The proposed auto-enrolment pensions plan has been labelled a "waste of resources" by a former actuary.

The Department of Social Protection' retirement savings scheme for employees is set to be implemented on September 30th next year.

Under auto-enrolment, all employed workers who are not already in a pension scheme will be automatically enrolled in the new national scheme.  

Employees, employers and the State will all pay a certain amount into an employee's pension fund.

A new public body - the National Automatic Enrolment Retirement Savings Authority - will oversee the administration of the new scheme.

Employees can opt out of the scheme after six months if they wish.

Former actuary and past president of the Society of Actuaries in Ireland Colm Fagan, however, has described the pensions plan as a "waste of resources".

On The Pat Kenny Show, Mr Fagan claimed two aspects of the plan would be very costly to the State.

"One is the total contributions being paid by employees, employers and the State," he said.

"That would be €20 billion in the first 10 years of the scheme and then it would be €4 billion a year after that."

"It’s incomprehensible that they’ve agreed to go into this without any consideration of whether they’re getting good value for money."

NEST

Mr Fagan said Ireland's auto-enrolment plan is modelled off the UK's National Employment Savings Trust (NEST) scheme.

"In the NEST scheme, there is between a quarter and a third of the people who leave every year.

"If we have the same experience as the NEST scheme, of the 800,000 people who join, only 30,000 of them will still be there after 10 years."

Assessment

Mr Fagan is calling for the Economic Social Research Institute (ESRI) to assess Ireland's proposed auto-enrolment scheme before it is enacted next year.

"All I'm saying is we should have the ESRI go through it with a fine-tooth comb," he said.

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Feature image: Bank notes, coins and a calculator are laid out on a surface, Alamy.