Eligibility Criteria: Identifying Who Must Be Enrolled

Mandatory Enrolment Conditions

For an individual to be automatically enrolled into the scheme, they must meet all of the following conditions:

• Age: Be aged between 23 and 60.
• Earnings: Earn more than €20,000 per year from their employment(s).
• Current Pension Status: Not currently be paying into a work or private pension through their payroll.

Key Exclusions and Special Cases

Certain individuals are not considered eligible for auto-enrolment based on their employment type or PRSI classification. Key exclusions include:

• Self-employed individuals: These individuals are identified by their PRSI class and are not eligible for enrolment.
• Participants of specific schemes: Individuals participating in Community Employment, Job Initiative, Rural Social Scheme, or Tús schemes will not be enrolled.
• Company Directors: A director's eligibility depends on their PRSI class. If they pay PRSI as an employee, they will be enrolled if they meet the other criteria. If they are registered as self-employed, they are not eligible.

How the Scheme Works: Administration and Regulation

This section provides essential background on the organisations managing and overseeing the AE scheme. 

With a clear picture of the scheme's governance, we can now turn to the financial details that are most relevant to employees.

Common Employee Queries: A Detailed Q&A Guide

Contributions, Thresholds, and Financials

The €80,000 Annual Earnings Threshold Contributions are only made on gross earnings up to €80,000 per calendar year. However, contributions may be paid on income slightly above this threshold in the specific pay period where it is breached.

For example, if an employee's year-to-date earnings are €79,500 and their next monthly payslip shows gross pay of €2,000, their total earnings become €81,500. Contributions will be taken on the full €2,000 for that pay period. After this, a notification will be sent to their payroll to cease contributions for the rest of the year. It is important to note that there are no refunds for contributions paid on the amount that breaches the threshold in that final period (€1,500 in this example).

State Contribution vs. Traditional Tax Relief The way the State supports AE savings is different from traditional pension schemes.

• Auto-Enrolment: The State provides a direct top-up of €1 for every €3 the employee contributes.
• Other Pensions: These are supported by tax relief on the employee's contributions, which can be as high as 40% depending on their income level.

Tax Treatment of Savings The Department of Finance is legislating for the tax treatment of AE savings, which will operate as follows:

1. The State top-up is provided instead of traditional tax relief and is not subject to tax.
2. Investment growth within the fund is tax-free.
3. At retirement, individuals can take a tax-free lump sum of up to 25% of their fund. The remaining balance will be subject to income tax as it is drawn down.

Interaction with Existing Pensions

"I already have a pension I pay into from my payslip. Will I be enrolled?" No. If you are actively contributing to a pension directly through your payroll for a specific job, you are not eligible for auto-enrolment for that employment.

"I have more than one job. What happens?" You will be automatically enrolled for any job where you are not contributing to a pension via payroll, provided your combined wages from all jobs are more than €20,000 per year.

"I used to have a pension but stopped paying into it. Will I be enrolled?" Yes. If you are no longer making contributions to a previous pension and you meet the other eligibility criteria (age, earnings), you will be automatically enrolled.

"Can I have a private pension and also be in the AE scheme?" Yes, it is possible to contribute to both. If you contribute to a private pension outside of the payroll system (e.g., via direct debit from your bank account), NAERSA will not be able to see it. If you meet the AE eligibility criteria through your employment, you will be enrolled. If you do not wish to contribute to the MFF pension, please contact NAERSA directly to be removed from the AE scheme.

Opting Out and Savings Security

Opting Out

If an employee chooses to opt out of the scheme, any contributions that are not refunded will remain in their savings pot, where they will continue to be invested on their behalf until retirement age. This money will be available to them at retirement. There are no penalties for employees who continuously opt out of the scheme.

Security of Your Savings

Employees may have concerns about the safety of their money. It is crucial to provide them with the following facts:

• The savings pot is the employee's personal property, not an asset of the State.
• Similar to other pension plans, the fund is not guaranteed by the State.
• The State is taking multiple steps to protect the savings, including:
  • Choosing low-risk investment strategies.
  • Ensuring supervision by the Pensions Authority.
  • Using only regulated funds and reputable, regulated investment companies.

Life and Employment Changes

• Earnings Drop Below €20,000: Once an individual is enrolled in the scheme, they remain in it, even if their annual earnings later fall below the €20,000 threshold.
• Stopping Work: If an employee stops working, they remain enrolled in the scheme, but all contributions will cease. Their existing savings pot will remain invested. Contributions will restart if they begin working again in the future and meet the eligibility criteria.
• Emigration: If an employee emigrates, their savings pot remains invested and will be accessible at State Pension age. Contributions will stop once they cease working in Ireland.

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Common Employer Queries: Obligations and Administration

Employer Obligations

It is a legal requirement for all companies in Ireland, regardless of size, to facilitate the auto-enrolment scheme for their eligible employees.

Employers who fail to comply with their obligations may be subject to legal consequences, including fines, penalties, and interest payments for any withheld or underpaid contributions.

The Enrolment and Notification Process

Employer's Role in Registration A key point of clarification is that employers do not enroll individual employees. Their primary action is to register themselves as an employer on the MyFutureFund employer portal. NAERSA handles the identification and enrolment of employees.

The Automatic Enrolment Payroll Notification (AEPN) NAERSA will use payroll data from Revenue to identify eligible employees. Once an employee is identified and enrolled, NAERSA will send an Automatic Enrolment Payroll Notification (AEPN) to the employer’s payroll software. This notification instructs the employer to begin deducting and paying contributions.

Informing Employees Employers have a legal obligation to inform their employees of their enrolment and the date it occurred. To simplify this, NAERSA will provide downloadable welcome letters on the employer portal, which employers can give to their staff to meet this requirement.

Managing Contributions and Existing Schemes

Paying Contributions Contributions are paid directly to NAERSA, not into a separate fund managed by the employer. The contribution amount is calculated based on the employee's gross pay—essentially, anything included in the gross pay field on their payroll is assessable.

Employees Earning Over €80,000 Across Multiple Jobs NAERSA will manage this centrally. If an employee's combined income from multiple jobs exceeds the €80,000 threshold, NAERSA will issue updated AEPNs to all relevant employers to cease contributions for the remainder of that calendar year.

Interaction with Existing Company Pension Schemes

• Employees who are actively contributing to an existing company pension scheme via payroll will not be enrolled in AE for that specific employment.
• Employers are not required to contribute to an employee's personal pension plan.
• The AE legislation does not allow employers to automatically enroll employees into their existing company scheme as an alternative to the State AE scheme.
• The legal obligation for employers to provide access to a Personal Retirement Savings Account (PRSA) remains unaffected by this new legislation.
• Initially, existing schemes do not need to meet any specific standard to be exempt. As long as a contribution is being made via payroll, the employee will not be enrolled in AE. However, it is crucial to note that standards for these exempt schemes will be developed by the end of year six of the scheme's operation, at the latest.

POINTS TO NOTE

Fee Structure for 'My Future Fund' The fee model is designed to be transparent and provide value. While final details will be confirmed closer to the launch, the structure is expected to have two components:

• A modest weekly flat administrative fee to cover operational costs.
• An investment management charge calculated as a percentage of the participant's savings. Importantly, administrative fees will not be charged on inactive accounts, protecting small savings pots from being eroded over time.