The Coalition is to delay the start of enrolment for some 800,000 workers in a State-backed pension scheme for several months.
The auto-enrolment arrangement – a cornerstone of plans to tackle imbalances in the State’s pensions system – has also attracted criticism from companies as it will require them to make contributions to plans for workers without a retirement fund.
It is understood that Minister for Social Protection Dara Calleary will brief Ministers at this week’s Cabinet meeting on plans to defer commencement from the end of September this year to the start of January next year.
It is the latest in a series of delays, with the Government arguing that the complex and extensive back-room systems that have to be put in place to ensure the scheme works as planned need more time to be rolled out.
Mr Calleary is expected to tell the Cabinet that while many operators are in a position to meet the initial deadline, not all will be ready in time, raising potential problems for the planned start date.
His predecessor, Heather Humphreys, said at the launch of the scheme last year that auto-enrolment had been talked about for 30 years. “In 2025 it will become a reality,” she said at the time, adding that a start date a year after the announcement meant there was time for all stakeholders to make the necessary preparations.
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Earlier this month, Minister for Public Expenditure Jack Chambers indicated the plan was to be delayed – alongside delays to increase the minimum wage which look set to be deferred due to economic uncertainty caused by US tariffs.
Mr Chambers said earlier this month that the commencement date would be “marginally” adjusted.
The scheme targets workers aged between 23 and 60 earning more than €20,000 a year who are not part of an existing company pension. It would involve an initial 1.5 per cent of gross salary, up to €80,000 per year, being paid in by each employee with their employer matching the sum and the Government adding 0.5 per cent.
Under this calculation, for every €3 a worker pays, an additional €4 is added to the pension pot.
Contributions are scheduled to grow over time. After 10 years, the employee and employer will be contributing 6 per cent each and the Government 2 per cent. In year 10 and beyond, a person earning €40,000 annually would have €5,600 a year in contributions.
Qualifying workers will be automatically enrolled but can opt out after six months. Trade unions have been critical of delays, arguing there is an urgent need to start the scheme.
