The introduction of pensions auto-enrolment (AE) has moved a step closer with the Automatic Enrolment Retirement Savings Systems Act (“AE Act”) that has passed through both Houses of the Oireachtas and was signed into Law by the president on 9th July 2024.
Whilst there is still much to do, the government is sticking by their commitment to introduce auto-enrolment in 2025. The Irish government is expected to announce the anticipated implementation date during the Budget speech. The government scheme, once introduced, will be administered by the National Automatic Enrolment Retirement Savings Authority.
What employers are doing
Many employers are working through the key considerations to determine the most suitable option for their organisation. Amongst the considerations are – use of their existing pension plan or the government's auto enrolment scheme, tax implications for employees, communications, payroll impacts and overall cost increases for the business. Getting independent advice and support is crucial in ensuring each employer makes the optimal decision, and then documenting this from a governance perspective. Understanding the system and making tax effective decisions will be key for employers and employees.
Pension providers, such as insurers and consultants who have in house Master Trust providers are encouraging employers to put all employees into existing pension schemes or to set up new pension schemes where employers currently have no pension provision. This is no surprise as pension providers have most to gain from this approach. However, it is imperative for employers not to buy into this “one approach fits all” messaging as each employer and employee grouping is different and faces their own unique circumstances. Employers should seek advice and evaluate all options available to them.
Communication with employees
Once the government confirms the implementation date for auto-enrolment, it is expected that it will also launch advertising and information awareness campaigns. It is important that employers work through the key considerations, select the approach that works for them and then communicate this to employees. Employers need to do this in advance of the government starting their information awareness campaigns to manage and significantly reduce the number of employee queries they receive around auto-enrolment.
It’s important that employers develop a clear, concise, and transparent communication strategy around auto-enrolment to effectively communicate the employer’s approach to their workforce.
Employees might see auto-enrolment as an additional tax as it will impact their take home pay and could perceive this as something their employer is introducing. The introduction of auto-enrolment will inevitably prompt queries from employees, some of which employers might struggle to answer but need to be prepared for.
The importance of independent advice and transparent communication
The introduction of auto-enrolment is likely to be the single most impactful pensions related change for employers. It will shape pension provision and adequacy for decades to come. Employers will only get one chance to get this right for their organisation and use the opportunity to communicate broader benefits offerings in a positive light. Getting independent advice to achieve the best outcome, along with implementing an efficient and transparent employee communication strategy will be key for those employers that get this right.
For more information, visit our People Solutions (opens a new window) page or contact your local representative.
