More than 29,000 people opted out of the My Future Fund State-backed pension scheme during the two month window to do so which ended on August 31st.
Then National Automatic Enrolment Retirement Scheme Authority (NAESRA) said the figure amount to less that 4 per cent of the more than 800,000 workers who have been enrolled in the scheme since it became active on January 1st.
This, it said, was below the expected number for the window during which people who had been enrolled in the scheme’s initial period had the option of recouping the 1.5 per cent of gross pay contributions they had paid to date.
The contributions made by the employer (also 1.5 per cent at present) and Government contributions (currently 0.5 per cent) remainin in the person’s pension pot. If individuals do not voluntarily rejoin the scheme within two years of leaving, they are automatically re-enrolled.
NAESRA said more than €500 million had been saved by participants in the fund since the start of the year. It said 380 participants had also requested that their contributions be suspended.
About 10,500 employees, meanwhile, who did not fulfil the age or earning criteria for automatic enrolment, had voluntarily opted in to the scheme during its first eight months.
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Damien McCarthy of HR Buddy said the number of opt-outs was low but significant. “It has probably been primarily driven by people at the lower end of the earnings spectrum, people earning towards the €20,000 figure who simply need the money, who feel they can’t afford to see the contributions coming out of their wages. Although there would a number too who have private pension arrangements.
“The numbers are on the low side but a lot of people who were auto-enrolled, and quite a few employers, would not really have been aware of the period for opting out. There wasn’t nearly so much advertising about this aspect of the scheme as there had been around its launch at the start of the year.”
Irish Congress of Trade Union social policy officer Laura Bambrick said the fact 96 per cent of participants had chosen to remain enrolled was a major endorsement of the scheme’s benefits.
“The low opt out rate is a resounding signal of support in the new My Future Fund retirement savings scheme,” she said before suggesting that issues persist with a minority of employers.
“Documents recently released under Freedom of Information shine a light on some of the bad practice engaged by some employers to deny their employees the 3.5 per cent (the employer and employee contributions combined) legal minimum contribution and a financially secure old age. Continuing to monitor compliance and strong enforcement of the Auto-Enrolment Act will be central to determining the success of My Future Fund.”