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In this month’s public policy update, our policy team outlines its ongoing lobbying efforts on the issue of childcare, its representations to Government on how a change in process is impacting Critical Skills Employment Permit holders and the Institute’s recent submission to the Department of Social Protection on pensions auto enrolment. Advocating for improved childcare in the Republic of Ireland and Northern Ireland Following the publication of our recent policy paper Supporting Working Parents – The case for better childcare policy in the Republic of Ireland and Northern Ireland, efforts have been ongoing to engage with policymakers across the island of Ireland on this important issue. Last week, our public policy team met with officials from the Department of Children, Equality, Disability, Integration and Youth to discuss our members feedback on the issue and in particular to emphasise the need to improve capacity across the sector. Meetings have also been held with opposition parties on the issue including Sinn Fein so as to ensure our members voice is heard across the political spectrum. Following the restoration of the Northern Ireland Assembly, meetings have also been held with legislators from all political parties as work toward developing a new childcare strategy for the region advances. As part of these discussions, our policy team have emphasised the cost pressures our Northern Ireland members are facing with respect to obtaining adequate childcare and in particular the need to abolish the £10,000 cap on tax-free childcare. Our policy team will continue to advocate on the issue of childcare throughout the year and welcome members feedback on the issue which can be sent to publicpolicy@charteredaccountants.ie. Changes with Critical Skills Employment Permit / Stamp 4 process causing issues for member firms Following recent changes announced by the Department of Enterprise, Trade and Employment (DETE) on November 15 2023, holders of Critical Skills Employment Permits (CSEP) must now apply directly to the Department of Justice or their local immigration office (if living outside Dublin) for a Stamp 4 permission to continue to reside and work in Ireland following the expiration of their CSEP. To obtain a Stamp 4 on or after the 30 November 2023, CSEP holders must complete a minimum of 21-months' work following the issuance of a Stamp 1. In effect, this means that the eligibility to meet the 21-month test does not start from the day the worker started to work physically in Ireland (which was the case under the previous system); instead, the clock starts from the date the Stamp 1 is issued (which could be several weeks later). These changes have had an enormous impact on CSEP holders and their employers, who in many cases bear the financial cost of the visa application process on behalf of their employees. Specifically, given that the 21-month period required to apply for a Stamp 4 is now only deemed to have commenced after the CSEP holder obtains a Stamp 1, many CSEP holders are finding that their 2-year CSEP expires before they have met the 21-month period needed to obtain a Stamp 4. This is the result of extensive processing times, with some employees reporting up to 18 weeks wait for Stamp 1 applications, particularly in regional areas. Such employees cannot possibly meet the 21-month period before their CSEP expires, as they are not able to obtain their Stamp 1 within the parameters of their CSEP. As a result,  many member firms have reported the need to apply for a ‘bridging’ CSEP to cover these employees until they can meet the necessary 21-month residency period, which in turn has created additional financial and administration costs.   Our policy team have written to officials in both the Department of Justice and DETE to highlight this issue and to request a meeting to discuss how the new system may be adjusted to reduce the financial and administrative burden it has placed on our members. Representations to Government on Pensions Auto Enrolment The Institute’s policy team have also recently written to the Department of Social Protection on the need to allow businesses adequate time to plan for the introduction of pensions auto-enrolment. While the Institute has long been clear in our support for the introduction of auto-enrolment as a mechanism for increasing private pension coverage in the State, payroll services providers tell us that a lead-in time of at least 18 months would be required to properly adapt to this significant change. In order for auto enrolment to be a success, we are calling on the Government to adopt the recommendation of the Joint Committee on Social Protection (in its pre-legislative scrutiny report) that there be a two-year lead-in period, following the relevant legislation being signed into law, that allows businesses time to adequately prepare for the implementation of auto enrolment. In addition to the above, the policy team re-emphasised the Institute’s position that any new scheme of auto-enrolment should facilitate the existing and well established model of tax relief at both standard and marginal rates for pension contributions, rather than introduce a new scheme of tax relief, as proposed.

