The Government’s auto-enrollment pensions scheme looks set to be delayed once again, a financial expert has warned.

Auto-enrolment schemes are common in many Western countries – with employers legally obliged to pay into an occupational pension plan for staff members.

The Automatic Enrolment Retirement Savings System Act 2024 was signed into law by President Higgin in July and the Government “expects” the act’s provisions will come into force next year. 

Despite this, Fairstone Ireland CEO Paul Merriman said he believes the date will be pushed back “yet again”. 

“I can’t see it coming into play in 2025,” he told The Pat Kenny Show. 

“There’s a lot of employer groups urging the Government to bring in a pilot scheme in 2025 [but] trying to get 800,000 people into a scheme is a massive undertaking. 

“So, my estimation is [it’s] going to go live for those 800,000 people in 2026 and you might see a couple of pilot schemes in 2025.” 

A pensioner holding euro coins in his hands. Picture by: Weyo / Alamy Stock Photo

Mr Merriman described auto-enrolment as the Government “passing the buck over to the employers” for the responsibility of funding current workers’ pensions. 

The employer, the staff member and the Government all make a financial contribution to the employee’s pension fund; however, the Government’s contribution will be the smallest - starting at 0.5% of the worker's salary and rising eventually to 2%. 

To begin with, staff and their employers will pay in 1.5% of the worker's salary each.

The contribution will gradually rise until it reaches 6% each after 10 years of employment.

Once the Government's payment is included, the total contribution to the worker's pension plan will be 14% - which Mr Merriman described as “massive” in the current economic environment. 

“The employer paying the 6% is going to be the issue here because we do a lot of group company pension planning and it’s very rare that you see anything over 5% going in from the employer,” he said. 

“They’re from really big organisations as well.”

Who will take part?

Everyone between the age of 23 and 60 is eligible for auto-enrolment - providing they earn more than €20,000 a year. 

For those who do not wish to take part, it will be possible to opt out. 

“You can opt out after six months but you’re automatically going to be re-enrolled then after two years,” Mr Merriman said. 

“So, they’re not going to let you off the hook that easily.” 

Investments

For those who do decide to take part, they will be able to choose which pension plan they want to pay into. 

“You will probably have a couple of options,” Mr Merriman said

“We’re thinking four to six options are going to be on display for consumers. 

“How good they’re going to be managed and what type of assets they can invest in is not yet known.” 

As TDs debated auto-enrolment earlier this year, Leo Varadkar told the Dáil it would “make a big difference for our society” and described its introduction as a “good reflection of long-term thinking by the Government.”

Main image: Hands of an elderly pensioner holding a leather wallet. Picture by: Alamy.com