What does the new auto-enrolment pension scheme mean for me?
Than Make Between It More The 23 Of Plan Scheme Mandatory And Ages To 60 A If Pension The Cabinet To Employees In Approved Introduction The €20,000 For Earning Of A Has Enrol
The Cabinet’s approval of its much-delayed auto-enrolment pension scheme is a significant milestone, aimed at defusing the mounting pensions time bomb the country is facing.
Launching the plan, Social Protection Minister Heather Humphreys said the system would be clear and simple for both employees and employers to operate and would enable 750,000 people currently without a pension to get one.
The Cabinet has approved the introduction of a plan to make it mandatory for employees between the ages of 23 and 60 to enrol in a pension scheme if earning more than €20,000.
It is expected contributions will begin to be paid from January 2024.
Initially, employees will be expected to contribute 1.5% of salary, increasing every three years by 1.5% until they eventually reach 6% by Year 10 (2034).
Under the terms of the plan, employers will match employee contributions up to a maximum of €80,000 of earnings. This recognises the value employers gain through their employees having additional security in retirement and assists employees with the cost of accumulating pension savings. Employers will not have to invest in the establishment or procurement of an occupational scheme for their own business. They will simply be required to facilitate payroll deductions.
Yes, the State will also top up contributions by €1 for every €3 saved by the employee, up to a maximum of €80,000 of earnings. This is in addition to the €3 that will also be contributed by the employer.
Between the State contributions and employer contributions, for every €3 saved by a worker, a further €4 will be credited to their pension savings account. That means that every €3 contribution by an employee automatically grows to €7 before it is invested, or, put another way, for every €1 saved by an employee their savings account will be credited with €2.33.
Yes, after six months of commencing contributions, employees will be able to opt-out for up to two years. However, at that point if they are still opting out, they will automatically be re-enrolled into the scheme. After another six months, employees can opt out again.
No. You would be expected to park your PRSA and contribute to the auto-enrolment pension.
Employees will have a range of four retirement savings funds to choose from. Three funds will have differing risk/return profiles. In addition, a default fund based on what is known as a "life-style"/"life-cycle" investment profile will be provided. People who do not express a preference for any fund will be enrolled into the default fund.
People moving between jobs will not have to change pension scheme or join a new scheme. They will remain members of the auto-enrolment scheme on a ‘pot-follows-the-member’ basis. In addition, people with multiple employments will have their pension savings consolidated into one ‘pension pot’.