Abstract Book of the 6th World Conference on Management and Economics
Year: 2025
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Auto-enrolment in voluntary pensions: Irish project versus other countries’ experience
Antoni Ludwik Laszewski
ABSTRACT:
Demographic challenges have a negative impact on pension benefits. Voluntary savings are, therefore, needed to maintain stable consumption in retirement. Long-term saving using the third pillar provides tax incentives and subsidies. So far, five OECD countries (New Zealand, United Kingdom, Turkey, Poland, Lithuania) have used the recommendations of behavioral economics and introduced nationwide automatic enrollment into voluntary schemes. A similar project is planned in Ireland in the second half of 2025. The study aims to identify factors that caused the success (or failure) of previous implementations and to evaluate the Irish proposal on the basis of current experience. The study finds the Irish case particularly interesting due to the expected average replacement rate of 26% in the public pillar (flat-rate benefit) and the attractiveness of current third pillar solutions for high earners (only). The research shows that auto-enrolment solutions are a very effective way of saving for retirement in all the countries studied. However, the details vary across countries. The Irish plan sets the target employees contribution rate at 6%, which is the highest among all plans. Since the study found no relationship between contributions and participation rate, a high number of opt-outs is not expected. However, the lack of an early withdrawal option in the Irish plan, combined with automatic enrolment of workers over the age of 23, is likely to result in low participation among young employees.
Keywords: behavioral economics, Irish pension system, participation in pension schemes, third pension pillar, voluntary savings