An article in the Irish Times today highlights the worrying lack of knowledge around pensions in Ireland. It got us thinking about workplace relations and how little many employees and employers know.
Many employees know very little around their rights and entitlements when it comes to pensions. Many sign up to contracts of employment delighted to see a provision for joining the company pension scheme but know little else. Employers in turn generally just provide the employees with contact details for a pension scheme advisor when a problem arises.
Whilst employers cannot be expected to know the answer to all pension related queries, it is certainly an advantage to understand a couple of key points.
- Do I have to give an employee a pension at work?
The simple answer is no. If you do not have a company pension scheme in place you must give employees access to a standard Personal Retirement Savings Account or PRSA. Further details are available on the Pensions Authority Website which also lists the PRSA providers available.
2. What information do I have to give employees in relation to their pension?
In essence an employee is entitled to basic information concerning the scheme and it is always prudent to arrange for the pension administrator to provide them with the scheme rules and an explanatory booklet.
An employee is also entitled to know if any changes have been made to the scheme rules or any other changes within 4 weeks of the change being made.
Again the Pensions Authority provide some good guidance on what you should provide here
3. What is the difference between a defined benefit and a defined contribution scheme?
Defined contribution schemes are company pension schemes where an employee’s contributions and their employer’s contributions are both invested and the proceeds used to buy a pension and/or other benefits at retirement. The value of the benefits payable from the scheme depends on the amount of contributions paid, the investment return achieved less any fees and charges, and the cost of buying the benefits.
Defined benefit schemes are company pension schemes that provide a set level of pension at retirement, the amount of which normally depends on an employee’s service and their earnings on retirement.
Many employers have defined contribution schemes now as many would up defined benefit schemes when the recession hit.
The Pensions Authority explain the various types of schemes further on the following link to their site.
4. One of my employees is alleging that I have discriminated against her as she was not eligible to join our company scheme yet. What does this mean?
In essence an employer must ensure there is equal pension treatment and there cannot be any discrimination in respect of scheme rules.
This means that an employee cannot be treated less favourably on the grounds of age, gender, race, religion, marital status, family status, membership of the travelling community or sexual orientation in respect of accessing a pension scheme, retirement ages, contribution arrangements etc.
You should note however it is not discrimination on the grounds of age to fix ages for admission to the scheme or for entitlement to benefits under the scheme, including fixing different ages for employees or groups of categories of employees, provided that this does not result in discrimination on the gender ground.
Your employee would need to show that you have somehow treated her less favourably on one of the above grounds to bring a claim. If she is currently ineligible to join due to a fixed age for admission in the scheme rules, this may not be discriminatory provided another ground is not breached.
5. What happens if an employee makes a complaint to the Pensions Authority?
In general employees who have a complaint in relation to a company pension scheme are encouraged to contact their employer or pension scheme administrator, the Pensions Authority or the Financial Services and Pensions Ombudsman.
It is always prudent as an employer to try and resolve any employee queries or concerns internally first. An employee should be provided with the contact details of the pension scheme trustees who may be able to help.