Pension plan falls short
by Róisín McKane

Employers are to be legally obliged to include their employees in a pension scheme, and make contributions to the fund, on foot of a new government scheme. Unions have welcomed move in principal, but ICTU wants the proposed ‘auto-enrolment’ scheme to be strengthened in a number of ways.

Ireland is one of only two OECD countries without mandatory earnings-related pension savings. Currently 35% of the workforce are not in an occupational pension scheme.

The new automatic enrolment scheme targets low and middle income earners to ensure they save towards a financially secure retirement, with financial contributions from their employer and the state.

Fórsa backed ‘auto-enrolment’ proposals at its national conference in May.

Earlier this month, employment minister Regina Doherty released a draft proposal on how the scheme could work to generate a discussion amongst interested parties.

Under the current Government proposals, workers would have to contribute up to 6% of their salary towards their pension pot, with employers having to match that amount. The state would then pay €1 for every €3 the worker contributes.


Participation in the scheme would be compulsory for workers for six months. However, they could opt out after that time. Workers could also suspend their contributions in limited circumstances – but employer and State contributions would cease if an employee stopped saving.
ICTU has outlined its concerns in a recent submission. The union federation wants older workers to be included in the scheme which, as it currently stands, would only include workers aged between 23 and 60 who earn more than €20,000 a year. Congress wants this expanded to 16-60-plus with no income threshold.

Congress has also questioned the current opt out model, recommending that the opt-out, re-enrolment and saving suspension features proposed in the current draft are merged into a time-limited 'contribution holiday’, during which the employer and state would continue to make contributions. This contribution could be claimed as a single continuous period or a number of separate periods.

The submission also sparked concerns that workers paying income tax at the higher rate of 40% on pensions would lose out. Congress has questioned any move to impede the tax relief available to employees who currently pay into a pension fund.

Read ICTU’s simple guide to the scheme HERE.

For more information on ICTU’s submission click HERE.

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