Elsewhere in the world, respondents believe most of the responsibility in sourcing retirement plan advice should sit with the members themselves. However, our Irish plan sponsors believe “friends and family,” “independent financial advisors” and “the employers” are also important advice sources for their members. People recognize that they need advice and should be comfortable that they can source, understand and trust advice from industry experts.
When it comes to who pays for retirement advice, Irish respondents diverged from the global average, which believes the cost should be borne by the “employee themselves.” In Ireland, 67% said that the cost of advice should be covered by the government.
Policymakers may want to consider communications and education campaigns that help deliver information on retirement options at a wide scale. Beyond this, employers and providers should look to build trust with their members by using simple, consistent language in familiar settings.
Doing Good and Doing Well
All plan sponsors surveyed in Ireland said they felt that it was important to incorporate environmental, social and corporate governance (ESG) considerations into their plan’s investments. However, many plans have not yet taken the step to incorporate ESG in their investment lineup.
In the past, choosing values such as ESG or performance was often presented as a zero-sum game (i.e., driving impact came at the cost of better returns). We believe this is a false choice and that a company’s environmental actions, social behaviors and governance practices can have a meaningful impact on performance. In our survey, only 33% of respondents reported “lower returns” as the key reason for not incorporating ESG to date.[i]
The Irish government’s recently launched “Ireland for Finance” strategy for the development of the international financial services sector to 2025 includes sustainable finance as one of its three “horizontal” priorities.[ii] Recognizing that Ireland has done some significant work in this sector, action points will be identified with a view to delivering improvements that will enable Ireland to increase its global competitiveness in this area.
This strategy will supplement the call for the industry to continue to innovate in products that not only incorporate ESG values, but also offer value for money. We believe ESG index funds can help achieve these goals.
There is still a high degree of confidence that auto-enrolment will be implemented in Ireland.