The pension you will pay for automatically
Workers can opt out after minimum period of time
WORKERS who don’t have private pensions will see a portion of their income automatically diverted for mandatory personal retirement savings from 2022.
However, all workers will be able to ‘opt-out’ if they don’t want in on the new State-run pension savings scheme. The Government has announced a dramatic overhaul of future State, private and public service pensions, partly to deal with our changing and increasingly ageing population.
And Taoiseach Leo Varadkar yesterday outlined the roll-out of a five-year ‘Roadmap for Pensions Reform’, which will include a new ‘Automatic Enrollment’ retirement savings system from 2022 for those who do not have private pensions.
There are six strands to the Government’s plan, including the new automatic enrolment retirement savings system.
It is being introduced to address ‘Ireland’s significant retirement savings gap’.
Eligible workers will be automatically enrolled. It is intended that employee savings in this scheme will be supported by both employer and State contrisystem’ butions. A consultation process is underway, and this will include parameters such as the identified age and specific income thresholds of employees who should be automatically enrolled, who don’t have existing private pension provision.
There are variables which may influence this automatic enrolment such as duration of employment in contracts.
However, workers will be given the ‘freedom’ to opt out.
It is the Government’s plan for workers who are automatically subscribed or enrolled that they can ‘opt out’ or withdraw after a minimum period of time.
Any contributions which are made during this time would be refunded.
However, the Government has outlined that experience from other countries indicates that ‘once automatically enrolled workers tend to remain in the and it is their hope that will occur here.
Opting in may also be an option for workers who are on lower salaries, self-employed or those with existing private pension provisions.
Conclusions reached by the Citizens Assembly previously saw that 87% of members recommended that Government should introduce some form of a mandatory pension scheme to supplement the State pension.
It is hoped the design of the automatic enrolment system will be finalised early next year.
The Taoiseach made the announcement alongside Social Protection Minister Regina Doherty and Finance Minister Paschal Donohoe yesterday.
Mr Varadkar said: ‘We will put in place important pension reforms and also promote better levels of private pension coverage to help supplement future retirement incomes.
‘These measures will deliver us with a fit for purpose pension system for future generations of pensioners in Ireland.’
Retirement savings gap