What is auto enrolment for pensions and how will it work in Ireland?
The Irish Government is planning to launch an auto-enrolment pension scheme from 2022. Automatic enrolment in Ireland is being mooted as a measure that, if introduced, could bridge the pension gap. But how will auto-enrolment pension work and how can it affect your pension plan?
If introduced, automatic enrolment would see employers introduce a workplace pension scheme and automatically enrol their employees into the scheme. Employers would then be obliged to contribute a percentage of an employee's salary to help fund their retirement.
The Government is also supporting this idea in an effort to bridge the pension gap. This gap exists and will continue to grow because the State pension system will not be sustainable in the future due to increasing life expectancy and an ageing population.
Can I rely on the State pension?
According to the CSO, the number of workers who expect the State pension to be their main source of income has risen from 26% in 2009 to 36% in 2015*. A sharp fall in pension coverage is cause for concern for all of us because the increase in reliance on the State pension will place even more pressure on already strained resources. Therefore, auto enrolment is seen as a viable solution to the pension problem and could encourage people to be more financially aware of the importance of saving for their retirement.
In order to secure a financial future, starting a pension is one of the smartest financial decisions you can make. When choosing a pension, having all the information you need is key. Sound advice is invaluable, so it's a good idea to seek advice from a financial advisor. An independent financial advisor can guide you through the process and help you select the right plan for your circumstances. You can find a local financial advisor near you with the Zurich Advisor Finder. Alternatively, our Financial Planning Team can provide you with more information about Zurich's pension plans and options.
*Source: Press Release Population and Labour Force Projections 2016-2046.