Plans to auto-enrol workers in pension schemes announced
The Government is to introduce a system of pension auto-enrolment on a phased basis from 2022.
The details have been published by the Department of Employment Affairs and Social Protection.
Under the system, a worker will be automatically enrolled in a pension scheme when they start a job.
It will apply to all employees aged between 23 and 60 earning more than €20,000 a year and not already in a workplace pension scheme.
They will start paying contributions equal to 1.5% of salary, rising to 6% of salary in their tenth year of employment.
There will be opportunities to opt-out and take breaks from contributions.
Employers will be compelled to make matching contributions.
The contribution from Government is still being discussed.
A panel of pension providers will be run by a new State entity called the Central Processing Authority.
Brokers Ireland said it is very disappointed with aspects of the scheme.
It said a limit of 0.5% on administrative, management and investment charges will not facilitate independent advice for consumers.
It also said that with a 10 year build-up to full contributions many will miss out on having adequate savings built up for retirement.
Rachel McGovern, Director, Financial Services at Brokers Ireland said various studies, national and international, have shown that those who receive fnancial advice are substantially better off than those who don’t.
However, the insurance industry welcomed the scheme.
“Given our savings rates, demographics and the increasing number of people who will rely solely on the state pension, auto-enrolement is a key policy tool to increase pension coverage and help people plan for their retirement,” said Declan Jackson, Director of Government Affairs with Insurance Ireland.
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