On 28 February, the Government published the ‘Roadmap for Pensions Reform 2018-2023’, which aims to “modernise the Irish pensions system while continuing to target resources at those most in need”.
There are six strands to the roadmap:
- Reform of the State Pension
- Building Retirement Readiness – A New Automatic Enrolment Savings System
- Improving Governance and Regulation
- Measures to Support the Operation of Defined Benefit Schemes
- Public Service Pension Reform
- Supporting Fuller Working Lives
Strands 2 and 6 are those which are likely to have the most direct effect on employers.
Strand 2: Building Retirement Readiness – A New Automatic Enrolment Savings System
By 2022, the Government proposes to develop and begin implementation of a State-sponsored supplementary retirement savings system in which workers will be automatically enrolled.
The design parameters of this system (including target membership, the contribution rates, the financial incentives, the policy for opt-out and re-enrolment and the policy for contribution holidays) are yet to be defined, but the roadmap clearly states that contributions will be made by both workers and employers with a top up from the State. Self-employed people will have the option to participate.
By Q2 2018 the Government intends to publish a ‘strawman’ automatic enrolment system for public consultation. The example given of the contributions that may be proposed in the strawman system is that “employers could be asked to match worker contributions euro for euro subject to an eventual upper limit on employer contributions of 6% of gross salary”, with the State providing a 2% top up.
Strand 6: Supporting Fuller Working Lives
In August 2016 the Government published the Report of the Interdepartmental Group on Fuller Working Lives, which dealt with this area in detail. The roadmap reiterates the findings of the earlier report and clarifies how they will be integrated into the proposed pensions reforms, with the aim of making Ireland a society that supports older peoples’ continued engagement in economic and social life.
One aspect of this is the development of proposals for a State pension deferral scheme.
Regarding retirement age in the private sector, the roadmap states that “any widespread practice which sees the continuation of any prevailing mandatory retirement age of 65 would be inconsistent with strategies to remove obstacles to working to an older age”. Consequently, employment practice in this area will be kept under close review and “should it appear that these provisions are not resulting in improved flexibility for workers, by the end of 2018 the Government will consider the merits of restricting the capacity to use mandatory retirement provisions relative to the prevailing State pension age”.
The roadmap contains plans that will have significant implications for small business. The Small Firms Association has lobbied on these issues for decades and this lobbying will now intensify. Members will be asked for input once the automatic enrolment consultation opens but if you would like to share your views and concerns at this point please contact Linda Barry, SFA Assistant Director, on 01 605 1626 or firstname.lastname@example.org.
The full ‘Roadmap for Pensions Reform 2018-2023’ is available here.