The Irish government is seeking input on its first mandatory automatic-enrollment program that would place workers in defined contribution plans starting by the end of 2022, according to Regina Doherty, Irish minister of employment affairs and social protection.
Ms. Doherty launched a consultation Wednesday, outlining the government's plans to discuss the current proposal alongside other possible approaches to a DC model that will help cover 1 million Irish workers that are not now enrolled into any workplace or supplementary retirement plan.
"Our goal is to help interested parties conceptualize plausible approaches to automatic enrollment and to facilitate a focused debate around key design issues and how to address income adequacy for our retirees," Ms. Doherty said.
Employees ages 23 to 60 who do not already have an occupational retirement arrangement would be covered automatically by a defined contribution retirement savings plan, under the current proposal. The proposal states that participants would be defaulted into a plan provided by one of four providers, but they would be able to opt out. Low-income workers and the self-employed would have a voluntary option to opt into the system.
According to a reform package "Roadmap for Pension Reform 2018-2023," the Irish government would name four money managers or DC providers as "registered providers" for a period of five to 10 years.
"This approach with a limited number of providers allows us to achieve significant economy of scale and in that way gives us the ability to dictate the governance and communication standards we want, to impose a tight regulatory regime and to minimize charges, which is critical for the savings pots of lower- and middle-income people," the consultation said.
Employees will make contributions of 1% of earnings, automatically escalating by 1 percentage point each year for five years until the contribution rate will be fixed at 6% . Employers will match employee contributions on a mandatory basis. In addition, the Irish state will contribute 2% when the contribution rate reaches 6%.
Money managers, providers and interest groups have until Nov. 4 to submit their views.