Auto-Enrolment pension scheme costing businesses how much?
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk. Now, this is Breakfast Business with me, Emmet Oliver. And as you know, next year is going to be a massive sea shift in the whole pensions landscape in Ireland. The auto enrolment pension scheme kicks off. Both employees and employers will be involved in making contributions. But how is the scheme set up? Is there much visibility and buy-in from either of those particular groups? We are now joined by Colin Donnery of FRS Recruitment, who's done a survey with firms about how they're going to implement this and can they remain profitable while doing so. Good morning to you, Colin.
Morning, Emmet.
What is the auto-enrolment pension scheme and when does it start?
How are you?
It's good. Great to be joined by you. This is coming. It's only a few weeks away in terms of the actual official start-up of the scheme. But from what you're hearing, companies remain very concerned, particularly among small and medium-sized enterprises, that this is really going to hit their bottom line dramatically once it kicks off.
Yeah, certainly. I suppose the scheme has really snuck up on people, although it has been muted probably for about 12 months and was due to go live in September last month. It's kicking off in January. There's a lot of confusion. I think the government and Department of Social Protection are getting out there now, but it's coming late. I suppose what will happen is in January, anyone who's not in a corporate pension who's between 20 and 60 and earns over 20,000 euros will automatically be enrolled in my future funds. So 1.5% will go from the workers pay packet. And that's something that probably that hasn't been communicated really. I suppose anyone who is contributing will be down 1.5%, probably about €20 in their pay packet in January.
And then on the employer side, they contribute 1.5% with a small top-up from the government as well. Firms are telling us that it's going to cost them about €25,000 next year. And I think the flip side of this also is that employers, when they're looking at, I suppose, increasing salaries next year in line with inflation, etc., are probably going to take this into consideration. That's what they're telling us as well, you know, that 1.5% are having to contribute.
Yeah, what's coming across in your survey is that people are going to go to their pay packets next year and go... what is this? And I know, to be fair to the department, they have done marketing, they have got a big communications campaign rolling out there. I don't know much about the overall shape of it, but what comes through in your survey is that just the visibility of this still remains too low. There's too many people who just don't know about it.
Yeah, and that includes employers who, I suppose, have been communicated to significantly. It's I suppose one of the things that's going to happen, so we're seeing employers starting to scramble now to get their employees into their corporate pension plans to make it, I suppose, easier or they feel it'd be easier whether it is or not. We're not 100% sure. But one thing that's going to happen for a watch out for employers is if your employees aren't in the corporate pension in the November payroll, they will be scooped up into my future fund in January. And they will pay not only your corporate pension, but also my future fund. The Department of Social Protection are telling us that that will actually be refunded along the way.
But still, it's still a little bit confusing.
Yeah, I suppose neither of us want to be too doom and gloomy about this because some people who aren't and who don't know about any of this will be saying to themselves, oh, I'm a gig economy worker or I'm a temporary worker. Oh, I've got a pension for the first time.
How will the auto-enrolment scheme impact small and medium-sized enterprises?
So there is people who see this as a pretty decent change to their conditions.
Yes, certainly. Look, we've heard about the pension time bomb in Ireland for, you know, many years now. And this is a way of, I suppose, bringing everyone into the net. But if you look at the numbers of, say, 20 to 30 year olds who are in a corporate pension, it's about 30 percent.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:01–0:38
2
What is the auto-enrolment pension scheme and when does it start?
0:38–3:34
3
How will the auto-enrolment scheme impact small and medium-sized enterprises?
3:34–5:53
4
What are the financial implications of the auto-enrolment scheme for employees?
5:53–6:10