The Government will view a report recommending lowering the auto-enrolment for pension payments from 23 to 16.  

The Committee on Social Protection has sought to defuse the ‘pension time bomb’ by automatically requiring 16-year-olds to pay a pension along with PRSI.  

It will publish the report for the Government to review on Wednesday. 

Social Justice Ireland analyst Colette Bennett told The Pat Kenny Show the suggestion is “completely unnecessary”.  

She said the suggestion is driven by the idea that State pensions will become “unmanageable” in decades to come – but this is not the case.  

According to Ms Bennett, the Commission previously reported that between 2019 and 2050, the cost of providing a State pension was going to increase by 4.1% of modified gross national income (GNI).

“This year alone, the general government surplus is about 3.5% of GNI*,” she said. “The money is within the system.” 

Ms Bennett said young people should learn financial literacy from primary school, but an automatic pension “goes far beyond that”.  

“We’re not even allowed to drive” 

First-year college student Alex Rowley said 16-year-olds should enjoy some financial freedom “while they have them”. 

“We're not even allowed to drive in this country at 16,” he said. “There's no point in thinking about a pension.” 

Mr Rowley said an automatic pension payment is too much pressure on young people who make a lower minimum wage.

“If you're 16 and if you have a job, chances are you're only working during the summer,” he said.  

“So, you have three months of the year max, and with the money you want to have a few bobs spend with your friends.” 

He said he would not mind contributing to a pension fund now – but there is still pressure on college students attending classes five days a week.  

“Not everybody is in a good financial situation.” 

Financial literacy 

Mr Rowley said it would be more effective to give young people “willpower” over their finances.  

“I don't think [a pension fund] is going to do a whole lot even to teach about financial literacy,” he said. 

“It's the theory of it and the theory of opening an account and putting it in yourself and having your own willpower. To save money yourself is much more important.” 

“Building a nest egg” 

HerMoney.ie Director Carol Brick said 16-year-olds should consider starting their savings as soon as possible.  

She said they can opt-out of the automatic pension payments after six months, but hopefully teenagers could be “convinced to stay in it”. 

“If they stick with it, and they receive their annual benefit statements, having been in it for a year or two, and they see the nice little nest egg that they're building up, maybe they might continue,” she said. 

Despite that, she said it is unrealistic to expect all 16-year-olds to automatically pay for a fund they will not see for at least another 50 years.  

“I'd agree with Alex that there is a serious lack of financial literacy,” she said.