HUNDREDS of thousands of workers are set to benefit from a new pension scheme that has been finally agreed on by the Government.
The much-delayed auto-enrolment scheme is expected to be introduced in the year after next. It has been decades since the idea for such a scheme was first mooted. Close to one million workers do not have a private or occupational pension scheme, so will be depending on the State pension when they retire. The idea of the new scheme is to give them a bigger retirement income when they leave work. Workers will be automatically signed up to a pension plan co-funded by their employer and the State, but they can opt out if they wish to leave.
This plan is for employees who are not already in an occupational pension scheme. Rather than opting in, they will be automatically enrolled and will have to opt out if they wish to leave. Workers will have their pension savings matched on a one-for-one basis by their employer. The State will also provide a top-up of €1 for every €3 saved by the worker. Some 750,000 workers are expected to benefit from the auto-enrolment pension, Social Protection Minister Heather Humphreys said.
She said the bill will now go before the Oireachtas Committee on Social Protection for Pre-Legislative Scrutiny ahead of its expected introduction in early 2024. Ms Humphreys said it was a historic milestone in the journey towards enabling people who are currently without pension coverage to save for their retirement.
She said: “This represents a historic milestone in the journey towards enabling people who are currently without occupational pension coverage to save for their retirement.
“After decades of talking about auto-enrolment (AE) in this country, I am pleased to say the AE train is now very firmly on the tracks and leaving the station ahead of its introduction in early 2024.”
Participation in the new scheme will be voluntary. But those signed up will have to actively sign out of the pension plan, for example, if you need to save for a home deposit. You will be opted back in two years later. In the first three years, employees will contribute 1.5pc of their salary, which will be matched by their employer, and the State will add an additional 0.5pc of the original amount put in by workers. In years four to six, employees will contribute 3pc, which will again be matched by their employer, while the State will pay an extra 1pc into the pension scheme. In years seven to nine, the percentage payments will go to 4.5pc for employees and employers, and 1.5pc from the Government. After 10 years, employees and employers will contribute 6pc and the State will add 2pc.
Head of social policy and employment affairs at the Irish Congress of Trade Unions Laura Bambrick said Government approval of the General Scheme of the Automatic Enrolment Retirement Savings System Bill was welcome news.
“Occupational pension coverage jumped from 47pc to 80pc in a decade after auto-enrolment introduced in UK,” Dr Bambrick said.
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