Who is Eligible for Auto Enrolment?

Under the new Auto Enrolment scheme, all employees aged between 23 and 60 who earn €20,000 or more annually will be automatically enrolled in a pension plan, provided they are not already part of an existing pension scheme. This initiative aims to ensure broader pension coverage across the workforce, helping more people save for their retirement.

Employer Obligations: What You Need to Know

As an employer, you will be required to contribute to your employees’ pensions. The initial contribution rate will be 1.5% of your employees’ total earnings, matched by an equal contribution from the employee. These contribution rates will gradually increase every three years, reaching a maximum of 6% from both employer and employee by year ten.

In addition to these contributions, the government will top up the employee’s contribution by 1/3rd, providing an added incentive for employees to save.

Administration and Access to Benefits

The pension scheme will be administered by the National Automatic Enrolment Savings Authority, ensuring a standardized and secure system for managing your employees’ retirement savings. Employees will be able to access their benefits starting at age 66, providing a clear pathway to retirement security.

Employers with Existing Pension Schemes

If you already have a pension scheme in place, it’s important to review your current setup. Ensure that your eligibility requirements are updated to allow employees to join the scheme as soon as they start with your company, rather than after a probation period. This review is essential to remain compliant with the new regulations and to continue offering a competitive benefits package.

Employers Without a Pension Scheme

For those who do not currently offer a pension scheme, now is the time to take action. The introduction of Auto Enrolment means you will need to start contributing to your employees’ pensions. We strongly recommend seeking advice from a Pension Advisor to explore your options and implement the best solution for your business.

Considerations for Employees: Weighing the Benefits

While Auto Enrolment offers significant benefits, there are some considerations for employees to keep in mind:

• Government Contribution: The government’s top-up of 1/3rd of the employee’s contribution is equivalent to a 25% tax relief. However, employees in the 40% tax bracket may find this less beneficial compared to the 40% tax relief available through an employer-sponsored pension scheme.
• Fund Choices: Auto Enrolment provides limited fund options compared to some company pension schemes, which might offer more tailored investment choices.
• Access to Benefits: While Auto Enrolment benefits can be accessed at age 66, some company schemes may allow earlier access, potentially as early as age 50.

Our Advice to Employers: Seek Expert Guidance

The introduction of Auto Enrolment is a major change, and it’s crucial to make informed decisions that best serve your business and your employees. At Cregan Kelly O’Brien Financial Planning, we specialise in helping businesses like yours navigate these new requirements. Whether you need to review your current pension scheme or set up a new one, we’re here to offer expert advice and personalised solutions.

Contact us today to discuss your options:

• Phone: 01 8700370
• Email: colm@ckob.ie
• Website: www.ckob.ie

Let us help you make the best choices for your company’s future and ensure you’re fully prepared for the introduction of Auto Enrolment. We’re here to support you every step of the way.