On 29th of March 2022 Minister Humphreys announced details of Automatic Enrolment Retirement Savings System.
Are you curious as to what this means?
- The system will be phased in, All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employments, will be automatically enrolled.
- The system is due to be set up by 2023 with the first employee enrolments taking place in 2024.
- Both employer and employee contributions will start at 1.5%, and increasing every three years by 1.5% until they eventually reach 6% by over 10 years (by 2034).
- Matching contributions will be made by employers to those contributions made by employees up to a maximum of €80,000 of earnings.
- The State will also top up contributions by €1 for every €3 saved by the employee, up to a maximum of €80,000 of earnings.
- Eligible employees will be automatically enrolled/ ‘opted-in’ but will have the choice after six months participation to opt-out or suspend participation.
- Employees will have a range of four retirement savings funds to choose from.
- Three funds will have differing risk/return profiles. In addition, a default fund based on what is known as a ‘life-style’/’life-cycle’ investment profile will be provided.
- People who do not express a preference for any fund will be enrolled into the default fund.
- A Central Processing Authority (CPA) will be established to administer the system.
- People moving between jobs will not have to change pension scheme or join a new scheme. They will remain members of the Auto Enrolment scheme on a ‘pot-follows’ the member’ basis. In addition, people with multiple employments will have their pension savings consolidated into one ‘pensions-pot’.
- Services will be provided and supported through an easy-to-use online channel where participants will see their savings pots grow quickly and substantively.