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Have you factored the government’s auto-enrolment scheme into your company’s pension strategy?

Posted on 25 April 202425 June 2024 by CPAS

The Irish government’s pension auto-enrolment scheme due to commence in January 2025. In the latest Irish Construction News magazine, SUSAN O’MARA, Business Development Manager, CPAS (CIF Pension Administration Services), emphasises the importance of employers keeping themselves informed about the latest regulations and requirements relating to pensions.

It is always a good idea for employers to stay up to date with the latest regulations and requirements regarding pensions in Ireland. One of the most important updates for construction employers is auto-enrolment, which is now entering the final stages of its introduction.

The government’s auto-enrolment scheme has been on the cards for many years, and draft legislation is finally in the Dáil. The scheme is scheduled to commence on 01 January 2025, which is later than the mid-2023 date that was originally planned. The scheme, which endeavours to ensure that everyone working in Ireland is saving for retirement, will be co-funded by employers and the state.

Contributions to the scheme will commence at a low rate and incrementally increase over the next decade. Employers will need to ensure they have staff covered within their existing pension arrangements or their staff will automatically be opted into the government’s scheme.

Via the Sectoral Employment Orders (SEO) and previous Registered Employment Agreement (REA), the construction sector has, for close to 60 years, been ahead of the curve on pensions for specified workers anyway.

PROS AND CONS OF AUTO-ENROLMENT

Employers will need to weigh up the pros and cons of implementing auto-enrolment in their business or adapting and utilising their existing occupational pension schemes. One key area for serious consideration is the tax relief system. The current system, which makes pensions very attractive, will be different within the government scheme.

Currently, tax relief is provided to pension members on their contributions at the rate they pay tax. So, if paying tax at 40%, the cost of a €100 pension contribution would be €60. Within the auto-enrolment scheme, there will be no tax relief. Instead, the state will contribute, as outlined below, along with the proposed rates.

From 2025, employees aged 23-60 earning over €20,000 who are not already enrolled in an occupational scheme will be automatically enrolled and will have to opt out if they wish to leave. Workers will have their pension savings matched on a one-for-one basis by their employer. The state will also provide a top-up of €1 for every €3 saved by the worker.

Years	Employee	Employer	State	Total
1 – 3	1.5%	1.5%	0.5%	3.5%
4 – 6	3%	3%	1%	7%
7 – 9	4.5%	4.5%	1.5%	10.5%
10+	6%	6%	2.0%	14%

*Employer contributions and the state top-up will be capped at a maximum of €80,000 of an employee’s gross salary.

There are other factors, such as retirement flexibility, investment choice and access to additional voluntary contributions (AVCs), and the salary cap, which employers should consider before making a decision for their business and their staff.

Currently, there is no clarity within the proposed framework regarding support from the auto-enrolment scheme in terms of member communications. This may yet fall on the employer. Employers with occupational pension schemes already in place may believe there will be no impact on them. However, this may not be the case. Many employers do not invite staff to become members of their pension scheme until they have completed their probationary period. Where this is the case, these staff may fall under the auto-enrolment scheme during this period. There may also be staff who have declined the option to join for whatever reason. They now, too, may be required to opt into the auto-enrolment scheme.

Now is the time for employers to act to ensure that they have sufficient time to consider the options available and to gain an understanding of the differences between their current strategy and what will be required once auto-enrolment is in force.

ABOUT CPAS

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the construction sector. CPAS administer the Construction Workers Pension Scheme, the Construction Executive Retirement Savings (CERS).

For more details, contact Susan O’Mara via email (susan@cpas.ie) or phone 01 223 4949.

How to engage your workforce with the value of a pension pot

Posted on 6 March 20248 March 2024 by Susan O'Mara

In a now annual tradition, as the CIF celebrates International Women’s Day with a view to inspiring inclusion and expanding the construction workforce. In the latest Construction Magazine, Susan O’Mara from CPAS looks at the Pension landscape for women and where Employers can add value.

Pension Coverage

The CSO regularly reports available data for Pension coverage in Ireland, with current data up to date as at Quarter 3 2022. The CSO looked at pension coverage in the State for persons aged 20 to 69 years. It found that as of Q3 2022, 68% of men were covered compared to 65% of women.

