What do members of existing pension schemes do when auto-enrolment is introduced?

[dubdub123]

So if employee currently paying 5% and employer matching this 5% to company pension, might it be better to stop payments and opt for this new scheme?

Should we expect to hear today about tax implications?

 

[Eireog007]

Or maybe exit it?

A person with a private pension will be required to exit their current plan if they want to enter the Government scheme.

One of the astonishing things at the public consultation was that the proposal was that the pension fund on retirement would not be taxable. If that is still the proposal, then it's way ahead of any private scheme.

So just making sure I understand this correctly, I would have to exit my current pension with Irish Life and enrol in the government provided one to avail of the employer and government contributions.

I do not see why you are pigeonholed into a particular set of pension pots as opposed to leaving it open to you to decide which pension scheme works best for you and have the employer/govt contributions simply added to whatever scheme that ends up being.

 

[Blackwexford]

Hi all a little confused, I know its early days.
I have a pension from my last employment put in a bond so don't contribute to that. I also have a pension from my new employer who puts in 8% and I add 5% about €50,000 in fund to date. So is the proposal that I stop my company pension and my company provides a new pension or access to a new pension. . The government then add €1 for every €3 i put in and my employer also adds the 8%. Sounds very messy for employers but a good deal for the employee. Y
Do you think I am correct or is it too early to tell.

 

[LDFerguson]

So just making sure I understand this correctly, I would have to exit my current pension with Irish Life and enrol in the government provided one to avail of the employer and government contributions.

I do not see why you are pigeonholed into a particular set of pension pots as opposed to leaving it open to you to decide which pension scheme works best for you and have the employer/govt contributions simply added to whatever scheme that ends up being.

The AE scheme will not be mandatory so if your current arrangement works better for you, you can continue it unaltered. The government contribution in the AE scheme is just another way of expressing the tax relief on pension contributions that already exists. The AE scheme Government contribution is the equivalent of 25% tax relief. If you're a 40% taxpayer, you're already getting 40% tax relief on contributions.

 

[LDFerguson]

So is the proposal that I stop my company pension and my company provides a new pension or access to a new pension.

Not necessarily. You could continue your existing arrangement. There's no obligation on your employer to go above 6% contribution in the AE scheme. The government contribution in the AE scheme is just another way of expressing the tax relief on pension contributions that already exists. The AE scheme Government contribution is the equivalent of 25% tax relief. If you're a 40% taxpayer, you're already getting 40% tax relief on contributions.

Liam D. Ferguson
www.ferga.com

 

[LDFerguson]

From the FAQ section of today's document...

32. Does the introduction of AE with a State top-up affect the current tax relief system?

The tax relief system as it currently applies to traditional occupational and private supplementary pensions will remain unaffected by the introduction of AE. The two systems will work in parallel with each other.

 

[bish123]

It's not clear to me regarding options of switching to AE scheme in case employer has contributory scheme but is not contributing anything to fund. In theory there is a pension scheme so these will not be enrolled automatically and have to enroll themselves presuming it's mandatory for employers to facilitate this. The other issue is slow build up (and no option to start 6% employee contribution from year 1) even if they do switch to new scheme.

 

[johnwilliams]

question i hope i can ask here .never got my head round pensions
what if you are with company doing auto enrolment and move to another company doing its own pension scheme ,can the ae funds be transferred?