The Irish government has today published a bill that will pave the way for 800,000 workers to be brought into a pension scheme for the first time via automatic enrolment.
Publishing the Automatic Enrolment Retirement Savings System Bill 2024, Heather Humphreys, minister for social protection, said this represents “one of the biggest reforms of the pension system in the history of the state”.
According to the Irish government, there are around 800,000 state workers who have no occupational or private pension.
When the bill is 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 Special Saving Incentive Account (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. Contribution rates will be phased in gradually over a period of 10 years, the announcement noted.
It explained that 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.
It said that the phasing-in allows time for employers to budget and plan and for employees to adjust to the new system.
Humphreys said: “This landmark legislation is about protecting our workers, and particularly our young people, when it comes to reaching their retirement years.”
She pointed out that auto-enrolment has been talked about for decades, and “today is a clear sign that we mean action”.
“This legislation will provide the foundation for the most radical shake up of the pensions landscape in Ireland for generations. For me as minister, having 800,000 workers without pension coverage isn’t acceptable or viable,” she continued.
“We’ve been an outlier in terms of pension coverage for too long – and that’s now going to change.”
Humphreys added that this is a “hugely important” piece of legislation in terms of protecting workers’ future. “I look forward to bringing it before the Oireachtas immediately after the Easter Recess,” she said.
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