View from Dublin: it's time to seriously consider auto-enrolment
The Irish Government has drawn up another roadmap. This time it involves auto-enrolment for pensions. At some point, the Government will take out one of these roadmaps and actually set off on a journey somewhere.
Roadmaps on the future of pensions have been knocking around since 2006, so it was a little ironic when Taoiseach Leo Varadkar referenced an old adage from Benjamin Franklin when announcing details of the new one.
"Don't put off 'til tomorrow what can be done today." Sadly, when it comes to this issue, a more appropriate version might have been, 'don't put off 'til tomorrow what you can put off 'til next year'.
Auto-enrolment is a good idea and the new roadmap should be welcomed, but it is all long overdue. The reason is simple. Successive governments don't like introducing policies that involve people having less money to spend today, even if, in the long run, they are a good idea.
Ministers may have simplified things a little too much in endorsing how the scheme might work. It was presented as workers are automatically enrolled in a company scheme and employees and the company could each put aside 6% of salary. The state could then top it up by a further 2% and, hey presto, nobody is in penury relying exclusively on the state pension in years to come.
But why not make it easier for employees to put aside 6% of wages by sorting out the rental and housing crisis? It isn't easy to put 6% of your income aside at any time, but especially when you might be paying rents allowed to rocket in recent years.
It turns out that around 60% of private sector workers are currently without workplace pension coverage.
But the current environment makes it easier for employers to use casual labour, the gig economy and even bogus self-employment to save on the need to provide pensions.
The definition of a worker would need to be tied down quite strictly in these new plans or many will find themselves in the very same boat. Similarly, if 60% of private sector workers are without workplace pension coverage and auto-enrolment brings that up to 90%, what a boom for the pensions industry. Good for them as long as they are providing a quality, efficient and relatively inexpensive product.
This is a good move by the Government, but it won't be as easy as they are making out.