The idea of pensions auto-enrolment in Ireland was first floated in the early 2000s and over recent years the deadline for its introduction has been delayed on a number of occasions. It was to be the end of September of this year, but will not now happen until next January, after a recent Cabinet decision. Unless there is further delay.
Ireland is one of the few developed countries without such a system in place. It is needed because a large number of workers in the private sector – around 800,000 people – have no pension provision, bar their eventual qualification for the State pension.
Auto-enrolment will mean that those who are not members of existing schemes will be automatically signed up in a pension arrangement, to which their employer will also be obliged to contribute. The State will provide a top-up – on a different basis from the tax relief of existing pensions – and the level of contributions will gradually increase over time.
Employees can choose to opt out after six months, but the hope is that when most get used to contributing they will not do so. Some employers have complained about the additional cost, though initially at least it will be modest enough.
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Trade unions have criticised the delay in pushing ahead, though given that it is only for a few months they are probably more concerned that a further postponement could yet come. It appears that payroll complications and the fact that it would be easier to start the system on January 1st were an important factor in persuading the Government to delay. Not all employers appeared to be ready or able to participate.
Arrangements are being put in place to run the system and manage the funds, though there is still work to be done here. But, given that the date to commence the scheme has already been pushed back on a few occasions, the Government must now ensure that this new deadline is met and employers must ensure that they are ready. This is a measure which will only pay off in the longer-term, but it is an important one.