Movement on automatic enrolment welcome but sustained momentum needed to meet ambitious timeline Close adherence to timeline required to ensure passage of legislation and establishment of Central Processing Authority (CPA) achieved without delay €1 for €3 model should be withdrawn and existing, well-established model of tax relief for contributions should apply  29 March 2022: Today’s launch by Minister for Social Protection, Heather Humphreys T.D. of Ireland’s long-awaited automatic enrolment pension scheme is positive news, but Chartered Accountants Ireland has noted the ambitious timeline and cautioned that legislative hurdles, the tendering process, and the establishment of the CPA must progress at pace.    The largest professional accountancy body on the island of Ireland made the comments in response to confirmation by Government today that an automatic enrolment pension scheme for workers will be introduced in January 2024.    Commenting, Cróna Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland said: “While today’s announcement is welcome given the pension crisis facing us, the timeline is ambitious to say the least. A significant amount of work needs to be done not just to develop the legislation underpinning the scheme, but also to finalise its design and to establish the various mechanisms that will be required for it to function.     “Employers will also need sufficient time to plan and budget for its introduction. Payroll service providers tell us that a lead-in time of at least 18 months would be required to properly develop, test, and deploy a fully operational system. As the legislation progresses, the Government must work closely with businesses to advise and help them prepare for the introduction of automatic enrolment.”   Over 90 percent of respondents to a 2021 survey by the Institute supported the introduction of automatic enrolment, a scheme by which workers would automatically be enrolled in a pension scheme by their employers, and both employers and employees as well as the State would contribute to the pension fund. Chartered Accountants Ireland has also called for the existing model for tax relief at both standard and marginal rates for pension contributions to apply to automatic enrolment. It calls for the proposal to introduce a second model, whereby the State contributes €1 for every €3 paid in by an employee, to be withdrawn.  Ms Clohisey continued: “One of the issues that remains unclear is how the existing and well-established model for tax relief at both standard and marginal rates for pension contributions will sit alongside the €1 for €3 State model that is planned for automatic enrolment. The operation of essentially two tax systems between auto-enrolment and private pension schemes will cause needless tax arbitrage and confusion within the market. We are therefore calling for the existing model of tax relief to apply to automatic enrolment and for the proposed State model to be abolished.”   ENDS For more information Jill Farrelly PR & Communications Manager Chartered Accountants Ireland     

Persistently low coverage a major challenge for state Receding pandemic is opportunity to progress recommendations of Commission on Pensions  Increasing private coverage via auto enrolment is only way to safeguard state pension     27 January 2022 – CSO statistics published this morning showing that a third of workers do not have pension coverage outside of the state pension must prompt renewed momentum towards auto enrolment, according to Chartered Accountants Ireland. The largest professional accountancy body on the island of Ireland highlighted again the pressure on the viability of the state pension, amid continued delays to pension reform.  The Institute, which represents over 30,000 members noted the window of opportunity, as the pandemic recedes in Ireland, to lay the groundwork for the introduction of auto enrolment, which would see employees automatically enrolled in a pension scheme by their employers.  Commenting, Tax and Public Policy Lead with Chartered Accountants Ireland, Cróna Clohisey said: “One third of workers remain without private pension provision and will be reliant on the state pension. Of employees with no supplementary pension cover, 45% stated that they have never gotten around to organising it or will organise it at a future date, which highlights that the issue isn’t going to be resolved without significant action by the government.    “We have long argued that the sustainability of the State Pension cannot be addressed without parallel reforms to increase private pension coverage. We welcomed last year’s recommendations by the Commission on Pensions including the need for a long-term strategy on state pension reform, delaying any increases to the State Pension Age until 2028, abolishing mandatory retirement ages and introducing automatic enrolment.”     The government is due to make further decisions on the Commission’s proposals this March, with auto enrolment potentially being introduced in late 2023. The Institute notes the time that is required to build such a system and the need for employers to have sufficient time to prepare for such changes.  Clohisey noted: “A clear road map from government will allow the necessary consultation with employers and business groups to progress. One of the many issues that remains unclear is whether the existing and well-established model for tax relief at both standard and marginal rates for pension contributions should apply to auto-enrolment. In its absence, the operation of two tax systems between auto enrolment and private pension schemes will cause needless tax arbitrage and confusion within the market.”   Further detail on pension reform can be found in Chartered Accountants Ireland’s (under the auspices of the CCAB-I) recent submission to the Commission on Taxation and Welfare.  ENDS