Minister Humphreys' closing speech in the Second Reading of the AE Bill in the Dáil

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Duke of Marmalade

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Deputy Connolly mentioned the alternative AE proposal that came forward. I arranged an in-depth consideration of this proposal. My officials and the independent body, the Pensions Council, looked closely at it. I know the proposal sounds great. It would supposedly double the investment returns for automatic enrolment participants. Who, of course, would not want that? However, the fact is there are many unanswered questions about whether the proposal could work in practice. The Pensions Council is an independent body of experts who are drawn from the legal and financial world. Its role is to advise me on what it understands to be the best way forward to provide a pensions landscape in Ireland that works best for the consumer. While the council acknowledged that it is an interesting idea, it ultimately could not recommend it to me as a better alternative to the auto-enrolment design that had already been agreed. The council found several shortcomings with regard to the technical and practical feasibility of the proposal, as well as a lack of supporting evidence for it. I do not think it would allow the same degree of flexibility we are trying to build into this scheme.

I, as Minister, cannot foist an untested and unproven theory on automatic enrolment participants. I cannot and should not be taking risks with people's money with an unproven approach and against the advice of the Pensions Council. Even if the alternative proposal were to be risk-free - and is there such a thing as risk-free? - it would allow no flexibility whatsoever for participants. It would lock them into permanent participation with no option to suspend or opt out. I could not recommend that particular approach to the House.
 
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Hi Duke

One of my major reservations about Colm's system was the lack of flexibility. That people could not put in more or take payment breaks.

So I am clearly making the same mistake as the Minister. And believe me, there is nothing sinister in my mistake and I doubt it in her mistake either.

Brendan
 
Duke of Marmalade said:
Opt out - available in both cases (fake news from Minister)
Suspend contributions - available in both cases (fake news from Minister)
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It's a while since I looked at it but I got the impression or remember it that Colm's system was much more rigid. If it were not, then people could opt out while the market price was below the unit price and pile in when the unit price was below the market price.

It's not helpful to call my mistake "fake news" or "a tad sinister".

It is not easy to persuade people at the best of times, but if you abuse them, then you just make your case more difficult.

Brendan
 
Brendan Burgess said:
It's a while since I looked at it but I got the impression or remember it that Colm's system was much more rigid. If it were not, then people could opt out while the market price was below the unit price and pile in when the unit price was below the market price.
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Brendan, you're right that it would be bad for my proposal's stability if people kept opting in or out depending on whether smoothed value was more or less than market value, but you must remember that they would be cutting off their nose to spite their face if they opted out when smoothed value (SV) exceeded market value (MV).
Suppose that, in Month X, SV is 120% of MV. If the contributor opts out for that month, they lose the matching contribution from the employer and the state's contribution. So, by not contributing €3 in order to save themselves €0.60, they lose another €3 from the employer and €1 from the state. That's the key reason why they'll keep taking the XXXXXXXXXXXXXXXXXXXX if SV>MV.
When the opposite is the case, i.e., SV<MV, you're right that they will not be allowed to pile in. Contributions are a specified percentage of earnings (3% or whatever) up to 80k a year. They can't pay more than that percentage. If workers want to make AVC's, there's plenty of insurance companies out there glad to take their contributions. I think that's a small price to pay (if you really consider it a price) for getting double the value for money.
PS: Something very strange is happening with this post. It looks OK when I'm drafting it, but when I say "save", what appears is a load of XXXXX's where I've written that "they'll keep taking the XXXXXXXXXXXXXXXXXXXX if SV>MV". Strange
PPS: Even stranger. I still can't write "taking the p i l l s" and stop it coming out as a load of XX's!!
 
Colm Fagan said:
PS: Something very strange is happening with this post. It looks OK when I'm drafting it, but when I say "save", what appears is a load of XXXXX's where I've written that "they'll keep taking the XXXXXXXXXXXXXXXXXXXX if SV>MV". Strange
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Very sinsister.

Maybe Heather Humphreys has hacked Askaboutmoney?

Brendan
 
So that's that then? Fast foward 5 years when the fund is in massive liability and they review where it went wrong and alternatives
 
Brendan Burgess said:
Hi Duke

One of my major reservations about Colm's system was the lack of flexibility. That people could not put in more or take payment breaks.

So I am clearly making the same mistake as the Minister. And believe me, there is nothing sinister in my mistake and I doubt it in her mistake either.

Brendan
Click to expand...
This thread is very hard to follow. What is Colm's system?
 
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