Automatic Enrolment Retirement Saving System Bill 2022

What is the Automatic Enrolment Retirement Saving System Bill 2022?

The Automatic Enrolment Retirement Savings System Bill 2022 provides for an auto enrolment (AE) system to be set up in Ireland by the end of this year, with enrolments expected to commence in 2024. It is expected that an initial 750,000 workers will be enrolled into scheme, which will include matching employer contributions and a State top-up. Participation in the scheme will be voluntary and workers will be able to opt-out or suspend participations for periods of time.

Employers should note that, under the Bill, they may not interfere in any way in the AE choices made by an employee. This ensures that an employee’s participation in the AE scheme is fully protected, prior to and during their employment. Screening out applicants on the basis that they want to participate in the AE scheme is also prohibited as well as inducing an employee to opt-out or suspend their participation in the AE scheme.

What are the key features of the Automatic Enrolment Retirement Saving System Bill 2022?

The key features of the Automatic Enrolment Retirement Saving System Bill include:

  • All employees who are aged between 23 and 60 and who are not already in an occupational pension scheme and are earning over €20,000/year across all employments will be automatically enrolled.
  • Employer and employee contributions will start at 1.5% of gross salary and auto-escalate every three years, until reaching the maximum contribution rate of 6% from year 10 onwards.
  • The employer’s contributions will match the employee’s contributions and the State will also contribute at a rate of €1 for every €3 saved by the employee.
  • Workers will be able to opt-out or suspend their contributions after six months mandatory participation. However, they will be automatically re-enrolled after two years, after which they may opt-out or suspend their contributions after six months mandatory participation.
  • The CPA will be established to oversee the AE system and will act in a custodianship capacity for participants.
  • Commercial investment companies will compete through an open tender for the role of “registered provider” and will invest contributions on behalf of the participants.
  • Participants will have a range of funds to choose from. These will include a default fund, for those who prefer not to choose, as well as an alternative choice of funds for those who wish to make a more active choice.
  • Drawdown will be aligned with the State Pension age.

Will the Automatic Enrolment Retirement Saving System Bill become an Act?

The legislation is still being drafted so many of the details and concerns raised at the Committee are still being worked out. As noted at the Committee, the system must be easy for workers and employers to engage with so that they can trust it and buy into it. Further, it must be designed to minimise the administrative burden and legal responsibility on employers, which has always been a blocker on the provision of pension systems.

For more information and expert guidance on the likely impact of the Automatic Enrolment Retirement Saving System Bill and its obligations on your business, contact a member of our Pensions team.

The content of these articles are provided for information purposes only and does not constitute legal or other advice.