Almost 30,000 contributors have opted out of the State’s new auto-enrolment pension scheme, but Minister for Social Protection Dara Calleary said the figure represented less than 4 per cent of those enrolled, well below international figures.
The scheme aims to address the existing private pension coverage gap in the Republic and to “provide workers with greater comfort and security regarding their retirement income”.
Known as MyFutureFund, it began on January 1st this year and currently has more than 835,000 participants, working for approximately 115,000 employers.
Membership for workers is compulsory for the first six months, after which employees can opt out.
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On July 1st, those enrolled in the scheme were given a two-month opt-out opportunity, and by the end of August, 29,352 had left the scheme.
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In reply to a parliamentary question from Fianna Fáil TD John McGuinness, the Minister said the rate of opt-out was substantially below international comparators such as the United Kingdom, where the rate was approximately 10 per cent and New Zealand at about 12 per cent.
McGuinness welcomed the low opt-out rate as a good outcome and said people seem to accept the need for the fund. He called for those who withdrew to be interviewed to establish their reasons in an attempt to see what action could be taken to drive the positive momentum further.
Under the new system, employees not already in an occupational pension scheme, aged 23-60 and earning more than €20,000 a year, are automatically enrolled.
The starting contribution rate is 1.5 per cent per employee, 1.5 per cent per employer and 0.5 per cent from the State.
Refunds of €10 million have been made, with an average of €331 to employees, while an average of €400 was left in their fund.
Meanwhile, the Minister is expected to update Cabinet on the new pension regime on Tuesday.
The National Automatic Enrolment Retirement Saving Authority, which has responsibility for the operation of the fund, collected €553 million through the scheme for investment as of the end of August.
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Some €237 million were employee contributions, with the same sum coming from employers, and another €79 million in contributions came from the State.
There is another €33 million in investment returns, meaning the total value of funds under investment stands at €586 million.
Calleary said: “The high numbers of participants and low opt-out rate demonstrate the great level of success that MyFutureFund has achieved since its commencement.”
In a separate parliamentary question, 100% Redress Party TD Charles Ward expressed concern about reports from employers involved in the pension fund about “significant delays in the processing and reimbursement of payments due to businesses” that was affecting cash flow for small and microenterprises.
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Calleary told him the authority, the fund’s operator, had “processed more than 30,000 refunds with a value of over €10 million to date, including refunds to participants who have opted out of MyFutureFund”. The vast majority of refunds were processed within 15 days.
He added that a small number of employers requested a review where they believed they might have overpaid contributions through payroll error. “Each request must be assessed by an authorised officer” to establish any overpayment before funds can be disinvested from the employee’s pension pot. “There are approximately 500 such refunds on hand at present.”
