Richard Bruton
Question:294. Deputy Richard Bruton asked the Minister for Social Protection if he is considering allowing contributions to be made for pensions from rental income given the move to auto-enrolment. [21702/22]
View answerWednesday, 4 May 2022
Questions (294)
Written answers
In March I announced the final design principles for the auto-enrolment retirement savings system. An explanatory paper has been published on www.gov.ie.
The objective of this system is to address the low proportion of employees in Ireland with supplementary pension cover, which includes both occupational and personal pensions. According to CSO figures, the rate of active supplementary pension coverage is around 56% of the working population (Pension Coverage Survey 2021). It is estimated that this could be as low as 35% when the private sector is considered in isolation. As a consequence of this low supplementary pension coverage rate, many retirees may suffer an unwanted reduction in living standards when they retire and have to rely entirely on the State Pension.
The new AE system, which is expected to become operational in early 2024, will automatically enrol approximately 750,000 employees at the outset. These are employees who are aged between 23 and 60, earning over €20,000 across whatever number of employments they have, and who are not already enrolled in an occupational pension scheme.
Contributions will be based on employment income. Contributions will be paid by employees through a payroll deduction and matched by their employers as a percentage of the employee’s gross income from employment. The State will also contribute a top-up financial incentive at a rate of €1 for every €3 saved by the employee.
I hope this clarifies the matter for the Deputy.