New State pensions auto-enrolment plan will see higher rates phased in over 10 years

Cabinet also set to approve a €10m package of supports for tour operators and travel agents

A new State pensions auto-enrolment scheme will see higher rates phased in over 10 years, while workers will receive €7 into their pension pot for every €3 they put in.

The Cabinet on Tuesday is expected to approve the new system as part of a memo being brought by Minister for Social Protection Heather Humphreys.

Around 750,000 employees between the age of 23 and 60 who earn over €20,000 and are not already in an occupational pensions scheme will be automatically enrolled.

Contributions will be paid by employees and matched by their employers as a percentage of their gross income, and the State will top up the rest.

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In the first three years this would break down as a 1.5 per cent contribution from the employee, a 1.5 per cent contribution by the company and a 0.5 per cent contribution from the State.

From years four to six this would break down as 3 per cent from the worker, 3 per cent from the company and 1 per cent from the State.

In years seven to nine this would be 4.5 per cent, 4.5 per cent and 1.5 per cent and from year 10 onwards it would be a 6 per cent contribution from the employee, a 6 per cent contribution from the company and a 2 per cent contribution from the State.

Employer contributions and the State top-up will be capped at €80,000 of an employee’s gross salary.

A person can opt out after six months and receive a refund of their contributions but they will be re-enrolled after two years.

Supports

Cabinet is also set to approve a €10 million package of supports for tour operators and travel agents licensed by the Commission for Aviation Regulation. The scheme will be administered by the Department of Transport, and is being brought for Cabinet approval by Minister of State Hildegarde Naughton. It is designed to help the sector meet non-payroll costs as it recovers from the Covid-19 pandemic.

Travel was among the sectors most severely impacted by national and international restrictions in place during the pandemic, with Government of the belief there is ongoing uncertainty related to the full recovery of the sector to pre-Covid levels of activity. Meanwhile, operators have said the war in Ukraine has damaged consumer confidence about overseas travel.

The sector no longer qualifies for the Covid Restrictions Support Scheme, and has not done so for almost a year. The coalition hopes the funds will also shore up the sector during the summer, minimising the risk of collapsed travel companies which would leave the State to pick up the tab for repatriation of customers and refunds associated with company collapse that exceeds a firm’s insurances and bonds.

Applicants must demonstrate trading is 25 per cent below 2019 levels. It is limited to a five-month period of support containing two payment rounds. The scheme is set to be opened as soon as preparations are finalised, with the aim of making first payments in May.

Childcare

It is understood Minister for Children Roderic O’Gorman will update Cabinet on an independent review of the operating model for childcare which was commissioned in 2020. It examined how the sector is run, and is expected to recommend proposals for reform.

Minister for Health Stephen Donnelly was expected to bring the report of the expert review body on nursing and midwifery to Cabinet too.

Minister for Housing Darragh O'Brien will bring an amendment to the Planning and Development Amendment Bill which will allow applicants to make a retrospective application for a project that should have had an environmental impact assessment carried out before planning in exceptional circumstances. The Bill will make the process a single-stage application.

Jennifer Bray

Jennifer Bray

Jennifer Bray is a Political Correspondent with The Irish Times

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a Political Correspondent with The Irish Times