The Irish Prime Minister, Micheál Martin, has faced criticism over a memo that suggests people will be forced to “raid” their auto-enrolment pensions to pay their rent in retirement.

The suggestion was made in a cabinet memo, revealed by the Irish Independent, and has been criticised by Social Democrats co-leader, Catherine Murphy.

During Leaders Questions, Murphy said: “I don’t know what planet the government is on but if anyone thinks the answer to the housing crisis of 2022 is modest pensions that will accrue to people in 20,30 or 40 years from now, it is any wonder we are in the mess we are in.”

She said renters will have been “tearing their hair out” and “hundreds and thousands of them don’t have pensions” because they can’t afford them whilst paying exorbitant rents and struggling with the cost-of-living crisis.

“Declining rates of homeownership are a huge concern, the rate has fallen from 79 per cent in 1991 to 68 per cent in 2016 and will certainly have been revealed to have fallen further when the new census is taken. We have a housing crisis that can only be solved if affordability is seriously tackled.

“Under no signs from the government that you are doing this, can I ask the Taoiseach to confirm that it is not the intention of the government to force workers to raid their pensions to pay for rental costs, and what is the government’s plan to help people be able to pay their rents when they are in retirement.”

Earlier this week the government revealed the full details of its plans for an auto-enrolment pension system, which will see around 750,000 workers be enrolled into a new workplace pension scheme.

Under auto-enrolment employees will have access to a workplace pension savings scheme which is co-funded by their employer and the state. A key feature of the system is that although participation is voluntary, so that people don’t have to participate, it operates on an ‘opt-out’ rather than an ‘opt-in’ basis.

In order to encourage workers to participate, those people who choose to remain in the system will have their pension savings matched on a one-for-one basis by the employer. The state will also provide a top-up of €1 for every €3 saved by the worker. This means that for every €3 saved by the employee, a further €4 will be invested by the employer and the State combined.

Commenting at the announcement of the final design, Minister for Social Protection, Heather Humphreys, said: “We all know that people are living longer. While this is very positive, we also want people to be able to enjoy their retirement years with some financial security.

“However, for many people retirement seems a long way away and they think they have a lot of time before they need to think about a pension. Some people may be of the view that the process of putting aside a little each week to provide for their retirement years is something to be considered next year, or maybe even the year after next.

“However, that is not the case. If people want to retain a reasonable standard of living in retirement, they need to start saving as soon as possible. This major reform in the Irish pensions landscape is intended not just to get people saving earlier but to support them in that saving process by simplifying the pension choices and importantly by providing for significant employer and state contributions as well.

“What we are doing today is putting in place a system whereby people can save for their retirement.”

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