The Irish Government is planning to launch an auto-enrolment pension scheme from 2023.
Automatic enrolment in Ireland would see employers introduce a workplace pension scheme and
automatically enroll their employees into the scheme. Employers would then be obliged to
contribute a percentage of an employee’s salary to help fund his or her retirement. Employees will
have to match their employer’s contribution.

Do employers currently have to provide a pension to their employees?

At present in Ireland, there is no obligation on an employer to provide a pension scheme for
employees. There is, however, an obligation on all employers to give each employee access to a
PRSA. A PRSA is a Personal Retirement Savings Account, a personally owned pension that lets you
save for retirement even if there is no occupational pension scheme in place. An employer must, as a
minimum, facilitate a PRSA through payroll so that employees can avail of this type of pension.

What does auto-enrolment mean?

Auto-enrolment, where employees are automatically enrolled into a pension scheme and receive
contributions from both the State and their employer to help them save, has long been seen as an
essential tool in ensuring people have enough to live on in retirement. The Department of
Employment Affairs and Social Protection suggests that all PAYE workers between the ages of 23 and
60 earning more than €20,000 will be automatically enrolled in a pension in 2023 if they are not
already signed up for a scheme. Self-employed people and those earning less than the €20,000
threshold and people falling outside the prescribed ages could opt-in.

Why is auto-enrolment being introduced?

Ireland is one of only two OECD countries without a mandatory earnings-related element to
retirement saving. The mandatory pension scheme is being introduced to address a stubbornly high
level of workers who face retirement on nothing but the State pension. Just 35% of the private
sector workforce has private pensions coverage. If Ireland follows the UK auto-enrolment model,
employers will initially pay a 1% contribution in 2023, rising to a 7% contribution by 2029.

Does everyone think this is a good idea?

The Small Firms Association, which represents about 8,000 Irish companies, has rejected plans for a
mandatory pension system in its submission to the government group charged with putting together
the scheme. Director Patricia Callan said the current pension system needed to be enhanced but her
group was “by no means convinced” a compulsory scheme was the best option. “Mandatory pension
provision will prove costly to employees, to business, and the exchequer, without any associated
benefits in the long term,” she said.

With mandatory pensions on the horizon for Irish employers, now is the time to prepare for their
introduction. Employers that have any questions on this topic can contact GHR Consulting for a free
consultation on how auto-enrolment will affect them.