Minister Humphreys to bring new pension bill before the Oireachtas
Currently there are about 800,000 workers who have no occupational or private pension.
Minister Heather Humphreys has announced the publication of landmark legislation for the Automatic Enrolment Retirement Savings System (AERSS). The Bill, which will shortly be brought to the Oireachtas, will pave the way for around 800,000 workers to be brought into a pension scheme for the first time.
Currently there are about 800,000 workers in the State who have no occupational or private pension meaning they will be solely reliant on the State Pension when they retire. Under this new scheme, all employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State.
Once 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.
In practice, for every €3 put in by the employee, the employer will also contribute €3, and the State will contribute €1. Contribution rates will be phased in gradually over a period of 10 years. This landmark legislation is about protecting our workers, and particularly our young people, when it comes to reaching their retirement years.
“Automatic Enrolment has been talked about for decades, and today is a clear sign that we mean action,” said Minister Humphreys. “This legislation will provide the foundation for the most radical shake up of the pensions landscape in Ireland for generations.
“For me as Minister, having 800,000 workers without pension coverage isn’t acceptable or viable. We have been an outlier in terms of pension coverage for too long, and that’s now going to change.
“This is a hugely important piece of legislation in terms of protecting workers’ future and I look forward to bringing it before the Oireachtas immediately after the Easter Recess.”
Meanwhile, starting in 2025, employees will contribute 1.5% of their gross earnings, which will be matched by their employer, and topped-up by the State. These rates will gradually increase every three years until reaching a maximum contribution rate of 6% per employee, 6% per employer, plus 2% from the State from 2034 onwards.
This steady phasing-in allows time for employers to budget and plan and for employees to adjust to the new system.