Senate committee stage said:Senator Michael McDowell
In page 9, line 20, after “days” to insert “not earlier than 30th June 2025 as may be specified by resolution adopted by Dáil Éireann”.
I move this amendment in my name and that of the other Senators. This amendment is solely for one purpose, namely to make an appeal to the Minister to create sufficient time to allow the Economic and Social Research Institute or some other body to evaluate the alternative method of dealing with auto-enrolment put forward by Mr. Colm Fagan - which we spoke about on Second Stage - and by Mr. Paul Kenny, the former head of the pensions board, to allow an analysis as to whether it would, in fact, give more money to pensioners who are the subject matters of auto-enrolment over the years, as has been claimed.
The simple fact is that workers' pensions could be doubled by replacing the outdated investment approach proposed in the Bill with one designed especially for auto-enrolment.
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I ask that the Minister to take one last opportunity to seek the advice of a totally independent, outside body - not the pensions council - to deal with this and to evaluate whether Mr. Fagan's proposal makes better sense and will be better for people who are the subject of auto-enrolment.
Deputy Richard Bruton, who is a person of wisdom, experience and also ministerial experience, made this point during the Second Stage debate on the Bill in Dail Éireann.
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It would be a pity if everybody involved thinks that Mr. Fagan's alternative approach is the correct one that would yield higher pensions and better results for those who are the subject of auto-enrolment. The only thing I am concerned about doing is to appeal to the Minister to allow one more opportunity for somebody else to evaluate that possibility before this Bill commences. The idea of putting off the Bill's commencement date, as the amendment suggests, until that date in 2025 is to give the Minister the opportunity to send the matter to the Economic and Social Research Institute and ask for a totally disinterested and unbiased analysis as to whether the Fagan-Kenny approach would be preferable to the approach adopted on a conservative basis in the Bill. If so, this gives the Minister - even if this Bill is passed in its present form with this amendment - the opportunity to put down alternative amendments by way of a second Bill to ensure the result for pensioners is optimal and not sub-optimal.
I thank Senator McDowell for his amendment. I do not propose to accept it because a consequence of this amendment would be further delay to this transformational societal initiative.
The Pensions Council is an independent body of experts drawn from the legal and financial world. [together with civil servants including from my department] It is their role to advise me on what they understand to be the best way forward in providing a pensions landscape in Ireland that works best for the consumer.
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The Senator will appreciate that, as Minister, I cannot foist an untested and unproven theory on automatic enrolment participants.
Arising out of the Minister’s remarks, nobody serious has said the Fagan-Kenny approach is defective or pointed out some defect in it. They have all said it is interesting, it could be so and perhaps it would yield greater results. Nobody has said the reason it is wrong or the reason we should avoid it. The only argument I have heard offered against its adoption is that it has not been implemented elsewhere and it is, in that sense, untested.
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I do not see that the arguments the Minister made about further delay are all that valid. Some space should be created by this House and by Dáil Éireann to look for a further evaluation.
The Minister said the Pensions Council is independent, but it has not actually said at any stage that it finds any particular fault with the Fagan-Kenny approach. Nobody said the Fagan-Kenny approach, if adopted, would result in worse outcomes for pensioners under the scheme. All the indications I, as well as Deputy Bruton in the Dáil and others, have seen is that what the Minister is doing is conservative, suboptimal and avoiding an opportunity to do something that would significantly increase the real return on pension contributions for people subject to auto-enrolment.
Senator McDowell qualified what he said. Nobody said it is wrong, but it has not been tested, which is the problem. We are looking into the future.
I agree with the Minister in this case. We need to get this up and running. It has been going on for 30 years. I hope, as Senator McDowell said, that the Minister will get on with this Bill immediately.
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If it is going to be delayed, this other option could be looked at. However, I hope the Minister will initiate this straight away.
I thank the Minister for coming into the House. There are many amendments to get through but, ultimately, I agree with my colleague and the Minister that we have to get on with it.
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People are watching this debate and hoping it will pass through this House speedily. We have waited too long for it to happen. I hope we do not see any delays today.
I agree with Senators Burke and Ardagh. There are many people, as we speak, waiting for this system to get up and running, especially the 800,000 people who do not have any private pension cover apart from the State pension.
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As I said, it is important we move on as quickly as we can. Contracts are already in place and we will be signing up to them in a very short time. The process is moving on and I cannot afford to stall it. For that reason, I do not propose that we wait any longer in implementing this legislation and the plan to have auto-enrolment up and running. It is expected we will have it in place possibly in January 2025. That is the plan. It is getting closer and I do not want to delay it.
Senator McDowell
I thank the Minister for her response and I acknowledge the response of my fellow Senators. In view of that response, I seek the freedom of the House to withdraw my amendment.
Yes, indeed. I know Colm will be disappointed that McD looked like throwing in the towel at the end. He saw that he had no chance and so presumably simply followed parliamentary etiquette.Fair play to McDowell.
At least he tried.
Brendan
This is not actually as the Bill reads. Maybe just loose terminology from the Minister.Minister Humphreys said:All the members’ money will be pooled into three different pots – low, medium and high risk - and a default pot.
... It is all pooled into one of four pots.
That certainly stifles debate. Colm's claims are being turned against him. If you are suggesting higher returns that must come with higher risk - fact of life.Minister Humphreys said:The Senator must appreciate that I cannot risk the members’ money. I worked in financial institutions for many years and the one thing is that you must show prudence and make sure you do not risk it. We cannot do otherwise. I always heard this adage and it always rang through at the end of the day: if you want to get a higher return, you take a higher risk. That is just a fact of life. That is my view.
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