarily, unless it came to a crisis situation where he felt that was the only solution.”
Under the system, all those starting work are automatically enrolled in a pension scheme and a minimum percentage of their wages is deducted and paid into the account.
The approach is often referred to as ‘soft’ compulsion because people can then opt out, although the hope is that most will not bother and choose to remain in the system.
Speaking at the launch, Brennan said: “As the situation now stands, out of a current workforce of 2m, in the region of 900,000 do not have a private or occupational pension.
“Unless this trend is aggressively addressed and reversed then hundreds of thousands of people face into a retirement on the basic social welfare pension of less than €10, 000 a year.”
Brennan said the system had been introduced in other countries, most notably in New Zealand.
Paul Budgen is set to join financial technology and auto-enrolment (AE) firm Smart Pension as director of business development.
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