Pension Auto-Enrolment Explained

Share with your friends:

The Cabinet, has given the green light to a new law about pensions. This law aims to make it easier for people who work in private companies to save for retirement. It’s called the Automatic Enrolment Retirement Savings System Bill.

Here’s what the bill means:

  • If this bill becomes a law, around 800,000 people who work in private companies and don’t have a pension will automatically start saving for one.
  • The idea is to make sure that when people retire, they have enough money to live on without relying only on the government’s pension.
  • This system works like a savings account where both the employee and the employer put in money. The government also chips in some money based on what the employee saves.
  • At first, both the employee and employer will put in 1.5% of the employee’s salary. After a few years, this will increase to 6%.
  • For every €3 the employee saves, the government will add €1. So, if they save €3, they’ll end up with €7.
  • If someone earns about €45,000 a year and saves 6% of their pay for 40 years, they could have almost €750,000 saved up when they retire.

This plan has been talked about by different governments for years, but it’s never happened until now. The Minister for Social Protection, Heather Humphreys, brought the bill to the Cabinet.

If this bill becomes a law, it will be one of the biggest changes to pensions in Ireland’s history. Almost all employees aged 23 to 60 who earn over €20,000 will automatically join the system, unless they choose not to after six months.

A new organization called the National Automatic Enrolment Retirement Savings Authority will manage the system. Commercial investment firms will also handle the money that’s saved.

Employees will be able to choose how their money is invested, or they can let the system do it for them.

The government wants this new system to start on January 1, 2025. But some experts think it might take longer because there’s a lot to set up.

Many workers don’t know about this plan yet, so the government will need to explain it well. Employers are worried about the extra costs, too. But if everything goes smoothly, this new law could make a big difference in helping people save for retirement.

Pension Auto-Enrolment Explained

Like what we do? then please consider subscribing to us

TikTok for more

Leave a Comment

Your email address will not be published. Required fields are marked *