The Department of Social Protection in Ireland has published its long-awaited tender for the procurement of investment management services for the country’s forthcoming automatic enrolment scheme.

The AE scheme, known as My Future Fund, is set to launch on 30 September 2025. It will be administered by the National Automatic Employment Retirement Savings Scheme (NAERSA), which will be managed by Tata Consultancy Services.

According to the documents on the government’s eTender’s website, the DSP is seeking to procure three investment managers to each provide three risk-rated UCITS funds; these are lower risk, medium risk and higher risk. The UCITS fund must be comprehensive and fully managed solutions.

The DSP estimates that the total amount in retirement savings in the AE system (excluding investment returns) may amount to around €21bn in assets under management within 10 years.

Prospective investment managers, who have until 7 April to submit their applications, must hold a minimum of €80bn in assets under management. Furthermore, the annual management charge for each of the three UCITS funds should be no more than 10 basis points.

The weighting given to the annual management charge in regard to the awards criteria is 40 per cent and the investment manager with the lowest annual management charge will receive the highest score.

Other considerations for the awards criteria are investment fund profiles and performance (21.5 per cent), investment management experience and team (10 per cent), sustainable investing and social responsibilities (9.5 per cent), operational and integrational capabilities (8 per cent), Communication with the contracting authority and the managed service provider (6 per cent) and regulatory compliance (5 per cent).

AE will operate on a ‘blind account’ approach, whereby NAERSA is the sole investor and the three investment managers will not have sight of the individual AE participants’ account details. Contributions from participants assigned to a risk level will be divided equally between the providers.

“In this case, a participant’s contributions allocated to an investment strategy/fund type will be divided equally among the three successful investment management providers funds for that investment strategy. This means that the three sets of notional AE funds (high, medium and low risk) will use nine actual funds managed by the three Investment management providers.

“This approach helps to further diversify participants’ contributions and means that all participants in a particular risk strategy will receive the same return on their investment so that they are all treated equitably,” the request for tenders document stated.

Participants who do not make an active selection for their investments will be assigned to a default fund, which will be determined by how long they have until they reach state pension age.

Those with more than 15 years to state pension age will have their contributions invested in the higher risk fund; this will move to medium risk between 15 years to five years before reaching state pension age, then transferring to the lower risk fund when they are five years away from reaching state pension age.

Speaking recently at the Irish Association of Pension Funds (IAPF) Annual Dinner, Minister for Social Protection, Dara Calleary TD, said the introduction of AE in Ireland is a “key priority” as Minister for Social Protection.

“My department is now solely focused on implementing the agreed design with multiple workstreams being progressed in parallel,” he said.

Around 800,000 workers are expected to be enrolled into the My Future Fund pension scheme. Under the scheme, people aged between 23 and 60 who do not have a pension scheme and are earning more than €20,000 a year will be auto-enrolled into the new system.

For every €3 a worker puts into their auto-enrolment pension scheme, their employer will also contribute €3 and the state will top it up by €1.

Contribution rates will increase gradually as the scheme progresses, with employees contributing 1.5 per cent of their gross salary during the first three years of enrolment.

This will rise to 3 per cent from the fourth year to 4.5 per cent from the seventh year, before reaching the top employee contribution rate of 6 per cent in the 10th year. Employer and state contributions rise in line with this, resulting in total contributions of 14 per cent of an employee’s gross salary from the 10th year onwards.

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