Auto-enrolment bill published

Steven Barrett

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4,649
It will be interesting to see if they are able to implement it by then. The IT infrastructure project required to get this up and running is huge. Also, what fund managers will be involved.
 

Fibo49

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11
1:1 match by employer, wonder if they'll have a cap or if they'll have to match up to 20-30-40% depending on the age ?
1€ top up from government for every 3€ by employee, it's going to be a lot isn't it?
 

DBL2018

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20
I genuinely can’t see how this will be up and running by 2024. From what I can see the government intend to do the admin themselves and premium collection and allocation themselves, this a mammoth task to set up from scratch never mind the resources required.
 

Towger

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2,189
It could be running by the start of 2024 if they used Revenues existing PAYE systems to implement it. It would just be a matter of tacking on extra fields and treating the Ee and Er contributions as another two 'taxes' to collect.
However, they want to set up a new organisation the CPA) with their own systems.
 

jpd

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3,141
It would not be that simple - for a start taxes collected belong to the state, pension contributions do not

There would also have to be a mechanism for investing and keeping track of investment income, buying and selling investments, etc etc
 

ryaner

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532
1:1 match by employer, wonder if they'll have a cap or if they'll have to match up to 20-30-40% depending on the age ?
1€ top up from government for every 3€ by employee, it's going to be a lot isn't it?
It was originally reported at up to 1.5% match rising to 6%. The gov.ie page is just saying a limit of €80k of earnings too.

There will need to be a lot more detail fleshed out otherwise someone could contribute 40% and get a pretty decent pot.
 

Towger

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2,189
It would not be that simple - for a start taxes collected belong to the state, pension contributions do not

There would also have to be a mechanism for investing and keeping track of investment income, buying and selling investments, etc etc
The CPA will manage it and transfer funds to the various pension providers. The issue is with CPA interfacing with a couple of hundred thousand employers vs with just Revenue, who already have the systems in place. I just use the term 'taxes' to simplify the example. The same way Revenue collect PRSI (which in Revenue's view is not a tax) and send it into DEASP.
 

DBL2018

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20
its the tracking of the value of the fund that is where the complication sets in. not something the Revenue systems do.
 

Duke of Marmalade

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3,849
Fund management and accounting will be outsourced. I am sure that so to will contribution collection etc. A big task, but it won't involve setting up a whole new capability from scratch.
 

daheff

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Messages
130
1:1 match by employer, wonder if they'll have a cap or if they'll have to match up to 20-30-40% depending on the age ?
1€ top up from government for every 3€ by employee, it's going to be a lot isn't it?

I saw this and thought WOW. Thats better than any other pension scheme I've seen. No employer that I am aware of has a 1:1 pension match scheme. Top this up again with €1 from the govt. Something doesn't add up. Is there still the tax benefit too (contributions being on gross rather than net pay)?
If this is right, if I put in 300 EUR, my employer will put in 300 EUR, Govt 100EUR and I get tax benefit on my 300EUR. So possibly costs me 150 EUR to get 700EUR?
We'll all be rich as kings in retirement!!!

So somebody tell me the catch?
If my company already has a pension scheme where they contribute a smaller amount (say 1:3 match), will they be forced to increase to a 1:1 match? Is there a limit on how much I can contribute under this scheme (% of gross pay - I get theres an over limit of 80K)
 

ryaner

Registered User
Messages
532
I saw this and thought WOW. Thats better than any other pension scheme I've seen. No employer that I am aware of has a 1:1 pension match scheme. Top this up again with €1 from the govt. Something doesn't add up. Is there still the tax benefit too (contributions being on gross rather than net pay)?
If this is right, if I put in 300 EUR, my employer will put in 300 EUR, Govt 100EUR and I get tax benefit on my 300EUR. So possibly costs me 150 EUR to get 700EUR?
We'll all be rich as kings in retirement!!!

So somebody tell me the catch?
If my company already has a pension scheme where they contribute a smaller amount (say 1:3 match), will they be forced to increase to a 1:1 match? Is there a limit on how much I can contribute under this scheme (% of gross pay - I get theres an over limit of 80K)
1:1 matches are pretty common. My current scheme is an automatic payment from the company even if you don't contribute too. A previous job had the same automatic contribution too. All of them are capped at 5-7% though.

The Gov scheme HAS to have a limit on the match. There is no way it'll go ahead without one. I've just not found anywhere saying what it is.
 

Fibo49

Registered User
Messages
11
Found it. Starts at 1.5%, capped at 6% after 10 years.
 

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Protocol

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The State cash contribution is equivalent to 25% tax relief, so obviously this scheme may not be attractive to higher rate 40% taxpayers.
 

TheJackal

Registered User
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245
These are some of the details when Auto Enrolment for Pensions from 2024 was announced

Match required by employer and the State is capped at 80K salary

https://www.gov.ie/en/publication/27bab-launch-of-the-final-design-of-an-automatic-enrolment-ae-retirement-savings-system-for-ireland/ 1

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Example: Years 1-3
Salary 100K.
Capped at 80K.
You pay in 1.5% (100K x 1.5% = 1,500).
Employer must put in 1.5% (80K cap x 1.5% = 1,200).
State must put in 0.5% (80K cap x 0.5% = 400).
Total per annum: 1,500+1,200+400=3,100 of which 1,600 was free

Example: Years 4-6
Salary 100K.
Capped at 80K.
You pay in 3% (100K x 3% = 3,000).
Employer must put in 3% (80K cap x 3% = 2,400).
State must put in 1% (80K cap x 1% = 800).
Total per annum: 3,000+2,400+800=6,200 of which 3,200 was free

Example: Years 7-9
Salary 100K.
Capped at 80K.
You pay in 4.5% (100K x 4.5% = 4,500).
Employer must put in 4.5% (80K cap x 4.5% = 3,600).
State must put in 1.5% (80K cap x 1.5% = 1,200).
Total per annum: 4,500+3,600+1,200=9,300 of which 4,800 was free

Example: after 10+ years
Salary 100K.
Capped at 80K.
You pay in 6% (100K x 6% = 6,000).
Employer must put in 6% (80K cap x 6% = 4,800).
State must put in 2% (80K cap x 2% = 1,600).
Total per annum: 6,000+4,800+1,600=12,400 of which 6,400 was free
 

Duke of Marmalade

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3,849
The State cash contribution is equivalent to 25% tax relief, so obviously this scheme may not be attractive to higher rate 40% taxpayers.
Absolutely! AE applied up to 80k salary. That includes a lot of folk at the 40% tax rate plus 4% PRSI. AE not good at all for this cohort. This anomaly was pointed out during the 2018 consultation. A whole 4 years and they haven't addressed the point :mad:
 
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