WHAT IS THE NEW AUTO-ENROLMENT PENSION SCHEME???

The National Pensions Framework 

This is a document that was published by the Irish Government in 2010.  It sets out the governments intentions for wide-scale reform of the Irish Pension System.  The state will continue to provide for the state pension, while employers and individuals will be encouraged to share the responsibilities with government to save and provide for the future.  It sets out key developments for the future of pension provision in Ireland in the areas of : 

  • Social Welfare Pensions 
  • Auto-Enrolment
  • Current Occupational & Voluntary Provision 
  • Public Services Pensions
  • Tracing Service for Dormant Pensions

What is Auto-Enrolment??

The aim of Auto-Enrolment is to deliver security, equity, choice and clarity to the Irish Pension system for each individual.  It also aims to increase pension coverage, particularly among the low to middle income groups and to ensure that state support for pensions is equitable and sustainable.  


How Auto-Enrolment will work :  

Employees will be automatically enrolled into a new pension scheme unless they are a member of their employers scheme and that scheme provides higher contribution levels or is a Defined Benefit Scheme.  


Contributions to the new scheme will be made within a band of earnings, with earnings below and above certain thresholds exempt. 

  • Employees will be required to make a fixed percentage contribution. 
  • In line with the government commitment, a state Contribution, a state contribution equal to 33 percent tax relief will be provided in respect of pension contributions made by the employee. 
  • Employers will be obliged to provide a contribution equivalent to the state contribution.  

A Simplified Example - A contribution of €4 to the scheme would comprise of an employee contribution of €2, a state contribution of €1 and an employer contribution of €1. 


The Government will introduce three principal changes in the Pension System : 


  • An Auto-Enrolment system for employees to ensure increased coverage and adequacy. 
  • A requirement for employers not currently providing pension arrangements to take on a significant role in Pension reform by enrolling employees and contributing on a mandatory basis. 

Once a person enters employment or changes employment, and is over 22 years of age, he or she will be automatically be enrolled into the new pension scheme unless the employee is a member of their employers' scheme which must be : 


  • A Defined Benefit Scheme

                      OR

  • A Defined Contribution Occupational Pension Scheme with a contribution rate equal to or greater than the minimum under the new scheme. 





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