By contrast, the same survey, carried out in Q4 2005 found that 60% of men were covered versus 51% of women. Coverage has grown for both over the years, with increases in coverage for both women and men over the period.

However, despite this, research carried out by Irish Life in 2019, found that Irish women were retiring with smaller funds than men. There are several factors that contribute to this, which I have both written and spoken about in the past – however, the clear message is that pension coverage and pension adequacy are not the same thing. When you retire, will the value of your retirement fund be adequate to fund your desired lifestyle?
It is important for women (and men) to engage with their retirement planning and to think carefully about whether they are saving enough for retirement.

Employers, particularly those seeking to attract and retain staff, have an opportunity to be a part of the solution to pension adequacy. I have outlined below some key tips for employers to engage the women (and men):

Construct an occupational pension scheme that is a key part of your employee benefits package and get employees engaged from the start. Your pension offering should be part of your recruitment conversation and the finer details should be included as part of your induction process.
Ensure that your pension communications are clear and not full of “jargon”. One of the reasons employees find it hard to engage with the topic of Pensions is that the information can be focused on pension jargon and regulatory information. Developing simple and clear messaging around your pension offering and its value will greatly benefit employee engagement.
Provide pension and financial education for your employees. This can be done via regular pension scheme updates, webinars and even one-to-one sessions. Having delivered many of these types of sessions for employers, I have enjoyed my experience over the years in witnessing that “epiphany” moment when people understand not only the importance of saving for retirement but also the significant value of the employers’ contribution to their retirement outcome.

A workforce engaged with the value of their occupation pension scheme through employer efforts can lead to improved employee health and wellbeing and increase employee engagement at work, while also ensuring that when employees come to retire, they can secure a more comfortable income to live on.

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the Construction sector.

CPAS administer the Construction Workers Pension Scheme and the Construction Executive Retirement Savings (CERS). For more information and to find the right solution for you, contact our team for a no obligation discussion. Our team of financial specialists will put you in touch with the right team member. No obligations, no hidden fees, no jargon – just a straight forward chat to help you secure your present and your future.

Health, Safety & Wellbeing in 2024

Posted on 31 January 202431 January 2024 by CPAS

In the latest edition of Irish Building Magazine, Susan O’Mara explains the importance of reviewing pension schemes now and the proposed Pension Auto Enrolment . CPAS return as sponsors of The Irish Construction Excellence Awards (ICE Awards) for 2024 and are proudly aligning with the Health, Safety & Wellbeing category.

THE Health, Safety & Wellbeing category seeks to recognise companies that promote the importance of health, safety and employee wellbeing in the Construction Sector.

Employee Wellbeing

“Employers who currently have an occupational pension scheme in place should consider reviewing their schemes now.” Susan O’Mara — Business Development Manager

There are several factors to take into consideration when we look at employee wellbeing including topics such as financial security and health. Salary alone does not cover financial security and employer sponsored pension and benefits packages are a cornerstone of financial security for employees.

Back in 2017, Irish Life carried out a piece of research that found that employees who are included in their employer’s pension scheme are likely to feel that “Pension plans that employers contribute to are the second highest valued workplace benefits for employees in Ireland.” A lot has changed in the intervening years with workplace flexibility being a current favourite – but employees provided with pension schemes with an employer contribution tend to value their employer’s contribution to their peace of mind for their future financial well-being.

With pension auto-enrolment due to commence in 2024, Pensions have been and will continue to be topical, particularly in the media. Employers who currently have an occupational pension scheme in place should consider reviewing their schemes now.

Other benefits that are meaningful for employees’ financial well-being include Death in Service benefit, and cover when sick.
Death Benefit is typically provided with the Pension benefits and provides a lump sum payable on death. This cover is for the unexpected, but when the unexpected happens, it provides financial comfort for employees’ family and dependants.
Income Protection is another important part of a benefits package. While many of us can expect to live well into our retirement years for 1 in 4 people it’s not all plain sailing and illness or injury can be an unforeseen life event.

The World Health Organisation (WHO) stated that globally, life expectancy increased by 5 years between 2000 and 2015. You can expect to live well into your retirement years (past age 65) but for the aforementioned 1 in 4 people, an unexpected illness or injury could have grave financial consequences.

