What is auto enrolment and how will it work?
The aim of Auto-enrolment is to address the lack of private pension cover for workers in Ireland between the age 23 to 60, estimated to include 750,000 people.
Concerns include excluding people because of age and/or employment status.
Savers on the standard rate of tax and those that pay no tax will especially benefit from this new proposed approach.
Going to be run by one central processing authority.
Auto-enrolment in numbers
Enrolled into new workplace pension by end of 2023.
For every EUR 1.00 a worker saves, EUR 2.33 will be credited to pension savings account.
Eligible if aged between 23 to 60.
People earning above EUR 20,000 pa across all employments automatically enrolled. People below this can opt-in.
Employers will make 100% matching contributions
State will add 33% to the worker’s contribution.
Invested into a range of 4 funds. There will be a default investment option.
An example
Worker earning EUR 35,000pa saving 6% of salary will accumulate a fund of EUR 293,000 (excluding investment returns).
Adding investment returns could see the fund grow to EUR 583,000
Some key points (these may change)
Drawdown age will be aligned with the State Pension arrangements (from age 66, increasing to age 68). Currently, PRSAs can be accessed from age 60.
We are uncertain about the drawdown options e.g. amount of fund available and options for residual monies.
Capped at EUR 80,000 of employee’s gross salary.
Employers will be required to match employee contributions.
We expect this to be introduced on a phased basis
Years 0 to 3; 1.5% employee net earnings and 1.5% employer and 0.5% from the State.
Years 4 to 6; 3.0% employee net earnings and 3.0% employer and 1% from the State.
Years7 to 9; 4.5% employee net earnings and 4.5% employer, and 1.5% from the State.
Years 10 onwards; employee 6.0% net earnings and employer 6.0% and 2.0% from the State.
Get in touch for support
Nelson Life are here to support both or existing clients and new clients during this change. If you would like to know more about preparing your company or organisation for IORP II compliance, PRSAs or Master Trust – we are here to guide you through the options and the best fit for you.
telephone | 091441188 and/or email | office@nelsonlife.ie
LIFE | RETIREMENT & PENSIONS | INVESTMENT
Nelson Life Limited trading as Nelson life is regulated by the Central Bank of Ireland.
WARNING: Past performance is not a reliable guide to future performance. WARNING: The value of your investment may go down as well as up. WARNING: You may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. WARNING: If you invest into this product you will have access until you retire (Pension Products). WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances. WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice.