Automatic Enrolment Retirement Savings System Bill 2024

The publication of the Automatic Enrolment Retirement Savings System Bill 2024 marks a significant step in the pension landscape in Ireland. On the 5th of April, Minister for Social Protection Heather Humphreys announced the publication of the legislation. Upon enactment and commencement, the bill aims to automatically enroll employees aged between 23-60, earning over €20,000 annually, and not already enrolled in an occupational pension scheme, into the new system. The Bill also provides for the establishment of a new State body, the National Automatic Enrolment Retirement Savings Authority.

Contribution rates will be phased in over a decade, resembling the structure of the old SSIA, where employee contributions are matched by employers and supplemented by the State. Initial employee contributions start at 1.5% of gross earnings, gradually increasing to 6% by 2034. For every €3 contributed by an employee, €3 from the employer and €1 from the State will be added, up to a maximum of €80,000 of annual earnings.

The system operates on an opt-out basis, allowing employees to opt out after a mandatory 6-month participation period. Employees who remain outside an occupational pension scheme after two years will be re-enrolled. The bill also establishes the National Automatic Enrolment Retirement Savings Authority to administer the scheme.

The proposed auto-enrolment scheme aims to enhance pension coverage and adequacy, targeting a participation rate of 70% among the private sector workforce. Implementation is scheduled to commence from the first quarter of 2024, with contribution rates gradually increasing over ten years. The bill also ensures that employees in existing pension schemes will not be disadvantaged compared to those enrolled in the auto-enrolment scheme.

Employers are prohibited from interfering with employees' auto-enrolment choices, ensuring protection for participants. The bill outlines key features, including automatic enrollment criteria, contribution rates, oversight by the National Automatic Enrolment Retirement Savings Authority, and the role of commercial investment companies in managing contributions.

While the legislation is still in the drafting phase, efforts are focused on making the system user-friendly for both workers and employers while minimizing administrative burdens. The aim is to design a pension system that engenders trust and participation among stakeholders. Implementation of the new system is now targeted for January, 2025.

About the author: Sinéad Leahy is a Trainee Solicitor with Dermot G. O’Donovan Solicitors.