Politicians have recently vocalised their concerns surrounding the new auto-enrolment scheme, where employers will be required to automatically enrol eligible employees into workplace pension schemes, being delayed until 2026 or even 2027.
The Irish Congress of Trade Unions has called on politicians to get the bill done’. Owen Reidy has said that it’s vital 2024 is the year when we get the pension auto-enrolment bill done and bring an end to our failed voluntary approach to pension saving.
Former Taoiseach, Leo Varadkar, had advised Heather Humphreys to push back against any attempts to delay this despite the temptation heading into elections. He also said that while the legislation was not perfect, Ireland remains the only OECD country to not have a pension system like this in place.
Ms Humphreys accepted Varadkar’s advice, stating that time is not on our side and that the best time to start saving for a pension is always now.
When is auto-enrolment coming to Ireland?
Auto-enrolment is estimated to come into effect as early as the 1st of January 2025. However, there’s still a lot of scepticism around this date as the scheme has been delayed numerous times already, and the sheer amount of infrastructure that has to be set up is constrained to a tight time bracket.
According to Ms Humphreys, the cost of auto-enrolment to the State will be around 138m in 2025, and by Year 10, will rise to reach 760m.
What are the auto-enrolment contribution rates in Ireland?
The contribution rates are the same for employees and employers. The State will contribute a lower rate. For every 3 put into the pension scheme by the employee, the State will contribute 1 to their pension scheme.
Ms. Humphreys has estimated that someone on the average wage who contributes for 40 years could end up with a savings pot of 750,000. To help everyone adjust to the new scheme, it will be phased in over a 10-year period, which contribution rates increasing every three years.
Auto-enrolment contribution rates for employees and employers
- Years 1-3, contribution rate is 1.5%
- Years 4-6, contribution rate is 3%
- Years 7-9, contribution rate is 4.5%
- After 10 years, contribution rate is 6%
Auto-enrolment contribution rates for the State:
- Years 1-3, contribution rate is 0.5%.
- Years 4-6, contribution rate is 1%
- Years 7-9, contribution rate is 1.5%
- After 10 years, contribution rate is 2%
Stay up to date on auto-enrolment legislation
Want to keep up with all the latest news and changes on auto-enrolment, and how it’ll affect payroll? We’ve got some webinars, guides and other useful resources in the pipeline as we creep closer to the expected deadline. Register your interest below and we’ll keep you in the loop.
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