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Pensions Auto-Enrolment Is A Step Nearer

Arrangements to give effect to the proposed system of automatic enrolment in a retirement savings system is being progressed and is expected to be finalised for commencement in 2024. The details are contained in the Draft Heads and General Scheme of the Automatic Enrolment Retirement Savings Systems Bill, 2022.

The Draft Bill sets out the following design elements:

• Private sector employees aged 23 to 60 years old earning over €20,000 pa (not already in a qualifying occupational pension scheme) will be automatically enrolled.

• Contribution rates will be levied as a percentage of an employee’s gross earnings calculated on employee earnings up to €80,000.

• Employees will be required to make fixed minimum contributions starting at 1.5% of gross earnings (increasing to 3% in year 4, 4.5% in year 7 and 6% in year 10).

• Employers will be obliged to match employee contributions.

• The State will top up employee and employer contributions (State contributions to range from 0.5% to 2% on a phased basis).

• Employees must remain in the scheme for 6 months and will be free to opt out at a later date.

• There will be a facility to suspend or pause contributions and to leave the scheme under certain conditions.

• Eligible employees who opt out or suspend contributions will be automatically re-enrolled at a later stage.

• There will be limited scope to access retirement funds before retirement.

• Employees who are contributing members of a qualifying scheme (i.e. one that meets prescribed minimum standards and contribution levels) will not be automatically enrolled.

• An independent body, the Central Processing Authority (CPA), will be established to administer the scheme and to set standards for the scheme.

The Joint Committee on Social Protection, Community and Rural Development and the Islands published its Report on Pre–Legislative Scrutiny of the Bill which made several recommendations most notably that there should be a two-year lead in period after the legislation is enacted to enable businesses to prepare for the implementation of Auto-Enrolment.

It remains to be clarified if an employer operating an existing occupational pension scheme and their member employees will be fully exempt from the system.

If you would like to talk to us about any of the above issues, please get in touch with us or any of our Partners.

Brendan McGinty | Managing Partner

Stratis Consulting

‘Strategic Employment Relations’

M: +353 (0) 87 2433038 or T: +353 (0) 1 2936748

Disclaimer: The information in this article is for general guidance only and does not constitute legal or specific case advice. The answers to specific situations will vary depending on the circumstances of each case. This is not a substitute for specific professional advice relevant to individual circumstances facing your business.


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