The Government has published a bill which will pave the way for 800,000 workers to be brought into a pension scheme for the first time.
Publishing the Automatic Enrolment Retirement Savings System Bill 2024, Minister for Social Protection, Heather Humphreys said this represents one of the biggest reforms of the pension system in the history of the State.
“This landmark legislation is about protecting our workers, and particularly our young people, when it comes to reaching their retirement years,” she said.
There are about 800,000 workers in the State who have no occupational or private pension meaning they will be solely reliant on the State Pension when they retire.
Under Automatic Enrolment, all employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State.
Upon being enacted, employees aged between 23 and 60 years old, who earn over €20,000 per year, and who are not already paying into a pension scheme, will be automatically enrolled.
In a similar way to the old SSIA system, contributions made by the employee will be matched by the employer and topped up by the State.
In practice, for every €3 put in by the employee, the employer will also contribute €3, and the State will contribute €1.
That means for every €3 an employee puts in, they will receive a pot of €7.
The Government said contribution rates will be phased in gradually over a period of ten years.
Starting in 2025, employees will contribute 1.5% of their gross earnings, which will be matched by their employer, and topped-up by the State.
These rates will gradually increase every three years until reaching a maximum contribution rate of 6% per employee, 6% per employer, plus 2% from the State from 2034 onwards.
The Government said this steady phasing-in allows time for employers to budget and plan and for employees to adjust to the new system.
Article Source – Govt publishes bill paving way for pension auto-enrolment – RTE
