The Joint Oireachtas Committee on Social Protection has now published its report on the pre-legislative scrutiny of the Heads of Bill to establish the AE system, setting out 21 observations and recommendations. I am considering these recommendations in the drafting of the Bill, but would note that several of them are already incorporated in the design agreed by Government for implementation in a later phase once the system is bedded in. Other recommendations cannot be accommodated as they would require considerable change to the design already agreed by Government. The completion of the Committee’s scrutiny of the AE Heads of Bill nevertheless represents an important step in the legislative process.
Among the recommendations of the JOC are some relating to environmental concerns and the arms industry. In that context, it is important to state that the primary aim of investing AE participants’ funds is to provide a good financial return for them, so that they may have an adequate supplementary income that is over and above the level of the State Pension when they retire.
To manage and administer the AE system, a Central Processing Authority (CPA) will be established. It will procure, through the open financial services market, investment management services on behalf of AE participants. I want to make it clear to the Deputy that the CPA will not be administering a new State fund, but rather will be administering hundreds of thousands of individual savings accounts that are, and will remain, the personal property of the AE participants. The AE project is, in that sense, a State-incentivised personal savings scheme for individuals rather than a new national fund. In that context, the CPA and investment managers will have a duty to, first and foremost, get a good financial return for participants.
In designing high level investment strategies and in contracting for investment services, the Board of the CPA will be guided by both the prudent person principle as well as the need to ensure investments take account of environmental, social and governance (ESG) principles. Such principles would include taking pollution caused by fossil fuels and concerns relating to the arms industry into consideration as part of the overarching, long-term strategy.
It reads to me that most of the JOC recommendatons will be ignored