Under the new proposed auto-enrolment pension system, the Government will pay €1 for every €3 employees contribute to their pension. A memo is being brought to Cabinet later this week that outlines the detail around the pension scheme.

It states that employees earning more than €20,000 per annum will be automatically enrolled to make pension contributions. However, they will have the option to opt out of the scheme.

Employers will be expected to match the employee’s contribution but the plan is to introduce the scheme on a gradual basis to mitigate the financial impact.

The memo will seek permission from the Cabinet to begin the process to draft legislation. It is hoped that the auto-enrolment scheme will be up and running next year.

However, there is still some speculation that the introduction of any scheme may be delayed given the financial impact of Covid-19 and concerns around burdening employers with additional costs.

Pensions coverage

According to the latest figures from the Central Statistics Office (CSO), two thirds of workers have some form of pension outside of the State Pension[1].

However, just 25% of workers between 20 and 24 have a pension. While the group with the highest pension coverage is workers between 45 and 54.

For those workers with no pension coverage, they stated that they will be reliant on the State Pension as their main source of income.