Prepare to take control of your financial future with the upcoming introduction of Auto-enrolment, a revolutionary pension savings scheme anticipated to launch in late 2024. This initiative targets specific employees not currently contributing to a pension, automatically enrolling them in the scheme while allowing an opt-out option after 6 months. Auto-Enrolment in the New Pension Savings Scheme
Key Features:
- Inclusive Criteria for Automatic Enrollment:
- Age between 23 and 60
- Not currently part of a pension plan
- Annual earnings of €20,000 or more
- Employer Involvement and Penalties:
- Employers are obligated to participate, facing penalties and possible prosecution for non-compliance.
- Flexibility for Participants:
- Enrolled individuals must commit for at least 6 months.
- Option to exit the plan in months 7 or 8.
- Provision to stop or pause contributions under specific circumstances.
- Re-enrollment after 2 years for eligible participants.
- Exemption for Workplace Pension Holders:
- Those already contributing to a workplace pension plan are exempt from auto-enrolment.
- Contributions Breakdown:
- Participants contribute a set percentage of their annual salary.
- Employers match contributions, and the government adds an extra amount.
- Progressive contribution rates from 1.5% in the first year to 6% by year 10.
Contribution Breakdown:
| Year | Employee Contribution Rate | Employer Pays | Government Pays |
|---|---|---|---|
| 1 to 3 | 1.5% | 1.5% | 0.5% |
| 4 to 6 | 3% | 3% | 1% |
| 7 to 9 | 4.5% | 4.5% | 1.5% |
| 10 and after | 6% | 6% | 2% |
Example for a Worker Earning €20,000 a Year:
| Year | Employee Pays (€) | Employer Pays (€) | Government Pays (€) | Total Payments per Year (€) |
|---|---|---|---|---|
| 1 to 3 | 300 | 300 | 100 | 700 |
| 4 to 6 | 600 | 600 | 200 | 1,400 |
| 7 to 9 | 900 | 900 | 300 | 2,100 |
| 10 and after | 1,200 | 1,200 | 400 | 2,800 |
Maximum Contribution Limits:
- Employer and Government contributions capped at €80,000 gross annual salary.
- Participants earning over €80,000 can still contribute, but matching contributions cease beyond this threshold.
Empower yourself with knowledge! Explore the Department of Social Protection’s video on auto-enrolment and find additional information online. For inquiries, contact autoenrolment@welfare.ie. Your financial future awaits!
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I was in a pension but this pension was shutdown and my pension is now a deferred pension until my retirement. My employer then transferred me to another company under TUPE without alternative pension arrangements. Will I still be able to enroll in this?