A major reform of future State, private and public service pension provision was announced on 28th February 2018 by the Government. Our experts have provided an overview of everything you need to know about the pension reforms in Ireland.
To address Ireland's significant retirement savings gap, a new retirement savings system will be introduced to encourage employees to provide for additional retirement income to supplement the State pension.
The Government will introduce, by 2022, a State-sponsored supplementary employment-related retirement savings system in which workers will be automatically enrolled.
It is intended that employee savings in this scheme will be supported by employer and State contributions. Under the system, workers will have the freedom to opt-out should they so choose, however experience in other countries indicates that once automatically enrolled, workers tend to remain in the system. It is hoped that the same experience will be repeated in Ireland.
Automatic enrolment systems are characterised by certain design parameters. These include the target membership, the contribution rates, the financial incentives, the policy for opt-out and re-enrolment and the policy for contribution holidays.
The Government will make final decisions regarding the operational and design characteristics for automatic enrolment after the completion of a public consultation process to further inform our analysis and evidence building.
At present, there is no legal obligation on an employer to set up or contribute to a pension scheme. If an employer doesn't have a pension scheme or if you are an 'excluded employee', an employer will need to provide employees with access to at least one Standard PRSA.
An 'excluded employee’ is where:
- Their employer does not offer an occupational pension scheme, or
- The employee is included in a scheme for death in service benefits only, or
- The employee is not eligible to join the scheme or will not become eligible to join the scheme within six months from the date you began work, or
- The employee is included in a scheme that does not permit the payment of Additional Voluntary Contributions (AVCs) by members.
An employer must enter into a contract with a PRSA provider and is obliged to:
- Notify 'excluded employees' that they have a right to contribute to a Standard PRSA
- Allow the PRSA provider or intermediary reasonable access to 'excluded employees' at their workplace
- Allow reasonable paid leave of absence, subject to work requirements so that excluded employees can set up a Standard PRSA
- Make deductions from payroll at the request of employees and remit these to the designated PRSA provider (employers cannot charge for deducting and remitting contributions)
- Advise employees in writing (normally on their payslip) at least once a month of their total contribution including the employer's contribution, if any.
If you have any questions in relation to the new pension reforms, please contact our expert employment law advisors on the 24 Hour Advice Service on 0818 923 923
