More than 90% of Irish advisers think AE rollout will be delayed beyond 2023 – ITC

More than 90 per cent of advisers in Ireland believe that the rollout of the automatic enrolment pension reform will be delayed, according to Independent Trustee Company (ITC).

A survey of over 100 Irish pension advisers found that of the 94 per cent who do not think auto-enrolment will go ahead in 2023, 56 per cent think it will be pushed back to 2024/25, and 38 per cent think it will never happen. It means just 6 per cent of those surveyed believe that auto-enrolment will be introduced in 2023.

Commenting, ITC head of business development and marketing, Glenn Gaughran, said: “The survey reveals that over half (56 per cent) 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 per cent feel very sceptical on the topic, believing that no action will take place at all; rather that 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 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 advisers are concerned that auto-enrolment will face the same decision-avoidance measures by the 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.

“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,” Gaughran said.

He added that the government cannot continue to avoid reforming the “outdated pension system” and brave decisions 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.”

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