2025 Auto-Enrolment Retirement Savings Scheme
September 2025 seems a long way off, well past a general election. Which is why this government is delaying its latest attack on PAYE workers.
Under a new scheme known as Auto-Enrolment Retirement Savings Scheme, 800,000 workers will see 1% of their wages deducted for a pension. But this then moves up to 6% over a period of ten years.
The government makes a 0.5% contribution and employers must legally match a worker’s contribution. So, if a worker contributes 4.5% of their wage to a pension, the employer must match this.
But there is a catch. The employer can claim tax relief on their contribution – the worker cannot.
Even worse, the money flows into the hands of private pension providers, whom all studies, show take a much bigger cut for their profits. The scheme will be ‘administered’ by Tata Consultancy Services who will then line up a series of pension providers that workers choose from.
The worker takes the risk on investment returns – while the private pension providers have still received their cut. Whatever happens, Tata gets €150 million of state money over ten years. It puts the Dáil bicycle shed in the halfpenny place.
There is, of course, a better way. Workers could contribute to a pension and employers should be forced to contribute a higher percentage. The money should go to a state scheme to , for example, invest in housing. With no profit, there would be no private sector cut. And by investing money in socially useful activities such as housing, workers would not be taking a risk.
But in Ireland 2025, everything is designed to serve the market and the profiteers.