Auto-Enrolment Update – Exemption Standards for Existing Schemes

Minister Dara Calleary has signed a statutory instrument establishing pension contribution standards that Organisations must meet to be exempt from facilitating auto-enrolment.

The aim of introducing these standards is to ensure that pension arrangements outside of MyFutureFund are at least as favourable for the participating Employee as they would be under the introductory contribution rates in MyFutureFund.

In the case of a defined contribution occupational pension scheme, the standards specify the total contributions amount to at least 3.5% of the Employee’s gross pay, of which at least 1.5% must be made by the Employer (subject to a maximum of €1200) to exempt an employment from participation in the auto-enrolment scheme.

For defined benefit schemes, the standards specify that those that confer a long-term benefit based on continuing employment, will allow such employments to be exempted.

To begin with, these standards are being set at in line with the amounts in the phased introduction over a 10-year period of MyFutureFund, and the vast majority, if not all, pre-existing pension schemes will easily satisfy these standards.

The National Automatic Enrolment Retirement Savings Authority (NAERSA) will assess contribution levels over a three-month period which is also the basis for determining eligibility for MyFutureFund.

Organisations operating any schemes where the contribution amount, over this period, is less than the specified 3.5%, will be contacted with a view to assisting them to become compliant. However, if an Organisaiton scheme continues to fall below the standard with no evidence of the Employer making appropriate efforts either to reach the exemption standard or to allow their staff to enrol in MyFutureFund, then the compliance powers available to NAERSA will be enforced.

For further details or support, please contact Adare by calling (01) 561 3594 or emailing info@adarehrm.ie.