Pensions set for the biggest changes in history with auto-enrolment

Change is in the air for the industry in Ireland with new system a catalyst for a pivotal year for the future of the sector

Front Row: Claire Brock, News Presenter, Virgin Media Television; Fiona Mullally, Head of Client Services - Pension & Risk, Irish Life and Martin McAlister, Senior Manager, Pensions, PwC. Middle Row: Shay Cloherty, Managing Director, iQuest/Business Post Live; Oisin O’Shaughnessy, Managing Director, Irish Life and Elma Fox, Professional Trustee, Law Debenture Pension Trustees Ireland. Back Row: Paul Torsney, Head of Trustee Services, Law Debenture Pension Trustees Ireland; Brian Dunphy, Business Development Manager, LIA and Tom Corcoran, Sales Manager, ISME. Pictures: Maura Hickey

Now in its fifth year, The National Pension Summit 2024 had an agenda as packed as the room in which it was held.

With the sector poised for some of the most significant changes in its history, the summit focused mainly on people. Any pension aims to ensure a good quality of life for its users so much of the discussion was framed this way.

Welcoming everyone to Croke Park on Thursday, 1st February, the summit chair, Claire Brock, news presenter for Virgin Media Television, set the tone by highlighting how big a year this was for pensions, stating: “There’s a lot of changes coming down the line.”

The morning sessions began with a government address from Heather Humphreys, minister for social protection for the Department of Social Protection. She covered the pension landscape for this year and beyond and gave a significant update regarding the auto-enrolment (AE) scheme, the first batch will happen in Q4.

“I’m here to tell you all, loud and clear, 2024 is the year auto-enrolment is delivered,” she said. “Too much work has been invested to get to this point. We have the stone pushed to the top of the mountain, and I am absolutely determined now to get it over the top.”

“AE will be a new and unique scheme… It is about encouraging and supporting people to save for their retirement earlier. We will achieve this by eliminating complexity, simplifying people’s choices, and making significant employer and State contributions.”

With the year roadmap set, next up was Shane O’Farrell, director of corporate partnerships at Irish Life, who gave the morning keynote address on new pension models and the outcomes they’re driving.

In a wide-ranging talk covering topics like AE and IORP II, he stated that the move to master trust funds and other plans all comes down to communication, a common theme throughout the summit.

“The competition for member engagement is more serious, and it’s really Netflix, YouTube, Facebook, and TikTok,” he said. “There’s a competition for people’s time, attention, and headspace.”

“If you think about these platforms and how hyper-personalised they are, and how good they are at drawing people in and grabbing their attention, that’s the sort of competition you have when you’re trying to communicate pensions to people.”

Left to right: Oisin O’Shaughnessy, Managing Director, Irish Life; Heather Humphries, Minister for Social Protection, Department of Social Protection and Declan Bolger, Chief Executive, Irish Life Group. Photo by MAURA HICKEY

Following up was David Boylan, retirement programme manager at Intel Ireland, who gave a case study on how the organisation boosted membership of its pension scheme.

Boylan also highlighted the importance of engagement and communication, stating that the pension plan starts on day one for every new employee. He emphasised the number of ways the company interacts with its workers, the core of which is reducing the mental burden placed on workers to absorb information.

The result is that most of its workers’ queries are resolved within nine business hours.

This led to the day’s first panel session, which examined AE and bridged the knowledge gap.

Paul Torsney, Head of Trustee Services, Law Debenture Pension Trustees Ireland; Fiona Mullally, Head of Client Services – Pension & Risk, Irish Life; James Skehan, Retirement Planning (RPA) Lecturer, LIA and Laura Farrell, CEO, Retirement Planning Council of Ireland (RPCI). Photo by MAURA HICKEY

It featured James Skehan, a retirement planning (RPA) lecturer with LIA; Fiona Mullally, head of client services for Pension & Risk at Irish Life; Paul Torsney, Head of Trustee Services at Law Debenture Pension Trustees Ireland; and Laura Farrell, CEO of the Retirement Planning Council of Ireland (RPCI).

The theme of education continued throughout, with Skehan mentioning one problem with AE: there doesn’t seem to be any outlet for advice. Coverage isn’t enough, and people will need the information to know what they’re getting.

Torsney mentioned that practical examples resonate better with people when talking about pensions - what the end total will mean for their standard of living - while Mullally mentioned the challenge to bring personalised, impactful communications to help drive education and awareness.

She said, “It’s asking insurance firms not to a finance company but be to be a hybrid finance comms company.”

Dr Féidhlim McGowan, lecturer in economics (above the Bar) at the Department of Economics in University of Galway and Research Affiliate at ESRI rounded up the early morning talks.

