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.The new My Future Fund scheme requires employers to contribute 3.5pc of salary into it.Attempts to undermine the auto-enrolment savings scheme were first revealed in the Irish Independent.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.The standards ensure that pension arrangements outside of My Future Fund are at least as favourable for the participating employee as they would be under the introductory contribution rates in My Future Fund, Mr Calleary said.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.Today's News in 90 Seconds - Wednesday, December 24thAnd 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.Mr Calleary said: “We don’t want to cut across any well established, well designed and well operating schemes.“However, it is also important that such occupational schemes, if they are to be exempted, serve their purpose in allowing participants to accumulate sufficient retirement savings to fund a decent pension in retirement.”The Irish Congress of Trade Unions welcomed the prescribed standards to pension contributions.It said the regulations will prevent some employers sidestepping auto-enrolment on the cheap.Congress general secretary Owen Reidy said: “The main purpose for introducing auto-enrolment is to allow more workers have a more comfortable retirement with more money to spend on top of their state pension.“Workers signed up to a defined contribution pension plan with contribution levels lower than the initial 3.5 per cent auto-enrolment contribution are being robbed of their right to an adequate retirement income and good employers are being put at a competitive disadvantage.”The minister also announced that more than 77,000 employers with approximately 645,000 employees, had registered for My Future Fund since the start of the month. Government estimates suggest around 750,000 workers will be covered by the scheme.Anyone aged between 23 and 60, earns over €20,000 in a year from all employments and who is not otherwise signed up to a qualifying occupational pension scheme will be automatically enrolled in My Future Fund.
