Business

India’s Tata Consultancy Services preferred bidder to build auto-enrolment pension system

Department of Social Protection says auto enrolment will not begin in ‘early 2025′, having most recently targeted January

TCS set up and runs a UK auto-enrolment system established more than a decade ago

Joe Brennan
Thu Jul 4 2024 - 07:10

The Department of Social Protection has confirmed the selection of Indian information technology company Tata Consultancy Services (TCS) as its preferred partner to build and run the system for its landmark auto-enrolment (AE) pension scheme.

The 10-year contract is valued at up to €150 million.

The confirmation came as the Automatic Enrolment Retirement Savings System Bill 2024, allowing for the setting up scheme, passed its final stage in the Oireachtas on Wednesday evening and will now be sent to the President to be enacted.

“Tata Consultancy Services, a leading global IT services, consulting and business solutions organisation, has been selected as the preferred bidder to provide this administration as a managed service,” the department said.

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TCS set up and runs a UK auto-enrolment system established more than a decade ago. Founded in 1968, the company has had operations in Ireland for more than two decades and in 2020 opened a so-called global delivery centre in Letterkenny.

The passing of the legislation and appointment of TCS are major milestones as the Government races to meet its target of having the scheme up and running, after years of starts and stops. A spokeswoman for the Department of Social Protection said on Thursday that it is on track to launch “in early 2025″, having most recently targeted January.

Owen Reidy, general secretary of the Irish Congress of Trade Unions (Ictu), said the passing of the AE legislation was a “defining moment in bringing an end to our failed voluntary approach to pensions saving”. He called on Minister for Social Protection Heather Humphreys to clarify the date for the first AE pension contributions.

“This legislation cannot be left to sit on a shelf gathering dust,” Mr Reidy said.

A State agency that will oversee AE has yet to be set up and the department still has not begun the formal search for asset management firms to manage the underlying investments.

The target of having AE, which was first proposed in 2006 by then Fianna Fáil minister for social and family affairs Séamus Brennan, up and running by the start of next year is viewed with a high degree of scepticism by pensions industry participants and businesses. It is expected that about 750,000 workers without occupational or private pension plans will be captured by the plan.

“Introducing pension auto-enrolment by next year is a daunting challenge but one which the industry will work with Government to achieve,” said Mairéad O’Mahony, head of wealth and human capital at Aon Ireland. “An entirely new pensions system for one-third of the population will need to be created and effectively communicated to employees at speed.”

Under the AE plan, workers and their employers will each initially pay 1.5 per cent of a person’s gross salary into the scheme. From year four, that will increase to 3 per cent, rising again to 4.5 per cent in year seven and 6 per cent from year 10.

For every €3 a worker pays in, their employer would pay the same and the State would top this up by €1. The proposal is that the scheme would apply to those aged between 23 and 60 earning at least €20,000 annually. The “soft mandatory” scheme will give participants various windows to opt out of the programme.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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