Posts Tagged ‘Pension’

Are employers in Ireland legally obliged to provide a pension scheme for employees?

Tuesday, September 21st, 2021

Managing HR is challenging at the best of times! We are here to answer your queries and provide up to date HR advice on what is impacting businesses today.

Welcome to our weekly Q&A – if you have a question email us at info@voltedge.ie.

Are employers in Ireland legally obliged to provide a pension scheme for employees?

Currently in Ireland there is no requirement, however employers are obliged to provide employees access to a PRSA – Personal Retirement Savings Account. Employers must facilitate this through payroll enabling employees to pay into their own personal pension.

The introduction of automatic enrolment is on the cards however it has been delayed until at least 2023. When this is eventually introduced, it will mean that both employers and employees will be required by law to make contributions to a workplace pension scheme.

Details of the scheme are still being ironed out by Government and it is hoped it won’t be delayed further.

This week is Pensions Awareness Week. You can join them for free financial information to help you invest in and secure your financial future.

 

Need more help? Voltedge Management team can help you to get advice on all aspects of human resources and management. Email Ingrid at info@voltedge.ie or ring our offices at 01 525 2914.

The Introduction of Auto Enrolment Pensions

Wednesday, November 20th, 2019

With the latest CSO statistics depicting just 56% of persons as having pension coverage and with what has been described as a looming pensions timebomb, there is increased spotlight on the Government roadmap for pension reform 2018-2023, as we move closer to the New Year.

Specifically, the key proposal is for the introduction of an automatic enrolment scheme by 2022. This proposed mandatory scheme would bring Ireland in line with other OECD countries where we are currently falling behind in this regard. The move would see all private-sector workers over a certain age and income level automatically signed up for a pension scheme into which the employer, the employee, and the State will contribute.

In a major review of pension systems in Ireland, the OECD found that Ireland faces challenges on the financial sustainability of its pension system as the population ages; however, Ireland’s pension spending will be comparatively low in international comparison, despite large projected increases over the next 50 years. The report states that private pension coverage, both in occupational and personal pensions, is uneven and needs to be increased urgently.

The automatic enrolment scheme was formally announced by Minister for Social Protection Regina Doherty at the end of October after she obtained Cabinet approval to go ahead with it. Although there are some criticisms, many welcome the proposal, seeing the need for supplementary savings as essential.

Following consultation groups input, the latest proposal looks like it will apply to all employees aged between 23 and 60 earning more than €20,000 a year and not already in a workplace pension scheme. Younger, older and lower paid workers can ‘opt in’. Employees will start paying contributions equal to 1.5% of salary, rising to 6% of salary in their tenth year of employment.

There will be an opportunity to opt-out or take a break but with a mechanism where they will be automatically enrolled once more after three years.

One area that generated much debate in the consultation process was the state contribution and what form this will take. Minister Doherty said this had not been resolved yet and discussions with the Minister for Finance continue. Under the original proposal, the State was going to provide an additional 2% to the savings as an incentive measure.

There were some initial concerns over the future of the State Pension scheme, but Minister Doherty insisted that there are no plans to get rid of the ‘bedrock’ of the system, that the proposed auto-enrolment will be a top up to the scheme.

These future proposals and changes to the parameters of the State pension system are an area to watch as we strive towards improved future financial stability.

Kate Sibbery, Human Resources Consultant