Commencing in 2024 a new savings and investment scheme for employees where financial returns are paid to participants on retirement in addition to the state Pension, is being set up.
The driver behind setting up the new scheme is that 750,000 employees aged between 23 and 60 years and earning over €20,000 have not enrolled for an occupational pension scheme.
CSO figures show that 56% of employees have active pension cover (Pension Coverage Survey 2021).
When the private sector is considered on its own, this figure drops to less than 35%.
The new savings and investment scheme (Auto-Enrolment) is a voluntary scheme but will operate on an “opt out “ rather than an “opt in” basis.
Under the Auto-Enrolment system employees will be required to make certain minimum contributions, the employer will be obliged to match those employee contributions, and these will be topped up by the State.
The following table shows the rate of employee, employer and State contributions as the Auto-Enrolment system starting in 2024 is introduced over a period of 10 years.
|
Years Commencing in 2024 |
Employee Contribution Rate % |
Employer Contribution Rate % |
State Contribution Rate % |
|
1 – 3 |
1.5 |
1.5 |
0.5 |
|
4 – 6 |
3.0 |
3.0 |
1.0 |
|
7 – 9 |
4.5 |
4.5 |
1.5 |
|
10+ |
6.0 |
6.0 |
2.0 |
All private sector employees aged between 23 and 60 years who are not already in an occupational pensions scheme and earning over €20,000 will be automatically enrolled.
Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s gross salary. Employees may contribute on earnings greater than €80,000 if they wish.
Next Steps
If you are an employer and have any questions, please contact your CollierBroderick HR Advisor, call us on 01 8666426, contact us, or email us on enquiries@collierbroderick.
