New Development in Auto-Enrolment

The Department of Social Protection (the Irish Government department responsible for the development and roll out of the new AE system) has indicated that minimum standards for qualifying pension schemes are under consideration and likely to be introduced via Regulation shortly.

The Automatic Enrolment Retirement Savings System Act 2024 provides for the adoption of such minimum standards, which an occupational pension scheme must meet in order to qualify as an alternative to the State AE system.  The Act provides for these to be introduced before the end of the sixth year of operation of the State AE system.

The Irish Association of Pension Funds (IAPF) met with the Department this week in order to seek clarity on this development.  The key points that the Department flagged at the meeting are as follows:

• The intention is for Regulations to be introduced in the coming weeks to take effect from 1 January 2026 (ie to apply from the commencement of the new AE system).
• A minimum contribution rate of 3.5% of an employee’s gross pay will be required in order for a scheme to be considered a qualifying arrangement.  Employers must contribute at least 1.5% of this minimum amount with the remaining 2% paid either by the employer or the employee.
• All employees must receive at least the minimum rate outlined above regardless of whether employees are initially enrolled on lower rates (e.g. during a probation period) before becoming eligible for higher rates.
• NAERSA (the State body responsible for managing the State scheme) will monitor compliance with the new Regulations.
• In light of the above and acknowledging the complexity of non-contributory defined benefit schemes, the Department advises sponsors of such schemes to apply to NAERSA for an exemption from the new Regulations, where appropriate.

These potential new measures need to be carefully considered by employers.

A press release from the IAPF in respect of this engagement is available on its website and can be accessed here.

For more information about auto-enrolment

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