Auto enrolment: was any of your employees pulled into the scheme unexpectedly?
As all employer should be aware by now, auto enrolment for Irish pensions began in January this year. Employees were auto enrolled if their combined earned income is over €20,000 and are aged between 23 and 60. Employees currently contributing to an existing occupational pension through payroll or a PRSA is not eligible for auto-enrolment. Under auto-enrolement, employees will contribute 1.5% of their gross wages up to €80,000, employers also 1.5% and the State .5%. It is note noting that this is the equivalent of 25% tax relief. National Automatic Enrolment Retirement Savings Authority (NAERSA), administers the scheme through the My Future Fund portal which can be found at https://myfuturefund.ie/. Employers who do not sign up to the scheme will receive fines and penalties and underpayments to the fund will incur interest.
While processing wages earlier this year, some employees were included in auto enrollment even though their annual earnings were below €20,000. One reason, mentioned earlier, was because some employees had more than one part time job and the total income brought them over the €20,000 threshold. The other reason being, NAERSA does not look at the annual income earned last year, they take a view of 13 weeks wages and if the total is over €5,000, the employee will be auto-enroled. This can happen for example, if overtime is worked during that period or a bonus paid. Should you feel that you have been incorrectly auto-enroled, conact NAERSA directly on (01) 568 9555.
Other notes
Self-employed individuals can not currently opt-in to auto-enrolment.
Employees may decide in the future to contribute to an occupational pension or PRSA ans they will be automatically stopped from auto-enrolment.
It is important to know that employees have the option to opt-in even if they earn less than €20,000 a year, or if you are aged 18-22 or 60-66.
An employee can opt out after 6 months, in the seventh or eighth month and receive a refund of thir contributions. They will be automatically enroled again after 2 years, if eligible.