Auto-enrolment is a new retirement savings system for employees that will be introduced in January 2025.
Many employees do not have a pension scheme, which means that they will be relying on the state pension when they retire. While the state pension can make sure that retired people stay above the poverty line, most people are used to having more money to live on.
People who do not have a pension scheme, earn more than €20,000 per year and are aged between 23 and 60 will be automatically enrolled into the new system. This means that they will have extra money when they retire and won’t have to rely on the state pension alone.
An extra benefit to employees is that their employer and the State will also contribute – for every €3 that an employee puts in, the employer will also put in €3 and the State will top up by €1. This means that for every €3 contributed by the employee, €7 will be put into the employee’s account.
The benefit for employers is that they’ll be able to look after their employees without the administrative burden and cost of setting up a pension scheme themselves.
People earning less than €20,000 per year and who are aged outside the 23-60 bracket will be able to opt in, as long as they aren’t already in a pension scheme.
Contributions will be phased in so that everyone can get used to the new system without a steep change in income.
Employees will be able to leave the system or pause their contributions under certain circumstances, but will be automatically re-enrolled after two years if they are still eligible.
An independent body, the National Automatic Enrolment Retirement Savings Authority (NAERSA), will be set up to administer the scheme and look after participants’ best interests.