Income Protection simply put is a policy that insures a portion of a person’s income, so that in the event of a loss of earnings they can make a claim against this policy, to replace some of these lost earnings. Such loss of income is a very real concern for employees and therefore those offered access to a policy by their employer perceive this as a very valuable benefit. Furthermore, the cost can be significantly less than if an employee applies for similar cover on an individual basis. Additional health benefits included with the death benefit and Income protection benefits ranges from FREE access to online GPs and health and wellness seminars.

If you are an employer, looking to enhance your benefits package to attract and retain your valued workforce, you should consider the benefits of a great benefits package.

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the Construction sector. CPAS administer the Construction Workers Pension Scheme and the Construction Executive Retirement Savings (CERS).

For more information and to find the right solution for you, contact our team for a no obligation discussion. Our team of financial specialists will put you in touch with the right team member. No obligations, no hidden fees, no jargon – just a straight forward chat to help you secure your present and your future.

IORPS deadline is the 1st January 2023 – Is your Scheme ready?

Posted on 15 November 202224 November 2023 by CPAS

In the latest edition of Construction Magazine, John Geraghty examines the impact of both IORP II deadline and Auto Enrolment.

By the time January 1st 2023 rolls around, the Pensions Authority expects all pension schemes to be fully compliant with all IORP II requirements. There are some organisations that have yet to make the important decisions on the future operation of their pension schemes even as the January deadline for compliance with the IORP ll deadline looms.

An Annual Compliance Statement (ACS) must also be prepared by no later than 31 January each year in respect of the preceding year. The ACS must be certified for accuracy and completeness by at least two trustees or, in the case of a corporate trustee, by at least two directors. It is vital, therefore, that employers and trustees consider their options and agree appropriate processes to manage IORP II compliance.

Making a decision

For those employers who have not already done so, they will need to decide urgently what the best solution for their defined contribution scheme is. For those who wish to continue administering their own scheme in its current format, it is possible to do so long as they support the implementation of the IORP II requirements. They must also be mindful of the enhanced levels of governance and compliance along with the additional costs incurred as a sponsoring employer.

Alternatively, for those who do not wish to take on the arduous tasks of self-administering a scheme, employers can consider an alternative pension arrangement, such as a multi-employer arrangement (or a Master Trust), which might be a more appropriate and efficient solution.

Finding a solution

Multi-employer arrangements are a bundled, fully outsourced solution. Everything is administered centrally on behalf of participating employers. The primary benefit therefore is economies of scale, a reduction in costs and delivery of time efficiencies associated with running a defined contribution pension plan, without sacrificing quality or compliance.

Right now, your immediate focus should be firmly on IORP II by 1st January 2023 and preparing and signing your 2022 annual compliance statement by 31st January 2023.

Many employers and trustees will already be working on this, however, if you have any queries or are unsure of what you need to do, please contact us, we would be happy to help.

Waiting for Auto-Enrolment or taking proactive steps?

The government’s proposed auto-enrolment scheme has been described as a ‘once-in-a-generation’ pension policy. As the only OECD country without a mandatory retirement savings system, Ireland is playing “pensions catch-up” with most of the developed world.

From 2024 employees aged 23-60, earning over €20,000, who are not already enrolled in an occupational scheme will be automatically enrolled. They will have to opt-out if they wish to leave. Workers will have their pension savings matched on a one-for-one basis by their employer. The State will also provide a top-up of €1 for every €3 saved by the employee.

There are the proposed contributions provided for by the government:

Years	Employee	Employer	State	Total
1 – 3	1.5%	1.5%	0.5%	3.5%
4 – 6	3%	3%	1%	7%
7 – 9	4.5%	4.5%	1.5%	10.5%
10 +	6%	6%	2%	14%

*Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s gross salary.

Additional Considerations

Issues have arisen with the initial low level of pension contributions but in addition, individuals will be unable to make Additional Voluntary Contributions (AVCs). Employers who wish to top up the minimum amount will not be able to contribute more than the stipulated maximum.

Under the auto-enrolment system, the State subsidy of 33% of the employee contribution equates to 25% tax relief. By comparison, for Members of an occupational pension scheme, they will receive income tax relief on pension contributions at their marginal tax rate (i.e. 20% or 40%).

