Ireland’s Automatic Enrolment Retirement Savings System Act 2024 was signed into law on 9 July 2024, with the goal of significantly improving pension scheme participation rates. The act is expected to enter into effect in 2025, although the exact date has not yet been announced.
Once in effect, employees will be automatically enrolled in a new workplace pension scheme if they meet these requirements:
Auto-enrolment contributions will be phased in over a decade, with both employer and employee contributions starting at 1.5% and increasing every three years by 1.5% to a maximum of 6% by year 10.
The state will contribute a corresponding one quarter (or EUR 1 for every EUR 3 contributed by the employee), with all contributions calculated to a maximum gross salary of EUR 80,000. Employee contributions will not qualify for income tax relief; however, the contributions made by the state indirectly compensates for this.
Employees will be able to opt out of the scheme after six months. If availing themselves of the opt-out option, employees will be refunded their own contributions since enrolment, but not the employer or state contributions, which will remain in the fund for their benefit.
For more information on this topic, please consult your regular BDO contact or the author of this article.
Mark Hynes
BDO in Ireland
Once in effect, employees will be automatically enrolled in a new workplace pension scheme if they meet these requirements:
- Must be between the ages of 23 and 60;
- Must earn more than EUR 20,000 per year; and
- Must not be in “exempt employment.”
Auto-enrolment contributions will be phased in over a decade, with both employer and employee contributions starting at 1.5% and increasing every three years by 1.5% to a maximum of 6% by year 10.
The state will contribute a corresponding one quarter (or EUR 1 for every EUR 3 contributed by the employee), with all contributions calculated to a maximum gross salary of EUR 80,000. Employee contributions will not qualify for income tax relief; however, the contributions made by the state indirectly compensates for this.
Employees will be able to opt out of the scheme after six months. If availing themselves of the opt-out option, employees will be refunded their own contributions since enrolment, but not the employer or state contributions, which will remain in the fund for their benefit.
For more information on this topic, please consult your regular BDO contact or the author of this article.
Mark Hynes
BDO in Ireland