Dáil Éireann Debate, Thursday - 26 February 2026
19. Deputy Eoin Hayes asked the Minister for Social Protection to provide the total administration fees that have been paid by participants in the My Future Fund to date, or most recent data available; and if he will make a statement on the matter. [15581/26]
View answerI would like an update on the administration fees associated with the My Future Fund being paid by the participants. In particular, I would like a sense of any consideration that has been given to these fees not necessarily being flat fees and applying different rates to different cohorts, proportionate to their income.
As the Deputy knows, the programme for Government contains a commitment to introduce the automatic enrolment, AE, retirement savings system. The aim of AE was to address the pension coverage gap that exists in Ireland and to provide workers with greater comfort and security regarding their retirement income. The new system, known as My Future Fund, commenced on 1 January. The administration fee associated with My Future Fund was prescribed in regulations, following consultation with the CEO of the National Automatic Enrolment Retirement Savings Authority, NAERSA, and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation.
The administration fee takes the form of a flat weekly fee rather than a commission based on a percentage of funds under management. We did this because the administration fee reflects the actual costs of administration, which do not vary with fund size, and will be the same for all participants regardless of their income or the size of their retirement fund. The standard pension industry practice is to charge a percentage fee based on the assets under management; the cost of this obviously increases significantly as a person's pension savings accumulate. In contrast, charging a flat fee will ultimately prove much better value for money for all the participants over the course of a standard retirement planning horizon.
A fee equivalent to 55 cent per week will be charged each time contributions are paid to a participant's fund, up to a maximum of €28.60 per year. If a participant is not making contributions - for example, if they have opted out, suspended contributions, have joined an occupational pension scheme or are not currently receiving their pay - that administration fee will not be charged. As of 19 February, a total of €2,221,231 had been collected in administration fees. These fees are intended to cover the costs of NAERSA on an going basis.
I acknowledge the importance of the administration fee. I welcome the fact that a commission was not charged in terms of the fee. There are options when it comes to a flat fee versus a progressive fee. I made a few back-of-the-envelope calculations in respect of this matter, but do not hold me to them. If someone who is 60 years of age and who earns €20,000 per year is auto-enrolled in the scheme, they would spend about 6.36% of their contributions in administration fees over the course of their involvement in the My Future Fund. That is assuming that they are with it the entire time.
I also welcome the suspension of administration fees if people are not contributing. That is worthwhile and something that does not happen in the UK, for example.
By contrast, someone who is 25 years of age who is making €80,000 a year, and assuming that income stays the same, will spend 0.67% of their contribution on administration fees. There is a wide gap there, from a regressive perspective, on administration fees, depending on your income. If you are younger, you get better returns as you are in there for longer but if you are poorer, they will almost always be a higher proportion of your income.
The Deputy's assessment is an interesting one. In terms of getting this up and running, in the early stages we tried to bring as much clarity and understanding as possible in regard to the fee area. The feedback I have got in the past year in dealing with this is that a lot of people find administration fees and investment fees around pensions very confusing. It is one of the things that, certainly in my personal experience, would dissuade you from engaging with the pension provision. Therefore, we wanted the administration fee to be flat and to be accessible and understandable. Equally, we were able then to bring the prospect of the 700,000 plus workers, which we now know is 760,000, to bear in getting investment management fees, which were well under those applicable to an occupational pension scheme or to personal retirement savings accounts, PRSAs.
On the age side, administration fees are higher in a lot of PRSAs than they are in My Future Fund. I am not totally aware of - and I am happy for the Deputy to send me information if he wishes - the progression of fees.
Ultimately, all operational issues from My Future Fund are now going to be dealt with by National Automatic Enrolment Retirement Savings Authority, NAERSA. NAERSA has taken over operational responsibility, as we have launched. I want to make sure this is the best value possible and as accessible as possible so I am happy if the Deputy wants to share information with me on that.
I join the Minister in that. I want to make sure auto-enrolment is as successful as possible. I am confident the investment side, in terms of the investment fees, has been very well handled. In terms of the value for money, the Minister has got a very good rate for people.
On administration fees, and I will send this information to the Minister, it strikes me that people who are on the lower incomes - for example, somebody who is on €20,000 for the rest of their life - will spend approximately 3.24% of their contributions on administration fees. By contrast, someone on €80,000 for the duration of the scheme will spend less than 1% on administration fees. There is a question there. If you are on a lower income, a flat rate will be a higher proportion and that may rob people of that financial security into the future. Will the Minister, or NAERSA, consider changing that administration fee in the future to make it more progressive, so that people who are on lower incomes are spending a less of a proportion of their income on the administration of the fund and that it is similarly progressive for people on higher incomes?
Certainly, I am happy to look at the Deputy's information. A realistic assessment of administration fees would have to be done over the lifetime of their participation in My Future Fund. Incomes will, hopefully, change and that incomes will increase over the lifetime of their fund. One of the great advantages of My Future Fund is that it is portable and that people can bring it with them to their next employment, as they change employment. Particularly in this labour market, we are all going to be working in many different jobs. People can bring My Future Fund with them and, as incomes change and employment terms and conditions change, that fee will still remain the same. The best way of looking at the impact of the administration fee is not on a particular time of your income but over the lifetime of your personal My Future Fund growing.
Certainly, I am happy to look at the information the Deputy has prepared. We will provide it to NAERSA. I stress NAERSA is independent in its operation and in its care of My Future Fund.
