Pensions Auto Enrolment: A Comparative Look at Ireland and the UK

Cover Image for Pensions Auto Enrolment: A Comparative Look at Ireland and the UK

| Courtney Price

As countries grapple with ageing populations and the financial sustainability of state pensions, many have turned to auto-enrolment pension schemes as a solution. These systems automatically enrol eligible workers into pension plans, aiming to boost retirement savings. Ireland is set to introduce its own auto-enrolment system in 2024, following in the footsteps of the UK, which implemented a similar scheme in 2012.

In Industry Accountants 2024 - Pensions Auto Enrolment Ireland V United Kingdom, Tim Kelsey explores the key differences and similarities between the Irish and UK legislation on pensions auto-enrolment.

The Irish Approach to Auto-Enrolment

Ireland's upcoming pension auto-enrolment system targets employees aged 23 to 60 who earn over €20,000 annually. The plan will require new employees to be enrolled from their first day of employment. The contribution rate will start at 1.5% for both employee and employer, increasing by 1.5% every three years until reaching a 6% matched contribution after a decade.

The UK Experience

The UK's auto-enrolment regime began in 2012 and has since become a cornerstone of its retirement savings landscape. Similar to Ireland's proposed system, it involves mandatory enrolment for eligible workers with contributions from both employees and employers. However, the UK's system has evolved over time, with initial minimum contributions starting lower and gradually increasing to the current levels.

Comparing Contributions and Opt-Outs

Both Ireland and the UK's systems feature phased increases in contribution rates. However, Ireland's planned rates are set to rise more quickly, reaching a higher level of combined contributions within a decade. In terms of opting out, the UK allows for a refund of contributions if an employee opts out within a specific window after enrolment.

Legislative Specifics and Corporate Flexibility

The UK has provided flexibility for businesses with existing pension schemes, allowing them to use these as qualifying schemes if they meet certain criteria. Ireland is expected to follow suit, exempting companies with effective occupational pension schemes from the auto-enrolment process, provided they continue to meet new requirements.

Lessons Learned and Future Challenges

The UK's experience with auto-enrolment offers valuable lessons for Ireland. One of the most significant challenges identified in the UK was ensuring accurate enrolment, particularly for lower-paid workers. Ireland must establish robust administrative systems to avoid penalties associated with non-compliance.

While Ireland's auto-enrolment system shares foundational principles with the UK's, there are notable differences in contribution rates and implementation timelines. As Ireland prepares to roll out its scheme, it will need to address concerns regarding infrastructure readiness and learn from the UK's decade-long experience to ensure a smooth transition for employers and employees alike. The success of Ireland's auto-enrolment will depend on careful planning, clear communication, and a willingness to adapt based on feedback and evolving needs.

For the full session, please click here. Tim Kelsey covers the following topics during this course:

  • The key aspects of the Irish legislation
  • Comparison with UK rules to highlight similarities and divergence
  • Contribution rates, calculations of contributions and tax relief mechanism
  • The choices available to Irish companies as to how to meet the new obligations
  • Lessons learned from the UK experience of auto enrolment

The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

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About the Author

Courtney Price is a content creator for CPDStore. Courtney joined us during the COVID-19 pandemic and has been involved in the ever-evolving world of accounting ever since. Her passion for reading and writing, coupled with her degree in copywriting from Vega School has allowed her to channel her creativity and expertise into crafting engaging and informative content.


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