“Auto-enrolment” is the word of the day for pension experts and Ireland’s wider business community. While it has been mooted for many years, now it is finally within sight. The Government published the Automatic Enrolment Retirement Savings System Bill 2024 at the end of March. The Minister for Social Protection is adamant that the system will be implemented by the end of this calendar year. However, in addition to debating and passing the Bill, much remains to be done to implement the technical, administrative, and organisational measures necessary to establish the system.
Governing auto-enrolment
Perhaps the most significant element of the Bill is the proposed establishment of a statutory authority to establish, maintain and control the auto-enrolment system. The National Automatic Enrolment Retirement Savings Authority will be charged with arranging for the enrolment, collection of contributions, and establishment and maintenance of retirement savings accounts. It will also be responsible for:
- The provision of related information and services
- The investment of contributions with investment management providers
- Facilitating the payment of retirement savings
- Monitoring and enforcing compliance, and
- Undertaking research relating to retirement savings services
The National Automatic Enrolment Retirement Savings Authority will be supervised by the Pensions Authority.
How does it work?
A person will be automatically enrolled in the system if they are an employee and are:
- Between the ages of 23 and 60,
- Not already a member of a qualifying pension plan, and
- In receipt of total gross pay in all employments of at least €20,000 per annum
The Bill proposes three sources of contribution, paid as a percentage of an employee’s gross pay, as follows:
Contributions must only be made on the first €80,000 of a participant’s gross pay, although the Minister may amend this through subsequent related regulations. The Bill also sets out the conditions for opting in and out of the auto-enrolment system.
Once contributions are made and invested by the National Automatic Enrolment Retirement Savings Authority on behalf of participants, they can be paid out on reaching the State pension age, on death, or earlier in the event of incapacity or exceptional ill health.
We note that the Bill provides for the implementation of standards within future regulations. If implemented, these would essentially aim to ensure minimum standards as between the auto-enrolment savings system and other pension schemes, PRSAs and trust RACs. These standards would come into effect sometime within the first seven years of the auto-enrolment phasing-in period.
Compliance and enforcement
It is proposed that the National Automatic Enrolment Retirement Savings Authority will have a range of inspection and enforcement powers, including the power to issue compliance and fixed-penalty notices. A range of new offences have also been created, including:
