There have been calls for Irish employers to be given a six-month derogation period to enrol staff in the government’s forthcoming auto-enrolment pension scheme.

Speaking on Newstalk’s Breakfast Briefing recently, Excel Recruitment managing director, Shane McLave, said the government should give employers a six-month notice period before auto-enrolling staff.

The scheme, which is now planned to launch in early 2025, will see around 800,000 employers enrolled. Employers will be required to enrol staff as soon as the scheme comes into effect and employees will not be allowed to opt out until after six months has passed.

McLave was critical of this planned rollout and cited the UK as a better example of how to go about launching the scheme. In the UK, larger companies were required to auto-enrol staff first and then it filtered down to the smaller companies, allowing “awareness to build up”.

“It made sure that the institutions were set up in order to tackle and roll out this effectively,” he explained.

Furthermore, in the UK, employers have two months to enrol new staff members after they have started, and they can postpone this by and extra month if they give the employee notice. Employees can then opt out straight away if they wish to.

McLave thinks the rule that Irish employees can’t opt out until six months has passed should be reversed as it is “backwards”. He was also critical of the planned launch of the scheme, which is meant to be 1 January 2025, but is now expected to be early 2025.

“I think realistically we’re not ready. We need to be realistic, not just dig our heels in for the sake of digging our heels in. I think a bit of consultation with the hospitality and retail industries. It is very widely known that they are coming under serious pressure. Who has engaged with these industries on the government side?”

He continued: “This is meant to kick off on 1 January 2025 but we’re still a little bit unclear. It says anyone earning above €20,000 [will be auto-enrolled, but the] minimum wage is €25,000, but how is that calculated? You could work full-time for three months at the minimum wage rate of €12.70. It could look like you’re on a salary of over €25,000 a year but you’re not actually going to earn that at the end of the year.

“There’s lots of questions that are just not clear and there should be clarity for employers at this stage,” he said.

He also criticised the government for not yet setting up the department that is going to run the scheme. Tata Consultancy Services was announced as the administrator to run the National Automatic Enrolment Retirement Savings Authority (NAERSA), under the aegis of the Department of Social Protection (DSP), earlier this month.

“We don’t know who to talk to at the moment if we’ve got questions. I’ve spoken to very senior people within the pensions industry and they are scratching their heads. If they don’t know, who does?”

He continued: “We’re not against pensions, they are a good thing to have and they are necessary. It is the way in which they are rolled out. It is the lack of consultation with business and industry… we haven’t been informed.”

A spokesperson for the DSP said: "The Automatic Enrolment Retirement Savings System Act 2024 has now been enacted. In addition, Tata Consultancy Services (TCS), a leading global IT services, consulting, and business solutions organisation, has been selected as the preferred bidder to administer the AE system on behalf of the National Automatic Enrolment Retirement Savings Authority (NAERSA).

"The achievement of these two major milestones is significant and allows for Auto Enrolment to become a reality in Ireland in 2025.

"The department is now focused on working to arrange the implementation plans and timelines of administrative services, including the ICT infrastructure. In parallel, work is ongoing to resource and establish NAERSA and to conduct the procurement of investment managers as soon as possible.

"A phased communications strategy has been developed and the Department is continuing to work with agencies already under contract with the Department to further develop and finalise the elements of the campaign. Considerable levels of stakeholder engagement have already taken place as part of phase one of the strategy, with significant numbers of employers attending various webinars that the Department has presented at.

"Auto-enrolment has been designed without a waiting period. This is so that participants can begin to enjoy the benefits of the scheme and saving for their retirement as quickly as possible. In the event that an occupational pension scheme operates a waiting period it is likely that some workers will be automatically enrolled before the end of the waiting period. If this happens and they subsequently join the occupational scheme they will be exempted from AE."

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