Concerns mount over pension auto-enrolment as fresh deadlines missed

Starting programme in 2024 ‘very unrealistic’, says Irish Association of Pension Funds

Concerns over the Government’s ability to have a landmark auto-enrolment pension scheme in place in the second half of 2024 continue to mount as two of its latest self-imposed deadlines on the project have been missed.

The Department of Social Protection said in mid-November that it planned to launch by the end of that month an official search for a company to build and run the crucial system for the plan, with the 10-year contract valued at as much as €150 million. Officials also said that draft enabling legislation, originally scheduled to be published before the Dáil’s summer recess, was expected to be published by the end of 2023.

A department spokesman said in response to questions before Christmas that the request for tenders for the systems’ contract and Automatic Enrolment Retirement Savings System Bill will now be “published in the coming weeks,” declining to be more specific.

While he insisted that there are “no significant delays in either case”, observers of the stop-start process — which was first proposed in 2006 — say the latest signs of drift will make it even more difficult to meet the key deadline of having auto-enrolment in place by the end of next year.


“A start day in 2024 is very unrealistic at this stage,” said Jerry Moriarty, chief executive of the Irish Association of Pension Funds. “Too much has to happen over a very short time frame between building a system that can deal with 750,000 workers in the State, passing legislation, and getting small employers on board — not to mention the huge communications piece that needs to be undertaken.”

The Government faces a significant task selling the project to the electorate before the launch late next year — and months before the general election. Seven in 10 members of the public are unaware of the project, according to research published during the autumn by Standard Life.

The latest Central Statistics Office data shows that two-thirds of workers aged 20-69 have pension coverage of some form outside of the State retirement income. However, when public sector workers are stripped out, the figure slumps to about 33 per cent.

What’s in store for 2024?

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Under the auto-enrolment plan, workers and their employers will each initially pay 1.5 per cent of a person’s gross salary into the scheme. From year four of the scheme, that will increase to 3 per cent — irrespective of when someone joins the scheme — rising again to 4.5 per cent in year seven and 6 per cent from year 10.

For every €3 a worker pays in, their employer would pay the same and the State would top this up by €1. It amounts to an effective 25 per cent contribution.

Sources say that officials in the Department of Finance have been concerned about the differences between the top-up incentives associated with auto-enrolment versus the traditional tax relief afforded to existing pension savings schemes in the State.

Higher earners on the State’s 40 per cent tax rate can claim tax relief at this rate on their pension contributions, whereas lower-paid workers attract relief at the 20 per cent standard income tax rate.

However, it is understood that Department of Finance officials have privately acknowledged that there is little scope to revisit the top-up plan, given Cabinet had signed off on the general outline of draft legislation in late 2022.

Meanwhile, Minister for Social Protection Heather Humphreys confirmed on Friday that new “flexible” pension arrangements for people to work until they are aged 70 in return for higher payments will come into effect from January 1st. The change, originally announced in 2022, will mean the State pension age remains at 66.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times