By Tara Daly
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February 12, 2025
The Automatic Enrolment Retirement Savings System Act 2024, signed into law by the President, will introduce a new auto-enrolment pension scheme, called Future Fund, and will commence on 30th September 2025. This scheme will target workers who are not currently in a pension plan and will establish the National Automatic Enrolment Retirement Savings Authority, overseen by the Department of Social Protection. Tata Consultancy Service (TCS), a global IT service provider with a significant presence in Letterkenny, Ireland, will manage the system. Key provisions of the Act will include conditions for enrolment based on age, employment status, and an earnings threshold of €20,000 annually. Employees aged between 23 and 60 will be enrolled if their total gross pay meets or exceeds this threshold. The Authority will assign the enrolment date and notify employers, who must inform the concerned employees. Failure to notify employees will be considered an offence. After employees are enrolled, they must stay in the pension scheme for at least 6 months. If they opt-out 6 months after they have been enrolled, their contributions will be refunded. Employees who previously opted out will be able to re-apply to opt in. However, where an employee opts out or suspends their contributions, they will be automatically re-enrolled after 2 years if they are still eligible for the scheme. However, where they have an alternative pension plan, they won’t be re-enrolled. The Authority will also periodically re-enrol employees who meet certain conditions, ensuring they reconsider their participation in the pension scheme. Where employees earn less than €20,000 per year, or are not aged between 23 and 60, they can choose to join the pension scheme if they are not already part of a pension plan. Employers will be responsible for calculating and paying contributions for participants based on notifications from the Authority. The contribution rates for participants, employers, and the State will increase progressively over different employment periods, starting at 1.5% for participants and employers, and 0.5% for the State in the first three years, and rising to 6% for participants and employers, and 2% for the State after nine years. If an employee changes jobs after being automatically enrolled, they will not need to change their pension or join a new scheme. The employee will remain a member of the auto-enrolment scheme on a 'pot-follows-the-member' basis. No action will be required on their part, as the new National Automatic Enrolment Retirement Savings Authority will manage the transition. Employers will need to adapt to these changes, considering whether to use the government’s auto-enrolment model or adapt their existing schemes. They will not be able to automatically enrol employees into their own pension plans without consent, which could present challenges. Employers are strongly advised to review their systems in conjunction with payroll, pension, and HR providers before auto-enrolment takes effect in September 2025. Planning for these changes should begin as soon as possible to ensure a smooth transition. For any queries, employers get in touch with the team at MSS-The HR People.