I’m delighted to be here to join you all for the IAPF Annual Dinner.

I want to begin by thanking Kevin and the Council of the IAPF for the kind invitation to be here this evening and for this opportunity to address you in what will be a momentous year for pensions in Ireland. 

2025 will be the pinnacle in the latest of the most fundamental reforms in the history of the Irish Pension landscape.

As I’m sure you know, major reforms to our State Pension system have already taken effect in 2024 with the introduction of the new state pension deferral system which will provide workers with more flexibility and choice in their retirement, and with the beginning of the full transition to the fairer Total Contributions Approach to pension calculation.

Occupational pensions continue to see significant change and restructuring flowing from the implementation of IORP II.

But this year will see the introduction of the long-expected Automatic Enrolment Retirement Savings System, which will benefit hundreds of thousands of workers in Ireland and begin the important task of providing for a secure financial future for all.

Automatic Enrolment

Auto Enrolment, which is to be known as My Future Fund, will be a transformative scheme for our people. When implemented, the new system will ensure that every employee will have access to a system that will enable them to build retirement savings in order to sustain their standard of living after their long years working in paid employment.

For many people, retirement seems a long way away and they think they have a lot of time before they need to think about a pension. However, that process of putting aside a little each week to provide for retirement years is something that should ideally happen early on in a person’s career.

I’m sure I don’t need to tell this audience how low pension coverage in the private sector is in Ireland.

So, My Future Fund will address this by flipping the current approach to supplementary pension savings from one of voluntarily ‘opting-in’ to one where they are brought into a retirement savings scheme that they can ‘opt-out’ of.

The introduction of My Future Fund represents a change from a system whereby workers are often left to their own devices to navigate the complex world of saving for their retirement, to one in which choices and options are simplified for them.

It also represents a change from a system whereby workers, particularly those on low to middle incomes, may have to fully fund their own retirement savings, to one in which both employers and the State will make contributions.

As you are aware, the introduction of My Future Fund is a major commitment in our new Programme for Government, and I can assure you it is a key priority for me as Minister for Social Protection.

My Department is now solely focused on implementing the agreed design with multiple workstreams being progressed in parallel -

Firstly, it is developing the appropriate legislative base for its implementation and operation.  As you know, the President signed the Automatic Enrolment Retirement Savings System Bill into law on the 9th July last year.  The Department’s team is now focussed on developing the secondary legislation which flows from that and on ensuring that our processes and data management fully comply with data protection law.

Secondly, detailed work is underway with the Revenue Commissioners to source data for determining eligibility, and with payroll providers to effect contribution collection thus ensuring that the right people are automatically enrolled and that employers will be able to seamlessly comply with their legal obligations.

Thirdly, it is working with Tata Consultancy Services, which was awarded the contract for the scheme administration, to ensure that the appropriate processes and systems are in place for go-live.

Fourthly, it has completed its work on developing the approach to investment management and the RFT to procure investment managers will be published next week.

Fifthly, considerable behind the scenes work is underway with colleagues in the Department of Finance and the Department of Public Expenditure, etc., to effect the establishment of the new National Automatic Enrolment Retirement Savings Authority (NAERSA) and the recruitment of key personnel to it.

Finally, a major multi-channel communications plan to inform stakeholders and the public of this transformative reform has already commenced with

• regular ongoing meetings with key stakeholder groups,
• attendance at representative group meetings and conferences,
• public engagement at events such as the National Ploughing Championship and conferences of payroll providers,
• webinars for thousands of employers,
• various social media campaigns and collateral, and
• radio ads.

You will see the intensity of these communications activities increase considerably over the coming months across all channels as we get closer to implementation.

All told, I’m delighted to say that we are making great progress.

I would now like to turn my attention to the challenge for employers on employers through the introduction of My Future Fund. As a past Minister in the Department of Enterprise, Trade and Employment, I am very aware and attuned to your concerns.

I am confident that every effort has been made to ease this challenge.

In particular, the design of My Future Fund provides for phasing in of the contribution rates over a decade, starting at a very low 1.5% of gross pay for the first three years.  For employers, this approach gives very clear certainty as to the rates that will be applicable so as to facilitate the gradual absorption of these labour costs, thereby easing the burden on employers in implementing this reform.

