A National Pensions Framework Document was issued by the Irish government in March 2010, outlining proposed changes to the retirement pension system.
The government of Ireland recently set out three major proposals regarding retirement pensions:
1. Increase in the normal retirement age
Normal Retirement Age under Social Security will increase from age 65 to age 68, phased in from 2014 to 2028.
2. Mandatory enrolment of employees
From 2014, employers will be required to automatically enrol employees above age 22 in a defined contribution plan (provided they are not already included in a qualified employer plan). The mandatory plan will feature employer contributions of 2%, employee contributions of 4%, and government contributions of 2% of salary. Note, however, that this will apply only to employees earning above EUR 332 per week. The amounts involved will be adjusted for inflation in future.
3. Tax relief
Up to 33% tax relief will be available on employee contributions.
Note that while the framework document did not include any easing of the statutory minimum funding standard for Defined Benefit plans, the Pensions Board has now granted a five-month extension to any plan facing a funding proposal deadline of June 2010.
It is expected that more details will be provided once the government has developed the ideas further and received reactions to the proposals. Given the economic environment, there is considerable uncertainty surrounding the timing and exact nature of the implementation of these proposals.
1. Increase in the normal retirement age
Normal Retirement Age under Social Security will increase from age 65 to age 68, phased in from 2014 to 2028.
2. Mandatory enrolment of employees
From 2014, employers will be required to automatically enrol employees above age 22 in a defined contribution plan (provided they are not already included in a qualified employer plan). The mandatory plan will feature employer contributions of 2%, employee contributions of 4%, and government contributions of 2% of salary. Note, however, that this will apply only to employees earning above EUR 332 per week. The amounts involved will be adjusted for inflation in future.
3. Tax relief
Up to 33% tax relief will be available on employee contributions.
Note that while the framework document did not include any easing of the statutory minimum funding standard for Defined Benefit plans, the Pensions Board has now granted a five-month extension to any plan facing a funding proposal deadline of June 2010.
It is expected that more details will be provided once the government has developed the ideas further and received reactions to the proposals. Given the economic environment, there is considerable uncertainty surrounding the timing and exact nature of the implementation of these proposals.