The long awaited pensions auto enrolment pension scheme seems set to be introduced in 2024 according to an Irish Times article today. This follows a recent press release by Minister Heather Humphries today.
There has been much discussion on the scheme however there has been very little movement on it to date. According to the Irish Times it was first mentioned by Minister Seamus Brennan back in 2007.
The general scheme of the Automatic Enrolment (AE) Retirement Savings System Bill has now been sent forward to the Oireachtas Joint Committee on Social Protection. Thereafter it is expected that draft legislation will be published.
What do we currently know about the scheme?
The current indicators are (which may be subject to change):
- Workers between the ages of 23 and 60 who are earning more than €20,000 a year and are not already in a workplace pension scheme will automatically be signed up to the scheme in 2024 when legislation is passed and enacted. We await draft heads of the Bill and it will take some time for this to pass through the Oireachtas.
- There is likely to be an option to “opt out” after six months but indications suggest they will again be automatically enrolled 2 years later.
- Workers and their employers will initially pay 1.5 per cent of their gross salary into the scheme. From year four, that will increase to 3 per cent, rising again to 4.5 per cent in year seven and 6 per cent from year 10.
- The State will contribute €1 for every €3 paid in by the employee. As a result, every €3 contribution from the worker will see a total of €7 invested in their pension once employer and State contributions are factored in.
It remains to be seen how the scheme will operate in practice and we await the draft Bill to analyse it further.