Pension auto-enrolment: 5 key considerations when creating or reviewing your employer pension plan

With pension auto-enrolment expected to come into effect in Ireland in 2025, you as an employer will need to start getting to grips with your requirements now in order to make this considerable adjustment as smooth as possible for you and your employees when the time comes. 

Following on from our Pension auto-enrolment guide, one of our employee benefits consultants, Claire Battersby, wrote this article to outline 5 key areas to consider when setting up or reviewing your employer pension plan, to ensure you deliver the best outcomes for your people.

Ensuring employees are prepared for retirement

Auto-enrolment is a government initiative designed to increase pension savings among your employees and is a significant step towards ensuring that people are adequately prepared for retirement.  It mandates that employers automatically enrol eligible employees into a pension scheme, which will help promote financial security and independence in their later years. Essentially, employers in Ireland will be legally required to make pension contributions for the first time. 

As outlined in NFP’s Pension auto-enrolment guide the eligibility criteria for the auto-enrolment scheme are simple. To qualify, employees must:

• Be aged between 23 and 60 years
• Earn over €20,000 per annum across all employments
• Not already be participating in an exempt employment pension plan

It’s this final point that could add a level of complexity for employers, as they decide between solely adopting the auto-enrolment scheme (if there is no employer pension plan in place), setting up or amending their own employer pension plan, or in some cases, operating both.

Top 5 consideration for your employer pension plan

When considering the most suitable options for your future or existing employer pension plan, some key points to take into account include:

1. Customisation and flexibility: Your pension plan can be tailored to meet the specific needs of your organisation and people. You have the flexibility to design your plan, choose investment options, and set both the contribution rates and vesting period that best align with your financial goals and preferences.
2. Enhanced benefits: Employer pension plans often offer enhanced benefits, such as higher contribution rates, additional employer contributions, and access to a wider range of investment options, which can result in greater retirement savings for your people over the long term. At present, the auto-enrolment plan does not allow for additional voluntary contributions “AVC” 
3. Attraction and retention: A well-designed, competitive employer pension plan can be a valuable tool for attracting and retaining top talent, which can help reduce staff turnover and associated recruitment costs
4. Professional guidance and advice:  Employee benefits advisors can offer specialist support with your employer pension plan, giving you access to valuable guidance and advice on the best pension schemes available while also helping your organisation navigate complex pension regulations and legislation. 
5. Simplification: Having to deal with the auto-enrolment scheme and an employer pension plan may be disruptive, more difficult to administer, and add another layer of complexity when explaining options to employees.  Reviewing an existing employer pension plan, or setting one up if none in place, could provide better retirement outcomes for employees than a state auto-enrolment system.