Pension Auto Enrolment

The Governments Auto Enrolment (AE) pension scheme has moved from blueprint to construction, is your business ready?

We are working with employers to ensure they are taking the necessary steps to get AE ready, talk to us today!

Here in the table, we have analysed some of the main points of the CERS scheme versus the Government's Auto-enrolment scheme for your information.

 
CERS AE Comparison with CERS
Who is eligible? Anyone employed by you - including but not restricted to core staff, office staff, senior staff, directors, business owners etc. All workers over age 23 earning more than €20,000 not already in a scheme will be included automatically from 1 January 2025. Eligibility for CERS is set out by employer.
Additional Benefits Lump Sum Death Benefits and Income Protection available.  Pension Fund usually paid in addition. The value of the fund will be payable on death. The National Automatic Enrolment Retirement Savings Authority yet to confirm how.  Unlikely that additional death benefits will be available. Protection benefits are set out by the Employer and are a valuable part of the remuneration package offered to employees.  These are often used by Employers to attract and retain staff.
Charges Annual Management Charge (AMC) depends on Investment choice.  AMC for default fund is 0.9% - there are NO other charges applied. The National Automatic Enrolment Retirement Savings Authority will clarify the maximum investment and administration charges that will apply closer to 1 January 2025. The value of charges will be compared to services provided and returns achieved to enable clarity of comparison.
Additional Voluntary Contributions (AVCs) Allowed - via payroll deduction or from personal Direct Debit.  Regular AVCs and Once off AVC's allowed. Not allowed under AE. AVCs are a crucial part of the retirement savings plan for many members who wish to provide for a meaningful income in retirement and avail of tax advantages.  Under AE AVCs may have to be made to PRSA's - which can be costly.  Will Employers still have to provide access to a PRSA provider and Direct Debits for members. This is unclear, but likely.
Once off contributions Allowed for Employers and/or Employees. Not allowed under AE. Flexibility to make once off contributions can be an important HR benefit for employees in attracting and retaining key staff.
Effect on take home pay Cost of employee contribution is reduced by tax relief at marginal rate (20% or 40%). No tax relief. Full value of contributions deducted from pay. The same contribution under CERS will cost employee more under AE. Instead of tax relief, the Government will make a contribution (see rates below).
Retirement Age Employers can choose a normal retirement age between 60 and 70 for their scheme. Currently, mainly age 65. Members can retire from age 50. Earlier for serious ill health. In line with State Pension Age - currently 66. No option to retire early. State pension age is likely to increase to 68. Impact here for employers and members if no early retirement available.
Retirement Options 25% or up to 1.5X salary can be paid as a lump sum.  Balance to Pension, Approved Retirement Fund (ARF) or taxable cash depending on option chosen.  Competitive annuity rates provided by CERS and access to ARF. No clear view on how this looks yet. Guidance at retirement provided by CERS to members.
Support CERS have a dedicated admin and consultancy team to provide support and assistance to employers and members.  CERS meet with members to provide updates and 1:1 services. Employers are likely to be required to ensure that employees understand the AE scheme and what to do. We consider the ongoing support to employers and in particular members, when it comes retirement planning an important part of the scheme.  This service is not currently addressed in the plan for AE.
Investment and Fund choice CERS has a range of 8 funds available with a default fund option. These include a Standard and ARF Lifestyle Strategy. 4 Funds available selected by The National Automatic Enrolment Retirement Savings Authority. Fund details not yet available for comment or comparison.
Contributions Bespoke options available under CERS. See rates below. CERS provides greater flexibility to employers regarding contribution rates.

Contributions to Auto Enrolment

The rates are as follows:

Years Employee Employer State Total
1 - 3 1.5% 1.5% 0.5% 3.5%
4 - 6 3% 3% 1% 7%
7 - 9 4.5% 4.5% 1.5% 10.5%
10+ 6% 6% 2.0% 14%
*Employer contributions and the state top-up will be capped at a maximum of €80,000 of an employee’s gross salary.

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