The Auto - Enrolment Bill has now been signed into law 

The Irish pensions landscape will now enter a new era following the signing into law by the President of the Automatic Enrolment Retirement Savings System Bill. Mandatory employee retirement savings will be introduced for the very first time, bringing with it significant implications for employers and employees.

The signing into law of the Bill represents only the first formal step in the process to introduce AE. Much remains to be done to institute the key elements of the new system's infrastructure: in particular the creation of a new central AE retirement savings system and supervisory body, the establishment of investment funds and appointment of investment management service providers. While we know the Department of Social Protection has been progressing these elements (the selection of the administrator for the new central system has now been confirmed), we expect this activity to now accelerate significantly. Additional features of the new regime will then be introduced by separate regulations which are anticipated later this year.

The Minister has stated that auto-enrolment will become “a reality in 2025”. Exactly when in 2025 remains the key question. The Government has for some time been targeting January, for the first contributions by automatically-enrolled employees to be paid. Although it still has not formally confirmed this as the start date, the speed with which the Bill has passed, having been published only 3 months ago, indicates the high priority AE is being given by the Government. Our advice is that employers should continue to work to this deadline until further notice.

All employers need to quickly understand what this will mean for them and their employees and how they want to provide retirement benefits to employees.    

Our analysis shows that the vast majority of employers who already provide pension plans or PRSAs to employees want to continue to use these and avoid the new central retirement savings system where possible. But to do this, employees (or employers on their behalf) need to be contributing to the plan prior to January. If they are not, employees within the scope of the AE requirements will be automatically enrolled into the central system. 

For all employers, the challenge is clear: planning and preparation must start now to maximise the time available prior to commencement. Despite appearances, auto-enrolment is not straightforward and will need to be fully understood to minimise complications. Business employee and pension plan impacts need to be considered, options assessed, and strategic decisions made in sufficient time before the end of the year. Engagement with employees in particular is going to be vital to explain the approach their employer is taking and what employees will need to do next.   

Many employers have already begun work to be ready for AE. If you have not yet started your preparations it is important that you do so as soon as possible. We are working with hundreds of clients currently to help them assess the potential implications, to put plans in place and to undertake appropriate actions.

The passing of the Bill has not changed any of the fundamental features of the AE regime which were previously announced. Our April update provides more details on AE and its requirements and implications. 

If you have any further queries or require any assistance please reach out to your usual Mercer consultant or to our dedicated auto-enrolment team.