Going into behavioural finance and member outcomes, one of the main highlights was the power of deadlines.

Sarah McCague, Partner, Arthur Cox; Paul Leandro, Partner, Barnett Waddington; Claire Brock, News Presenter, Virgin Media Television; Niall O’Leary, Chief Sustainability Officer, Irish Life Investment Managers and Martin McAlister, Senior Manager, Pensions, PwC. Photo by MAURA HICKEY

Referencing the SSIA scheme back in 2002, which had a twelve-month window, he showed that more people signed up in the final month than the other eleven months combined. This is a lesson that insurance companies can take when incentivising people to take on or update their pension plans.

Getting the house in order

Once the coffee break and exhibition viewing were over, attention turned to the UK and its rollout of AE. Paul Leandro, partner at Barnett Waddington, discussed the more than ten-year rollout and its success.

There were elements to note, mainly that it’s just as much a payroll issue as it was pensions and that some opportunistic schemes emerged to take advantage of the confusion. Even then, its impact was immense and “completely changed the UK pension landscape.”

“We have now a fixation on value for members or value for money,” he stated. “It’s not just about price; it’s generally about how the scheme is improving member outcomes.”

Next, the focus went onto ESG, a growing area of concern across the board, with Niall O’Leary, chief sustainability officer at Irish Life Investment Managers, delivering the talk. To highlight just how crucial the issue was to people, O’Leary had a simple answer that brought assets invested in ESG from 25 per cent to 50 per cent in 2023.

“I’ve been in the industry for 25 years and I will contend that ESG is one of the first things I never had to sell,” he said. “Our clients want ESG solutions, and you don’t go from 25 per cent to 50 per cent through pushy salespeople.”

Both O’Leary and Leandro stayed on for the panel session before lunchtime, discussing the next twelve months. The panel also included Sarah McCague, partner at Arthur Cox, and Martin McAlister, senior manager of pensions at PwC.

McAlister mentioned that the industry is at a turning point with Ireland starting to see pension schemes emerging on a real scale and how that scale brings greater capabilities for the future.

Regarding the gender pay gap and how pronounced it is in the pensions sector, McCague said that AEs and master trusts have a role to play in helping to fix it but that there’s no one easy solution.

“There are varied reasons why we have that gender gap though so there’s no one easy solution to fix that,” she added.

Michael Dowling, Professor of Finance, DCU Business School; Wendy McKeown, Head of Financial Planning, Unio Wealth Management; Eoin McGee, Certified Financial Planner, Radio & TV Broadcaster, Author, and Podcast Host; Claire Brock, News Presenter, Virgin Media Television and Ian Moynihan, Director of Propositions, Irish Life.

People at the centre of pensions

The theme of putting the human at the centre of the decision-making process continued in the afternoon talks, and this was greatly reflected by the afternoon keynote speaker, Eoin McGee, a certified financial planner, radio and TV broadcaster, author and podcast host.

Providing two personal stories about his dad and a close friend, he spoke about the importance of thinking about the life you want to build. He gave two exercises: What would you like to say if you looked back at your life at 75 years of age, and what would you do if you only had two years to live?

Every person is different, and they need to look beyond finances to create the plan that best suits their living needs and ambitions.

“If I look at a person’s finances, I get to know what’s important to them, so whether they want to leave money behind or spend it themselves,” he explained, “We get finances supporting the life that they want to have.”

There was time for one more talk, this time from Michael Dowling, a professor of finance at DCU Business School. He discussed the role AI could play in shaping workplace benefit provision.

Shane O’Farrell, Director of Corporate Partnerships, Irish Life Photo by MAURA HICKEY

As well as tackling some of the myths around generative AI, he highlighted the straightforward benefits of implementing chatbots such as translators, expanding the reach and methods of communication, and the advances the latest releases of ChatGPT and more are bringing.

Dowling and McGee later joined the final panel session, which focused on the key catalysts that will shape the future of pensions and workplace benefit profession. With them was Wendy McKeown, head of financial planning at Unio Wealth Management, and Ian Moynihan, director of propositions at Irish Life.

McKeown said that as nobody can say how long they will live, people are putting more thought into how their pension pot can keep them going, so figuring out the most efficient way of using those funds will be a constant challenge.

“People are living longer, more active lives and that retirement phase has a price tag attached,” she mentioned. “People are putting a lot more consideration into that, and it’s really hard to put a value on that.”

With the summit concluded, Brock wrapped up proceedings and left the audience with food for thought. With AE set for the end of the year, the stage is set for what will be a critical year for pensions.