You will see the intensity of these communications activities increase considerably over the coming months across all channels as we get closer to implementation.

All told, I’m delighted to say that we are making great progress.

I would now like to turn my attention to the challenge for employers on employers through the introduction of My Future Fund. As a past Minister in the Department of Enterprise, Trade and Employment, I am very aware and attuned to your concerns.

I am confident that every effort has been made to ease this challenge.

In particular, the design of My Future Fund provides for phasing in of the contribution rates over a decade, starting at a very low 1.5% of gross pay for the first three years.  For employers, this approach gives very clear certainty as to the rates that will be applicable so as to facilitate the gradual absorption of these labour costs, thereby easing the burden on employers in implementing this reform.

Furthermore, it is my intention to minimise the administrative challenge for employers.  The new National Automatic Enrolment Retirement Savings Authority (or NAERSA) will undertake enrolment of participants and most of the administration of the new system.  Payroll applications should take care of almost everything else by consuming enrolment notifications, processing the contribution calculation and making returns to NAERSA automatically.  As a result, most employers will only need to register their payment details on an employer portal – and that is a once-and-done task.  Accordingly, this represents a considerably lower administrative burden for employers, both in terms of cost and resources, than operating an alternative pension scheme, and the preparation required by employers is largely limited to appropriate budgeting.

My Future Fund will not prevent employers from offering their own scheme to employees.  In fact, I would expect the take-up of existing occupational schemes to increase as a result of it being implemented.  I would therefore encourage employers to discuss retirement provision with their employees to ensure that the coverage provided through their employment, either through My Future Fund or an employer scheme, is suitable for their needs and circumstances.  And of course, where an employee who is auto-enrolled joins their employer’s scheme – for whatever reason – that employee’s involvement in My Future Fund will be suspended.

Finally, on this, I know some commentators have highlighted that the use of a State top-up approach rather than tax relief could lead to confusion and arbitrage among many.  I refute this.  Firstly, the majority of people who will be auto-enrolled do not have access to an occupational scheme, and consequently, the rate of tax relief is irrelevant.  For the few who do, then as I have said, they will be free to join their employer’s scheme at any time if they feel it is of greater benefit to them – in fact I would encourage them to.  Secondly, 3 in every 4 people auto-enrolled either don’t pay income tax or pay it at the standard rate, and consequently, My Future Fund will actually be more beneficial to them than the tax relief system.

To conclude on this, My Future Fund will be a new and unique scheme established by law for and on behalf of workers in the private sector.

It is about getting people to save for their retirement earlier and to support them in doing that.  We will achieve this by taking away complexity, by simplifying their choices and by providing for significant employer and State contributions. The design of the system will encourage more workers to save for retirement, thereby helping them to sustain a reasonable standard of living into that phase of their lives.  This will not only benefit the individuals concerned but will be critical to both corporate and national economic prosperity given that over a quarter of the population will be older than retirement age in the not too distant future.

Occupational Pensions

Turning now to occupational pensions, which are the lifeblood of the work of many of you in this room and which will continue to play an important role for the over 1.5 million members of these schemes.

Work is underway to identify and further develop measures to simplify and harmonise the pensions landscape and to enhance overall scheme governance.

As you are all aware, post IORP II, the pensions market is undergoing substantial change through consolidation, with fewer new schemes being established and a move towards Master Trusts and Personal Retirement Saving Products. This reflects decisions being made by smaller schemes on their ability to meet higher governance requirements and act in the best interests of their members.  Pensions Authority’s data to end November 2024 indicates that there were 17 Master Trusts operating in Ireland with approximately 580 thousand members and €32 billion in assets under management.

The consolidation of pension schemes into Master Trusts is expected to facilitate enhanced supervision by the Pensions Authority; help to improve the overall standards of scheme governance and security as well as increasing economies of scale which should facilitate lower costs to members.  These benefits must be realised rather than simply a re-arrangement.

The features and risks of multi-employer Master Trust scheme arrangements differ to traditional single employer sponsored schemes. To reflect these particular risks, it is essential to introduce appropriate and adequate obligations under law on the trustees of Master Trusts over and above those required of single employer schemes.  Such additional obligations will further support the sound management of Master Trusts and protect the rights of Master Trust scheme members.

