Whereas there is no legal obligation for an employer to set up or contribute to a company pension scheme, all employers MUST provide all their employees with access to at least one Standard PRSA, as of from 15th September 2003. (Source www.pensionsauthority.ie)
- To notify employees not included in a company arrangement that they have the right to contribute to a Standard PRSA.
- To allow the PRSA provider or Broker Intermediary reasonable access to employees at their workplace.
- Allow reasonable paid leave of absence so employees can set up a standard PRSA.
- Make deductions from payroll at the request of employees and remit these to the designated PRSA provider.
- Advise employees in writing, eg payslip once per month of the total contribution, including any employer contribution, if any.
IF THE EMPLOYER DOES NOT COMPLY WITH THE STATUTORY REQUIREMENTS TO PROVIDE ACCESS TO A STANDARD PRSA, THEY MAY BE FOUND GUILTY OF A CRIMINAL OFFENCE IN ACCORDANCE WITH THE ACT FOR WHICH FINES AND PENALTIES RANGING FROM €1,500 TO €12,700 AND/OR IMPRISONMENT FOR TERMS OF ONE OR TWO YEARS MAY BE IMPOSED
Mark Cahill Financial Services can assist you in keeping compliant in this area.
The expectation is that “Auto Enrolment” will begin in early 2024 meaning that approximately 750,000 employees who are aged between 23 and 60, earning over €20,000 across employments, and who are not already enrolled in an occupational pension scheme will be auto enrolled.
With Auto Enrolment, contributions will be paid by employees, and matched by their employers, as a percentage of the employee’s gross income. The State will top-up the balance due (see table below). This will all be done through a Central Processing Unit. The rates of contribution will be increased gradually over a decade as follows:
Employee Employer State
Year 1 – 3 1.5% 1.5% 0.5%
Year 4 – 6 3% 3% 1%
Year 7 – 9 4.5% 4.5% 1.5%
Year 10 + 6% 6% 2%
Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s
gross salary. Employees may contribute on earnings greater than €80,000 if they wish.
Auto Enrolment will be welcome for lower rate workers so they will have a better standard of living in retirement years. However, employers are advised that setting up a traditional scheme for employers on the higher tax rate will experience better tax relief if a separate scheme can be started to keep this cohert happier.
It is also noteworthy that contributions will be fixed with the Auto Enrolment Scheme scheme, whereby most employees will wish to contribute an additional voluntary contribution to their retirement plan along their investment journey which can be done with a tvery fluidly with a traditional company pension plan.