Auto Enrolment
”The universe is like a pension plan. It matches your investment” – Camryn Manheim
What is Auto-Enrolment?
Auto-enrolment is a new retirement savings system for employees which the Government have committed to introducing in the second half of 2024.
Many employees do not have a pension scheme, which means that they will be relying on the state pension when they retire. While the state pension can make sure that retired people stay above the poverty line, most people are used to having more money to live on.
People who do not have a pension scheme, earn more than €20,000 per year and are aged between 23 and 60 will be automatically enrolled into a new system. This means that they will have extra money when they retire and won’t have to rely on the state pension alone.
An extra benefit to employees is that their employer and the State will also contribute – for every €3 that an employee puts in , the employer will also put in €3 and the State will top up by €1. This means that for every €3 contributed by the employee, €7 will be put into the employee’s account.
The perceived benefit for employers is that they’ll be able to look after their employees without the administrative burden and cost of setting up the pension scheme themselves.
People earning less than €20,000 per year and who are aged outside the 23-60 bracket will be able to opt in, as long as they aren’t already in a pension scheme.
Contributions will be phased in so that everyone can get used to the new system without a steep change in income.
Employees will be able to leave the system or pause their contributions under certain circumstances, but will be automatically re-enrolled after two years if they are still eligible.
An independent body , the Central Processing Authority, will be set up to administer the scheme and look after participants’ best interests.
How Will It Be Managed?
An tÚdarás Náisiúnta um Uathrollú Coigiltis Scoir (the “Authority”) with be set up to administer the scheme and will:
- Administer the system on behalf of enrolled employees, their employers, and the State.
- Collect, pool, and distribute contributions to commercial investment managers.
- Collect, pool, and distribute financial investment returns to participants.
- Operate an online accounts portal where participants can see their savings.
- Facilitate a ‘pot-follows-member’ system whereby participants will benefit from owning one single AE pension pot across employments and throughout their working lives.
- Set standards for the commercial registered providers of AE investment products.
Exempt Employment
Employment, whereby, the employer makes contributions for the benefit of the employee, in respect of the employment of the employee at that time, to a qualifying occupational pension scheme, qualifying PRSA or qualifying trust RAC. The Authority, in consultation with the Pensions Authority, shall draw up standards that these pension products must meet in order to exempt employees contributing to these schemes. These standards have yet to be published.
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Want to know more?
If, as an employer, you would like to understand more about the potential implications of Auto-Enrolment and how we can assist you in establishing an arrangement which satisfies your employer obligations, please get in touch.