My officials are working, in conjunction with the Pensions Authority, on the development of proposals to provide for an enhanced legal underpinning for a Master Trust regime in Ireland.

Officials in my Department are also working, in conjunction with the Pensions Authority, the Revenue Commissioners and the Department of Finance, to develop proposals to provide for the introduction of a revised single-step pension scheme authorisation process in Ireland.  This is to ensure that all schemes meet the standards expected of them.

The Interdepartmental Pension Reform and Taxation Group continues its work considering the recommendations set out in its 2020 Report with a view to introducing further reform measures and simplifications over time including examining the concept of in-scheme drawdown.

I look forward to working together with the IAPF, and the pensions industry more generally, to deliver measures to enhance scheme governance and ensure the best outcomes for all members. 

State Pensions

As you all know, the State Pension remains the bedrock of the pension system in Ireland, and as such, it provides a basic and effective protection against pensioner poverty.

However, the State Pension should, in most cases, be combined with individual retirement savings in the form of occupational pensions or personal pensions. 

In combination, this allows employees, employers and the State to each play their part in addressing the provision of retirement incomes.

As you are all aware, there are many challenges facing the State Pension system in Ireland including:

• the sustainability of the system over the longer term,
• rising life expectancy, and
• the adequacy of contribution levels and benefits.

Following detailed examination and consideration of these issues by the Commission on Pensions, and subsequent Government consideration of the Commission’s analysis and recommendations, a series of landmark reforms to the State pension system were implemented last year. 

While Government decided to keep the State pension age at 66, people now have the option of continuing to work up until the age of 70 in return for an actuarially adjusted higher rate of payment.

This is about is giving people greater choice. If they want to draw your pension at age 66, they can still do so. But if they want to continue to work on longer, for a year, or two or even more, that is now an equally viable option.

It’s something which is particularly attractive to those people who might not otherwise have sufficient contributions to qualify for a Contributory Pension or those who may qualify for a reduced payment rate.

This is an important structural change that recognises that a one-size-fits all approach is no longer relevant to retirement and as we are all living longer and healthier lives, it is right to provide people with greater choice.

One small but important change that was also made is that long term carers of incapacitated individuals can now qualify for a State Pension based on the time they have spent doing that caring.

This reform will mean that thousands of people, mainly women who have spent time caring for their loved ones, will finally be rewarded for the work that they have done.

Finally, over the next ten years, the yearly averaging method of calculating State Pension will be phased out and replaced by the Total Contributions Approach.

The Total Cons approach is a fairer and more transparent method for calculating a person’s State Pension entitlement, it removes current anomalies and ensures that a person’s pension is based on their contributions over their entire working life.

As with any long-term savings, and given the considerable demographic shifts underway in Ireland, we must address the projected shortfalls in social insurance income to ensure our State pension system is sustainable into the future.

That is why Government has for the first time agreed a roadmap for PRSI increases over five years.

By starting this process now, when the Social Insurance Fund is in good shape, it means these increases can be small and incremental.

The first increase of 0.1% took effect in October last and will mean the average worker will pay about 90 cent extra a week.

Jerry Moriarty

I am acutely conscious that tonight’s event also marks the end of an era with Jerry Moriarty stepping down after leading the IAPF for the last 12 years.

Jerry has been at the heart of representing you and your members through all of the changes that this industry has seen over that period.  

My own officials in the Department, some of who are here tonight, have emphasised to me how Jerry always discussed and debated matters in a very measured, thoughtful, and intelligent way, how his contributions were always seeking solutions based on fairness and decency, how he was always engaging and a pleasure to deal with, and how his immense capability and knowledge will be sorely missed by us all.  So, on their behalf and my own, I would like to sincerely thank you Jerry for all of that and truly wish you our very best for the future.

Conclusion

After decades of discussion and deliberations on pensions, we have taken major steps in the last couple of years to reform the pensions landscape in this country, and we are now on the cusp of finalising some more critical ones.

I would like to thank you, the members of the IAPF, for your engagement and support with those efforts, and I look forward to continued productive engagement in the months and years to come.

I hope you enjoy your evening.

Go raibh míle maith agaibh.