Humphreys told to set a date for launch of auto-enrolment pension plan

The Dáil passed the Automatic Enrolment Retirement Savings System Bill on Wednesday, paving the way for the retirement plan that aims to provide an income for around 800,000 people when they give up work.

The legislation has previously been passed by the Seanad, and will now go to the President to be considered and sign it into law.

The Irish Congress of Trade Unions (ICTU) welcomed what it said was a landmark piece of social policy but said they could be no further delay in implementing the new retirement savings scheme.

ICTU general secretary Owen Reidy said the passing of the auto-enrolment legislation was a “defining moment in bringing an end to our failed voluntary approach to pensions saving”.

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Future generations of workers can now be spared from seeing their income and living standards plummet in retirement, he said.

“After decades of delay, it is vital to maintain momentum. The minister must name the date for the first auto-enrolment pension contributions. This legislation cannot be left to sit on a shelf gathering dust,” Mr Reidy added.

ICTU also said the introduction of auto-enrolment must not do any harm to existing good occupational pensions.

“We will nonetheless be vigilant for displacement or dilution and won’t hesitate in taking action should employers respond to the cheaper pension auto-enrolment option by closing their workplace pension to new hires or levelling down their pension contributions to the AE rate,” Mr Reidy said.

Putting in place an auto-enrolment system was first proposed by the Government some 18 years ago.

Indian information technology company Tata Consultancy Services has been chosen by the department as its preferred partner to build and run the system for its landmark auto-enrolment (AE) pension scheme, Ms Humphreys said.

Experts said the passing of the legislation and appointment of TCS are major milestones.

The Government has a target having the scheme up and running at the start of next year.

However, there are huge doubts that the deadline will be met.

Employers have complained about the cost and complexity of the new scheme.

A State agency that will oversee AE has yet to be set up and the department still has not begun the formal search for asset management firms to manage the underlying investments.

Ms Humphreys said: “Auto-enrolment is a truly transformative policy that I am proud to deliver for Ireland.

“It will make sure that hard working men and women across the country will be able to save for their future, with help from their employers and the State.”

Automatic enrolment will put employees between the ages of 23 and 60, and who earn over €20,000 a year, into a workplace scheme. At the beginning, contributions will be set at a rate of 1.5pc of a worker’s gross income, which will be matched by the employer and topped up by the State.

The contributions will automatically increase every three years by 1.5 percentage points, until reaching a maximum of 6pc by Year 10.

For every €3 saved by an employee, the State will add €1.