New delay to mandatory pension a ‘bitter pill to swallow' for workers
The Irish Congress of Trade Unions said the 811,000 workers would be impacted by the decision of Social Protection Minister Dara Calleary to push the start date from September this year to next January.
The scheme has been planned for 20 years now.
Minister Calleary said the commencement of the collection of contributions for the scheme, called 'My Future Fund', was being moved to align the new system with the tax year.
He said it is also being delayed to give additional time for payroll providers, especially smaller ones, to ready their systems for the launch.
Delaying the introduction of the mandatory scheme will also give additional lead-in time for employers, particularly small and micro businesses, to ensure they can be compliant with the legislation from the start, he said.
The Irish Congress of Trade Unions (ICTU) said it was disappointed with the latest delay.
It said: 'First, this decision must be viewed in the context of Government decisions taken in the past two weeks.
'The promised 10 days sick pay is to be halved to five days, despite evidence from their own business impact assessment not supporting a row-back, the living wage commitment is to be kicked out for three years, and a decision on the Low Pay Commission recommendation to abolish sub-minimum rates for young workers is to be deferred indefinitely.'
ICTU said auto-enrolment has been on the cards for a whole 20 years.
And businesses and payroll services providers have already had a 15-month lead-in time from the passing of the legislation, when the details of the scheme were known, and the commencement order was signed a full year in advance of the planned September 30, 2025, start date.
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'Delaying bringing an end to our failed voluntary approach to occupational pensions will be a bitter pill to swallow for the 811,000 workers without a workplace pension and facing their income and living standards plummet in retirement,' the trade union body said.
A recent survey of pension advisers, undertaken by leading pension trustees, Independent Trustee Company (ITC), found that three in 10 expected the rollout to be delayed again.
They expect it to be postponed by at least another two years.
Many of them are also calling on the Government to remove the limits on the amounts that can be saved into pensions through auto-enrolment.
This would give people a better chance of saving up an adequate pension through the scheme.
The survey of 130 pension advisers found that 8pc expect it to be later than 2028 or 'never' by the time auto-enrolment is rolled out.
The new scheme is designed to help over 800,000 workers to begin saving for their retirement.
All employees not already in an occupational pension scheme, aged between 23-60 and earning over €20,000 across all of their employments, will be automatically enrolled in the new scheme.
It will be gradually phased in over a decade, with both employer and employee contributions starting at 1.5pc and increasing every three years by 1.5pc until they eventually reach 6pc by year 10.
The State will top up contributions by €1 for every €3 saved by the employee. This is in addition to the €3 that will also be contributed by the employer.
Eligible employees will be automatically enrolled but will have the choice after six months participation to opt-out or suspend participation.
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