Pension auto-enrolment Ireland: update on progress

After a significant period of consultation and rescheduling, pension auto-enrolment in Ireland is now getting closer to implementation.

The concept of a mandatory savings scheme for certain employees who aren’t paying into a pension was first mooted by the late Seamus Brennan as far back as 2006, when he was Minister for Social and Family Affairs. In 2018, the then-Minister for Employment Affairs and Social Protection, Regina Doherty published a ‘strawman’ proposal.

While there have been a number of revised go-live dates for the new system, it does now appear that progress is being made on the legislation front.

What’s the latest on pension auto-enrolment in Ireland?

On 27th March this year, the Department announced that Cabinet had approved the Automatic Enrolment Retirement Savings System Bill. This new law comes before the Oireachtas in April.

The latest announcement also came with a shift in the proposed implementation date, which is now being quoted as January 2025.

What will pension auto-enrolment in Ireland look like?

The auto-enrolment proposal has been broadly welcomed by pension industry experts and other stakeholders over the past six years. The backbone of the proposal is a Central Processing Authority (CPA).

This national body will be responsible for administering the scheme and providing the supporting technical infrastructure to facilitate collecting contributions.

The CPA will also work with the Department of Social Protection to provide ‘self-service’ functionality. This will allow employees to review investments and manage their contribution options. It may work by leveraging the Revenue Authority’s MyAccount services or a similar tool.

Learn more: Ireland pensions auto-enrolment: Guide for payroll and HR

Still to do: crucial for successful rollout

The new timeframe sets a course for a January 2025 go-live. We believe four key things are crucial in order to make that happen:

The commissioning of the CPA

The CPA has not yet been commissioned. However, it’s believed that the Department is working with a shortlist of three suppliers in the hope of awarding a contract within the next couple of months.

Engagement with payroll providers

Payroll software providers will be expected to function as the conduit between contributing employees, employers, and the CPA. As such, meaningful engagement between the Department and payroll providers will be essential to facilitate the automation of the enrolment and contribution processes.

Investment management services

As a key component of the new proposal, investment management services have a remit for investing the underlying pension contributions. These pivotal services would be subject to a tender process to select and onboard the right investment management partner.

Communication and change management strategy

A target population of 800,000 workers, and their employers, need to be considered when it comes to the auto-enrolment process. There’s also a cost-of-employment consideration for businesses. While initially, the employer will be required to contribute just 1.5% of an employee’s salary to the scheme, this cost does quadruple in stages over a 10-year period.

Given the scale of the scheme, a clear communication and change management strategy will do much to help prepare and land the new policy.

Are Irish businesses ready for auto-enrolment? Find out here.