THOUSANDS of Irish workers are set for a “substantial cash injection” as a new saving scheme that’s set to come into effect in just months.
The My Future Fund is a new pension scheme that puts thousands into your pension pot, even if you are yet to save for retirement.
And the new auto-enrolment retirement savings scheme will be introduced from January 1, 2026.
Under the scheme, the employee, employer, and Government all pay a certain amount into the employee’s pension fund.
A new public body, the National Automatic Enrolment Retirement Savings Authority, will be set up to administer the Auto-enrolment scheme.
The scheme will be supervised by the Pensions Authority.
Askpaul answers Ireland’s Paul Merriman has explained the new scheme is set to put thousands into a pension pot, even those who are currently saving for retirement.
He added: “Employees in Ireland can look forward to a substantial cash injection as the government plans to roll out a new pension scheme that puts thousands into your pension pot, even if you are yet to save for retirement.”
Under the scheme, for every €3 contributed by the employee, the employer will match it with another €3, whilst the Government adds €1, ensuring that your initial €3 evolves to €7.
A salary of €20,000 a year will grow the pension pot by €700 in the first year and rise to €2,800 per year after 10 years.
Employer and government contributions are capped at €80,000 gross annual salary.
As a result, for the first 3 years, an employer can only contribute up to €1,200 a year.
Employees who earn over €80,000 will still receive the scheme however, contributions will remain capped at €80,000.
Employees will be automatically enrolled if they are aged between 23 and 60, earn €20,000 or more per year and not already in a pension plan.
Employees who earn below €20,000 can choose to opt into the scheme.
DO BOSSES HAVE TO PARTICIPATE?
If your employer chooses not to execute auto-enrolment, they may face penalties.
However, there are no plans to make employers enrol in the scheme.
The scheme differs from traditional workplace pensions, and your money stays with you from job to job.
You will again be automatically enrolled in your new workplace.
When enrolled, employees are required to stay in the scheme for a minimum of six months.
A refund is issued if an employee opts out before the six months.
Employees can suspend their contributions at any time. However, no refund will be given.
OPT OUT
If you opt out and are not entitled to a refund, you will still be able to receive your pension pot in retirement.
Paul added: “If you are starting your career, auto-enrolment is a great chance to get ahead and save for your pension before you have ‘got used’ to the money in your bank.
“If you opt out of the scheme, it’s wise to consider that you also opt out of government and employer contributions, essentially free money.
“You may miss out on tax benefits if you are a high-income earner.”
TAX RELIEF
He continued: “When you contribute to a pension, the government typically provides tax relief.
“However, with auto-enrolment, you lose these savings because your employer and the government don’t match contributions over €80,000.
“Consequently, high earners often have less money than traditional pension plans. If you’re planning to retire early, auto-enrolment may not be suitable.
“Unlike occupational pension schemes that allow early access after leaving a job, auto-enrolment postpones access until the standard retirement age.”
