Automatic Enrolment Retirement Savings System Bill 2024

1.      Who will be automatically enrolled?

People aged between 23 and 60, who are earning €20,000 or more per year and are not currently paying into a work or private pension through payroll will be automatically enrolled into the system.

People who don’t meet the eligibility criteria, can request to opt-in to the scheme provided they are working, are under the State pension age and do not already have a pension through payroll.

 

2.      Contributions

The amount an employee will pay will be a set rate of their annual salary, with a matching employer contribution and top-up by the State. Contributions will be calculated up to a maximum gross salary of €80,000. Employees who earn more than this, will only pay contributions on the first €80,000 they earn.

Contribution rates (based on a percentage of gross income) will be phased in over a ten year period as follows:

	Employee	Employer	State
Years 1-3	1.5%	1.5%	0.5%
Years 4-6	3%	3%	1%
Years 7-9	4.5%	4.5%	1.5%
Years 10+	6%	6%	2%

 3.      Opting out

Employees who have been automatically enrolled can choose to opt out after 6 months and their contributions will be refunded.

If employees decide to leave the scheme within months 7 and 8 after a change in contribution rates, they will get a refund. This refund will be based on the difference between the employee’s own contributions at the old and new rates during the previous 6 months. This option is only available during the first 10 years of the auto-enrolment scheme as contribution rates gradually increase from 1.5% to 6%.

Those who opt out will be automatically re-enrolled after two years if they still meet the eligibility criteria. They can opt back in again before the two years pass.

Members will also be able to suspend their contributions after 6 months but will not receive any refund.

 

4.      Administration

A body to be known as the National Automatic Enrolment Retirement Savings Authority will be established to:

1. maintain and administer the automatic enrolment retirement savings system;

 

2. to provide for automatic enrolment and re-enrolment of participants in that system and for opting into and out of the system;

 

3. to provide for payment of contributions by participants, their employers and the State, the investment of contributions and the payment of retirement savings out of participants’ accounts;

 

4.  to provide for the consequential amendments of certain enactments; and to provide for related matters.

 

5.      Employee Protections

There are protections in the Bill to ensure that employers must make contributions on behalf of participating employees. If they do not, employers may be subject to fines and repayment with interest.

Conclusion

A key feature of the scheme is its simplicity. Employers will not have to invest in the establishment or procurement of an occupational scheme for their own businesses. Employers are only required to facilitate payroll deductions and employer contributions will be deductible for corporation tax purposes.

People moving between jobs will not have to change pension scheme or join a new scheme. They will remain members of the automatic enrolment scheme on a ‘pot–follows–the–member’ basis. Most importantly, employee contributions will be boosted by matching employer contributions and State top-up. There will also be an easy to use online portal where participants can view their account.

For further information on this topic please contact Cómhnall Tuohy or any member of the Employment Team.

This Article has been prepared by Kane Tuohy LLP on 18 April for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.