Employers warned of new pensions burden

EMPLOYERS who already provide pension options to their staff are to face an increased burden due to ‘a flaw’ in the new auto-enrolment retirement Bill.

The Government yesterday finally published the long-awaited auto-enrolment legislation.

Around 35% of workers in the State currently have no occupational or private pension, meaning they will be solely reliant on the State pension when they retire.

Under automatic enrolment, employees will have access to a workplace retirement savings scheme which is co-funded by their employer and the State.

Approximately 800,000 workers are to be enrolled into a new retirement savings scheme from January 2025, the Department of Social Protection has said. However, pensions firm Irish Life has warned that employers who already run a pension scheme will face extra administrative costs as they will not be able to automatically enrol their staff into their existing scheme and will instead have to enrol them into the State scheme, meaning they must manage two pension schemes.

Oisín O’Shaughnessy, managing director of Irish Life Corporate Business, said: ‘Overall, we welcome the Bill publication and the policy intention to enable more people to save for their retirement and to have a better quality of life in retirement.

‘However, we’re disappointed to see that the recommendation made by the all-party Oireachtas Committee on Social Protection – to allow employers to automatically enrol their employees into their existing pension schemes – has not been included in the Bill.

‘This omission impacts employers by causing them unnecessary complexity, administration and material costs, where they are already providing retirement options for their employees.’

He also warned that women would be ‘negatively impacted’ by the failure to allow employers and employees to increase their pension contributions beyond the minimum set out in the legislation.

He said: ‘This is counterproductive to incentivising savings and will also widen the pension gender gap, as women will have no mechanism to make up for any gaps in contributions.’

Social Protection Minister Heather Humphreys said: ‘This represents one of the biggest reforms of the pension system in the history of the State, and is an important milestone in supporting people in their retirement years.’

Once it is enacted, 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, will be automatically enrolled.