Last-minute regulation signed to stop employers undermining My Future Fund

"Hundreds of thousands of workers are due to be automatically enrolled in the My Future Fund from new year's day. Employers will be forced to sign up workers and make contributions into the new scheme if the staff do not have a works-based pension or a private one and if they meet other criteria. But Mr Calleary has been concerned that some companies have been trying to circumvent signing up staff for the new scheme by putting them into company schemes with peppercorn contributions."

"Minister Calleary signed a statutory instrument on Tuesday, just days before the new pension scheme comes into operation. Employers who have staff eligible for the scheme under this last-minute rule change now have only days to complete a mandatory registration of those workers. The regulation sets out the minimum contribution requirements that occupational pensions schemes must satisfy if participation in these schemes is to be used as the basis for claiming exemption from enrolment into My Future Fund."

"In the case of a defined contribution occupational pension scheme, the standards specify the total contributions amount to at least 3.5pc of the employee's gross pay, subject to a maximum of €1,200. And 1.5pc must be made by the employer to exempt an employment from enrolment in My Future Fund. For defined benefit schemes, the standards specify that those that confer a long-term benefit based on continuing employment, will allow such employments to be exempted."

Automatic enrolment into My Future Fund begins on New Year's Day for hundreds of thousands of eligible workers. Employers must sign up eligible staff and make contributions when employees lack a workplace or private pension and meet criteria. The My Future Fund requires employer contributions of 3.5% of salary. Concerns arose about some employers trying to bypass auto-enrolment by placing staff into company schemes with token 'peppercorn' contributions. A statutory instrument signed days before launch sets minimum standards for occupational schemes to qualify for exemption and requires prompt mandatory registration. Defined-contribution schemes must total at least 3.5% (capped at €1,200) with employers contributing 1.5% to exempt staff; defined-benefit standards permit exemptions for schemes conferring long-term employment-based benefits.

Read at Irish Independent