Pensions and automatic enrolment


Sir, – In response to letter writer Richard Barrett’s concerns regarding “mandatory pensions” (August 24th), I would like to make a couple of points. First, the proposed scheme will not be mandatory – it will be automatic enrolment. Workers will have the option to opt out, but the infrastructure is designed under the behavioural economics idea of inertia.

I worked extensively on the coverage of UK auto-enrolment for a British pensions publication a few years ago. The idea that the state cannot keep up with pensions demand is an unfortunate consequence of what is known as the demographic timebomb, where the share of people in retirement is rising compared to the working population. In other words, state pensions are expected to provide for a larger pool of people from a smaller pool of tax receipts.

Ireland is about 20 years behind the UK in terms of this demographic shift. UK consultants that I spoke to often described how auto-enrolment was coming too late. If Ireland wants to avoid the same pressures on the state pension system, now is the prudent time to act. Ultimately, the aim of auto-enrolment is to create a culture of pension saving, which many of our European, American and Australian friends are already doing. – Yours, etc,



Dublin 3.