Around 750,000 workers in Ireland will benefit from a new private pension scheme once approved by Cabinet, according to Minister for Social Protection, Heather Humphreys.
Details of the new scheme emerged today and will see workers earn a further €4 for every €3 saved to their pensions account.
When the scheme is fully established - by 2023 - a worker earning €35,000 each year will accumulate a fund of around €293,000 before retirement.
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According to a statement released this afternoon: “Ireland is the only OECD country that doesn’t yet operate an Auto Enrolment or similar system as a means of promoting pension savings.
“The new system is designed to simplify the pension decision for workers and make it easier for employers to offer a workplace pension.”
All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employment, will be automatically enrolled.
However, participation will be voluntary, so anyone that does not want to continue their participation can ‘opt-out’ - rather than having an ‘opt-in’ basis.
Those who choose to remain in the system will then have their pension savings matched on a one-for-one basis by their employer.
The State will also provide a top-up of €1 for every €3 saved by the worker - meaning that for every €3 saved, a further €4 will be invested by the employer and the State combined.
Commenting at the announcement of the final plan, Minister Humphreys said: “We all know that people are living longer. While this is very positive, we also want people to be able to enjoy their retirement years with some financial security.”
She said that for many people, retirement seems a long way away and so they approach the subject of pensions too late after thinking they have a lot of time before they need to think about it.
“Some people may be of the view that the process of putting aside a little each week to provide for their retirement years is something to be considered next year, or maybe even the year after next,” Ms Humphreys continued.
“However, that is not the case. If people want to retain a reasonable standard of living in retirement, they need to start saving as soon as possible.
“This major reform in the Irish pensions landscape is intended not just to get people saving earlier but to support them in that saving process by simplifying the pension choices and importantly by providing for significant employer and State contributions as well.
“What we are doing today is putting in place a system whereby people can save for their retirement.”
Full details of the design of the Automatic Enrolment Retirement Savings System are being published today at www.gov.ie/AutoEnrolment.
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