Auto-Enrolment, Private Pension Schemes, and what businesses should ask

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With auto-enrolment fast-approaching in Ireland, and Irish businesses and workers should be seriously considering their options. Could a private pension scheme be the answer for you and your staff? The Irish government plans to introduce a mandatory auto-enrolment pension scheme for employees, likely starting in late 2024. Businesses will be required to automatically enrol eligible employees in a pension plan, with contributions from both employees and employers. By establishing a private pension scheme now, businesses can align with these upcoming regulations proactively. Those who are prepared have been implementing private pension schemes for several strategic reasons. So what are these strategic reasons? Well, if you have a business and are employing staff, here’s why you and others should consider this option, and the key questions you should ask a pension broker:

Setting up a private pension scheme now allows businesses to align with upcoming legal requirements in advance. This proactive approach can help avoid potential penalties and ensure smooth compliance. It gives companies, management, and HR teams greater control over the scheme design. By choosing a private pension scheme now, businesses can tailor a plan to better suit their needs and the needs of their employees. Why do this now? Well the answer is simple, this flexibility might not be available with standard government-mandated schemes.

Wander the streets of Dublin, Cork, Kilkenny, or any city or town in Ireland, and ask someone their thoughts on auto enrolment. Their response will likely be one of confusion. Many people still feel a little lost on the subject, there is still a sense of workers and businesses burying their heads in the sand, maybe this will go away? It wont. There is a distinct need for the general public and businesses to enhance their knowledge and understanding on the topic. A considerable amount of workers are of the belief their company will organise a pension scheme for them. This offers an insight and opportunity for business to consider.

Having a private pension scheme may become a considerable attraction when looking for and retaining talent. Offering a well-structured pension scheme can make a business more attractive in the job market, helping to attract top talent and retain key employees. With auto-enrolment coming, businesses that act early can set themselves apart. A robust pension scheme signals the intentions of a company, indicates that the company cares about its employees’ long-term financial security, fostering greater loyalty and satisfaction.

With private pensions, companies can set their own contribution levels and have the flexibility to manage costs more effectively, compared to a one-size-fits-all approach under government schemes. Employer contributions to a private pension scheme are tax-deductible, which can provide significant tax relief for a business. Establishing a private pension scheme now allows for a gradual transition rather than a rushed response when auto-enrolment becomes mandatory, reducing administrative burdens and ensuring a well-organised setup. Considering the lack of understanding by Irish workers, early implementation gives businesses time to educate their employees on the benefits of the pension scheme, ensuring higher engagement and understanding.

Auto-Enrolment, Private Pension Schemes, and what businesses should ask a Pension Broker

Compliance and Future-Proofing:
- How will this scheme align with upcoming auto-enrolment regulations?
- Can the scheme be easily adapted if regulations change in the future?

Scheme Design and Flexibility:
- What level of flexibility does the scheme offer in terms of contributions and benefits?
- Can the scheme be customised to suit different employee groups within the company?

Cost Structure and Management:
- What are the costs involved in setting up and maintaining this pension scheme?
- Are there any hidden fees or charges that we should be aware of?
- How can we manage and predict future contribution costs effectively?

Employee Engagement and Support:
- What support will you provide in educating our employees about the pension scheme?
- Are there tools or resources available to help employees understand and manage their pensions?
- How will you assist in the enrolment process and ongoing management of the scheme?

Investment Options and Performance:
- What investment options are available within this pension scheme?
- How has the scheme’s investment performance been historically?
- What is the approach to risk management in the scheme’s investments?

Administration and Technology:
- What kind of administrative support do you offer?
- Is there an online platform available for both the employer and employees to manage their contributions and view their pension details?

Employer and Employee Benefits:
- What are the specific tax advantages for both the employer and employees?
- How does this scheme compare with others in terms of benefits provided to employees?

Longevity and Provider Reputation:
- What is the track record and reputation of the pension provider?
- How long has the provider been operating, and what is their financial stability?

By carefully considering these points and asking the right questions, Irish businesses can make an informed decision about implementing a private pension scheme that not only meets the upcoming auto-enrolment requirements but also offers long-term benefits for both the company and its employees. It’s time to familiarise yourself with words and phrases like; Auto-Enrolment, Private Pension Scheme, and what businesses should ask.

If you or your company would like a deeper insight, or to explore the options available ahead of the auto enrolment rush, reach out to us at Phelan Caswell. Our team of qualified Financial and Pensions Advisors are here to help you navigate the complexities of auto enrolment and secure the best financial outcomes for both you and your employees.