The auto enrolment system in Australia

culabula

Registered User
Messages
11
Having lived in Australia I have to say the system there is pretty good. It's 10% employer contribution on earnings over $400 per month (so a very low threshhold), also payable on casual earnings etc if they are over this threshold. Personally i have never paid the slightest attention to pensions & always done low paid trendy jobs in the arts sector, but 12 or so years of work there from age 20-35 or so left me with a pot of $80,000 (€50,000) so far and I still have another 30 years to work & save. Individuals can contribute if they like and get tax relief, I think it's taxed at a flat rate of 15% on any personal contributions up to a set maximum. There are also tax concessions to encourage downsizing, for people selling large family homes to contribute tax free on a one off basis (I know because my parents are out there and considering doing just that).

I love that it just happened for me when i was in my 20s and not interested whatsoever but working full time before we had kids. I feel that's the time that will make the most difference over the long haul. so i agree with Brendan on the 6% for everyone. Also agree that it will mean the most to women/low paid people etc, so setting the threshold at €20k really defeats the purpose of it.

And now as one of the disinterested low income self employed here, I think there needs to be some carrot and stick approach. Maybe it could be taken along with the compulsory PRSI and matched by government? So say if I earned under 15k or something, I'd be forced to pay say 3% and government would match it to get my 6%? In Australia there is some kind of low income government contribution too, I think if you earn below a certain threshold and make individual contributions, they will match it up to a set amount. Something like that could also encourage low paid self employed people to contribute?

It's only now that I realise what a visionary thing it was for Australia to have set this up way back in the 90s. A similar system here would be great.
 

Brendan Burgess

Founder
Messages
38,407
Hi Cula

That is very interesting.

And now as one of the disinterested low income self employed here, I think there needs to be some carrot and stick approach. Maybe it could be taken along with the compulsory PRSI and matched by government?
That was one of the suggestions from the floor yesterday.

I think it's very important to force the self-employed to contribute to a pension scheme.

Brendan
 

Jim2007

Frequent Poster
Messages
2,105
It is pretty much the same here in Switzerland, for most people, especially the young, it is just another deduction that comes of the salary and people pay little attention to it. It is only in mid career when you switch jobs and get a statement of the money being transferred to the new employer’s fund that you notice it - Wow there is a lot of case there!

Contributes start at 7% plus 7% from the employer at 25 and go up to 17.5% plus matching from 55 on wards. Yap in the last 10 years 3.5 annual salaries hit the pension fund.
 

ashambles

Frequent Poster
Messages
435
As far as I gather the 10% employers contribution mentioned for Australia is the full extent of what would be equivalent to employers PRSI here. Also it's a capped contribution.

The Irish version as proposed would almost certainly be the existing uncapped employers PRSI contribution of 10.85% + probably capped 6% pension.

Try getting the Irish DoF to buy into a new arrangement where employers PRSI goes to the employee pension fund and they'll get a good belly laugh out of it - that's their money - not yours.
 

Protocol

Frequent Poster
Messages
2,959
As far as I gather the 10% employers contribution mentioned for Australia is the full extent of what would be equivalent to employers PRSI here. Also it's a capped contribution.

The Irish version as proposed would almost certainly be the existing uncapped employers PRSI contribution of 10.85% + probably capped 6% pension.

Try getting the Irish DoF to buy into a new arrangement where employers PRSI goes to the employee pension fund and they'll get a good belly laugh out of it - that's their money - not yours.
PRSI goes to the SIF, not into central government revenues.
 

Pinkpanter

Frequent Poster
Messages
68
Jim

Is there any facility in Switzerland for the member to access the pension fund to buy their home?

Brendan
Yes-one can use pension funds for a house deposit. Twice per year one gets a pension statement with the amount that can be used for buying property. I’m not sure if the money is pledged (not physically withdrawn).
 

NoRegretsCoyote

Frequent Poster
Messages
862
PRSI goes to the SIF, not into central government revenues.
The SIF is just an accounting presentation.

There is no investment strategy or obligation for it to break even over time.

It's been in deficit (so residually financed by the Exchequer) for the vast majority of its existence.

It is by international statistical standards unambiguously part of central government.
 
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