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Pension Auto-Enrolment Scheme Postponed to Late 2024

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The much-anticipated debut of Ireland’s groundbreaking pension auto-enrolment initiative has been rescheduled to the latter part of 2024, in unwelcome news to many workers. This pension auto-enrolment program aims to revolutionize retirement planning by making it simpler for workers to secure their financial future. Under the new system, eligible employees will be automatically enrolled into a workplace pension plan, encouraging a culture of enhanced savings and financial security during retirement. This has never been more vital as now, during a cost-of-living crisis.

The scheme’s delay is attributed to the level of groundwork required for a seamless implementation. This additional time will permit fine-tuning of the infrastructure, communication strategies, and regulatory aspects essential to ensuring the initiative’s success.

Once launched, the auto-enrolment scheme will have a substantial impact on Irish workers and employers alike. It promises to provide employees with an effortless means to participate in pension saving, while also enabling employers to play an active role in their employees’ financial well-being. There will, of course, be the option to opt-out also.

By postponing the launch to late 2024, the authorities intend to ensure that the pension auto-enrolment initiative is rolled out efficiently, avoiding any potential pitfalls. This approach underscores the commitment to delivering a robust and effective program that will ultimately empower citizens to secure their retirement years. The plans for auto-enrolment would see everyone earning more than €20,000 a year and aged between 23 and 60 enrolled in a private pension scheme. Up to 750,000 workers are likely to be affected initially when the scheme gets up and running.

While the wait for the official launch extends, the delay is indicative of the comprehensive preparations underway to ensure the scheme’s long-term viability. The forthcoming pension auto-enrolment initiative holds the potential to significantly reshape the landscape of retirement planning in Ireland, fostering a future where financial security during retirement is more accessible and achievable for all.

Should you have any queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

Pensions – it really is a case of Fail to Prepare…

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Something we are told from a very young age is that it is never too early to start planning for the future. As true as this may be it is something that falls largely on deaf young ears as we move on with our lives without thinking about that distant future of our elders. As you progress in your working life, this statement becomes increasingly true as no matter what stage of your career you are currently at, it is vital to plan for a future in which you will no longer be earning.

Recent reports show that the majority or workers are not saving towards a pension for their futures. As we have discussed previously, the cost of living, renting and buying property continues to grow so it should come as no surprise that many workers find themselves unable to set aside money for distant days ahead as wallets get increasingly light. There has been a lot of speculation recently that we may be heading towards a time-bomb in terms of pensions, so the news that only 47% of workers are contributing to a pension only compounds this fear and places the future of the State pension in question.

There have been discussions that the Government is to roll out a mandatory scheme for pensions by 2022, but this still leaves a period of 3 years during which workers could take matters into their own hands and begin making contributions. Perhaps unsurprisingly, it appears that the worst uptake in pension contributions is among younger workers, who again are most likely to be stuck in the rental trap at present. Social Policy Officer with The Irish Congress of Trade Unions, Laura Bambrick has said that too little is being done to encourage lower- and middle-income workers to contribute.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees.”

Funding issues for State Pensions are likely to become an increasing concern for the future if pension contributions don’t soon become a standard, and with many employers also not making any contributions for their employees, something likely must change and urgently.

If you are interested in beginning your own pensions journey, here are some tips from us.

Calculate:

As with any budgeting system, it is essential to first work out how much you need to be setting aside. There are a great many online calculators that can assist with this. It is also important to consider your own currently monthly budget.

Shop Around:

There are so many options to choose from that this can be daunting but take the opportunity to speak to some advisers and ensure that you find the right pension plan for you.

Speak with your Employer:

It is possible that your employer may be willing to match your contributions or make some contribution for you, it is important to find out if this is a possibility in your company.

Tax:

If there are tax breaks available, be sure to make use of them.

Save:

There are many small ways to make weekly savings, implementing these may mean that your pension contributions do not leave such a gaping hole in your pocket.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Long Term Gains from Short Term Pains

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It’s that time of year when we are all more intensely focused on our ever-lightening wallets as the Christmas season puts a strain on our willpower not to buy everything in the stores. Whilst most of us are focused on the short term goal of getting over the Christmas period, it has emerged that far too few of us are focusing on our longer term goals, particularly our goals in terms of retirement.

A recent study by the Organisation for Economic Co-operation and Development (OECD) has found that the average Irish worker’s pension is worth less than half of their earnings (roughly 34%) due to the lack of provision made beyond the basic State Pension. This leaves Ireland far behind other European countries in terms of pension provisions. In addition to this, it has emerged that approximately two thirds of workers have no occupational pension to supplement their State Pension. This news does not bode well for the future retirement of Ireland’s workforce, and has been described as being a pensions time bomb.

In order to combat this issue and diffuse this situation, a new scheme is being planned which would see workers paying 5% of their salary into their pensions from their 20s onwards, with employers expected to match the 5% annually. The scheme would be mandatory and would see workers and employers enrolled automatically. The OECD have stated that this could more than double the existing pension potential of workers without being a significant drain on their current earnings. If all workers had an occupational pension in addition to their State Pension we could avoid major issues when our young workers reach old age.

It is also believed that middle class workers who do not have an occupational pension, could see their pension be worth as little as 24% of their salary. The OECD believe that these occupational pensions should be mandatory for all workers entering the workforce from age 20 onwards in order to diffuse this ticking time bomb. Ireland and New Zealand remain the only countries within the OECD that do not have mandatory second tier pension provisions, with other countries having various options available.

Taoiseach Leo Varadkar has stated that there could be an automatic enrolment scheme in place for these provisions by 2021, with the option for workers to opt out.

Should you have any queries on any financial or business matters please don’t hesitate to contact us here at EcovisDCA, where we will be happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

PENSION DEADLINES

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The Revenue Commissioners have recently extended the deadline for people in excess of current pension savings to notify them. It has become a standard practise in the current financial climate for the amount of pension funds an individual can accrue while availing of tax relief to be reduced.

 

Those above the new threshold can notify Revenue and receive a new personal fund threshold, reflecting the size their pension fund was on the date the lower limit was announced. This is to ensure that these individuals do not face a further tax bill.

 

In January 2014, the threshold fell from €2.3 million to €2 million, those with savings between these figures were given until July 2nd, 2015 to notify Revenue. Despite the deadline, it is thought that many people have not been in touch with Revenue and as such the deadline has now been extended to July 31st 2015.

If you have pension savings between €2million and €2.3 million you are encouraged to notify Revenue ASAP in order to avoid any further taxation on these amounts. It is unlikely that further extensions will be granted.

 

The deadline for staff in the public service to retire if their pensions are to be calculated on the higher salaries has also been extended in recent months. The new deadline will be July 2016. Minister for Public Expenditure and Reform, Brendan Howlin has said that the new deadline is intended “To minimise impacts on schools in particular.”

 

It is hoped that this extension will reduce the number of key managerial senior staff retiring en masse, which could lead to significant financial strain on schools in particular.

The Department has said that under the Haddington Road agreement, public service pay rates were reduced by 5.5% or more. “Retiring within the extension period will allow an affected public servant to benefit from superannuation calculated at the pre-cut pay level.”

 

If you are unsure about how these changes may affect you or you require any assistance with your own financial matters, please don’t hesitate to contact us here at DCA Accountants.