Around 800,000 workers to be automatically enrolled in pension scheme under new plans

Around 800,000 workers will be automatically enrolled into a pension scheme for the first time under new legislation published today.

Workers who have no occupational or private pension and would have otherwise been solely reliant on the State Pension upon retirement will have access to the scheme under the bill.

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, would automatically be enrolled.

Social Protection Minister Heather Humphreys said she intends to bring the legislation to enactment as “quickly as possible” and the bill will be brought before the Oireachtas after the Easter recess.

Under the planned scheme, contributions by the employee will be matched by the employer and topped up by the State, meaning for every €3 the employee puts in, the employer will add €3 and the State will add €1.

Rates will be phased in gradually over a period of 10 years from 2025.

Employees will contribute 1.5pc of their gross earnings, which will increase gradually every three years until reaching a maximum rate of 6pc per employee, 6pc per employer and 2pc from the State from 2034 on.

This proposed process of phasing in contribution rates is intended to allow time for employers to budget and plan and for employees to adjust to the system.

The Department of Social Protection estimates that a worker on the national average wage contributing consistently for 40 years could build up a savings pot of nearly €750,000, including investment returns, over the course of their working life.

The Automatic Enrolment Retirement Savings System Bill was published today and will soon be brought before the Oireachtas for consideration.

It will be a voluntary scheme but will operate on an ‘opt-out’ basis, where someone will be enrolled but have the option to withdraw or suspend participation after six months.

Ms Humphreys said the bill represents “one of the biggest reforms of the pension system in the history of the State” and described it as an “important milestone” in supporting those in retirement.

It also provides for the establishment of a new State body, the National Automatic Enrolment Retirement Savings Authority, to administer the scheme.

It will facilitate the collection of contributions, arrange for the investment and manage accounts that will be accessible through an online portal.

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