Movement on automatic enrolment welcome but sustained momentum needed to meet ambitious timeline

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• €1 for €3 model should be withdrawn and existing, well-established model of tax relief for contributions should apply 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