In CPAS, we believe, while auto-enrolment will increase the number of people saving for their retirement, the proposed system’s inflexible contribution rate and tax relief make it a less attractive proposition. As a consequence, construction companies may be better suited setting up an occupational pension scheme rather than being auto-enrolled into the State scheme. This is especially attractive to those employers’ who are looking to attract and retain skilled staff.

CPAS – Pension Specialists Serving the Construction Sector

If you are concerned about your IORP II and auto-enrolment obligations, the CPAS team can help you navigate the vast amount of information, explaining how it will impact you, your organisation and employees. Most importantly, we’ll guide you along the way, helping you maximise your investment – whether it is in your staff or your future.

Our team is available for no obligation, virtual calls to help you navigate these options. Get in touch with us via phone (01) 223 4947 or contact John directly (j.geraghty@cpas.ie). For the latest updates, subscribe to our newsletter here.

What employers need to know about pensions

Posted on 13 July 202224 November 2023 by Susan O'Mara

In this edition of Irish Building Magazine, Susan from CPAS looks at IORP II and the impact on the pension industry in Ireland.

Much talk about pensions in the media of late has been focussed on the State Pension Age and whether it will increase past 66 or not. This was an important topic at the last election and is back on the agenda again. It appears that political parties do not expect to be re-elected if the State Pension Age is increased to 68 as previously legislated for.

Why increase the State Pension Age?

In simple terms, an ageing population, and a future landscape where more people are in receipt of the State Pension than are actively working and paying tax, makes the current level (€13,171.60 p.a.) unsustainable. Pushing the State Pension Age out to 68 was a way to decrease the burden on the Exchequer. The ramifications for employers when it comes to the State Pension Age, particularly if they don’t have a pension scheme in place, will result in employees being unable to retire before they can access the State Pension even if it’s in the best interests of the employee to do so.

IORP II deadlines

There has been less media coverage of IORP II, which could have a more significant impact on you, your business or your pension arrangement. A European directive, this was transposed into law in Ireland in 2021, under which many of the deadlines for changes have already passed or are looming.

If you are an employer already running a standalone scheme, either acting as a Trustee or paying a small trustee company to provide such services, the IORP II legislation will affect you.

One of the key areas of the IORP II legislation is around effective systems of governance. Trustees of schemes will need to implement compliant policies around risk management, internal audits, any outsourced activities and communications. This will result in a significant compliance burden and increased costs for small or stand alone schemes.

Why the media attention now?

This European directive is in the headlines this week as it transpires that the effect of the IORPII legislation has had an impact which was not previously anticipated.

With effect from 1 July 2022, the Pensions Authority advised that any “One Member Arrangement” (OMA), set up on or after 22 April 2021 must meet the full requirements of the Pensions Act, 1990, as amended (the Act). This includes the new requirements of the IORP II Directive, by 1 July 2022. The resulting compliance burdens and costs effectively could render these one person arrangements unavailable in the Irish market.

Auto enrolment

According to recent CSO figures, private pension coverage in Ireland is low. This means that many will be solely reliant on the State to provide for their income in retirement. As noted above – there are some major challenges ahead if conditions continue as they stand currently.

In 2012 the OECD reported that countries with mandatory or quasi mandatory workplace pensions have 70%+ coverage. Ireland has started on the road towards mandatory pension coverage, but there is still a long way to go. This scheme hopes to cover employed individuals who are not covered for any pension. This scheme would be funded by the individual, their employer and the State. It is slated to commence in 2024 – but that is already a later date than previously planned.

So has anything remained the same?

The pensions landscape has changed dramatically, some challenges do not – the struggle to attract and retain skilled workers for example. The core solution is to offer key talent more than just an attractive monthly salary, but to offer a meaningful pension and benefits package that employees are engaged with.

CPAS – the pension provider of choice for the construction sector

Now is the time for the construction sector to make a difference to the future of all their employees through pension savings and cover. Our team of consultants is available for no obligation, virtual calls to help you navigate these options.

Planning for the Future

As in life, there are many variables and changes. Planning for retirement and protecting your financial future involves forming expectations about income and expenses over the rest of your life, based on present assumptions. As the pension administrator for pension schemes in the construction industry, we have a range of solutions to help you prepare and protect your future investments. Whether you are self-employed, running a large company with multiple staff requirements, looking for life and income protection, we can help.