An Oireachtas committee has recommended that the lower age limit for the Government's planned new auto-enrolment pension scheme be lowered from the proposed 23 to 16, to align it with the PRSI minimum age threshold.
The Joint Committee on Social Protection, Community and Rural Development and the Islands also suggests that the lower income threshold of €20,000 be removed, as it could penalise young workers, low earners and women.
The recommendations are among 21 contained in the committee's pre-legislative scrutiny report on the Automatic Enrolment Retirement Savings System Bill, which when enacted will introduce the new scheme.
The committee also recommends that when participants are auto enrolled, they should be given a sample of the likely pension they will receive on retirement in real terms by adjusting for inflation.
It also proposes that investment advice be offered to all auto-enrolment members to allow them to select the most appropriate fund for their age, gender, financial position, and circumstances.
The total amount of all charges should equate to a maximum of 0.5%, it also suggests.
The report follows a series of sessions where the committee heard from the Department of Social Protection, The Pensions Authority, the ESRI and stakeholders such as ICTU, Irish Life, IBEC, and Insurance Ireland.
The new scheme, when introduced, will automatically enrol employees in a workplace pension savings plan, co-funded by their employer and the State.
Under it, for every €3 saved by a worker a further €4 will be credited to their savings account, with €3 coming from the employer and €1 from the State.
Unlike private pensions, no tax relief will be available on deductions from salary and wages for auto-enrolment.
However, the committee recommends that the Department of Social Protection carefully consider tax relief in the General Scheme of the Auto Enrolment Bill and its impacts on the wider pension system.
Although the system will be voluntary, workers will have to choose to opt-out or suspend their participation.
Ireland is generally considered to be facing a pensions timebomb, due to its ageing population, but is currently the only OECD country that doesn’t operate an auto-enrolment or similar system.
Other committee recommendations include that the investment funds be prohibited from investing in fossil fuels or the arms industry.
Instead, the committee found a minimum percentage of the funds should be invested in Irish renewable energy developments in order to ensure our climate action obligations.
Reacting to the report, the Irish Congress of Trade Unions called on all politicians from across the political divide to prioritise the introduction of auto-enrolment.
"Politicians have been talking about introducing a mandatory pay-related pension saving scheme longer than they have been talking about increasing the pension age," said general secretary Owen Reidy.
"Now that we are finally within touching distance of making income adequacy in retirement a reality for workers, it is imperative that all politicians work together to get the legislation passed and the new pension up and running."
"We cannot allow this legislation to be further delayed by this or future Governments."
Aon Ireland said the committee's recommendation to remove the lower income threshold and lower the age limit for auto-enrolment to 16 years would help ensure that lower earners, more likely women, are not excluded from the auto-enrolment safety net.
"With the emergence of a multigenerational workforce, it’s vital that as many employees as possible can access the new scheme. Increasing the number of retirement savers in this country will strengthen the sustainability of the overall pension system," said Mairéad O’Mahony, Head of Wealth Solutions, Aon Ireland.
Irish Life Group said it welcomed many of the recommendations but said the absence of one on the cost and structuring of the Central Processing Agency was disappointing.
"If the current plan to build a new state monopoly is pursued, international evidence suggests that this will be more onerous and expensive, and take much longer to complete, than a model which uses the existing pension systems," said Declan Bolger, Chief Executive, Irish Life Group.
