In our most recent blog we reported on a speech made by an Taoiseach, Leo Varadkar, to the IBEC President’s Dinner.

It was a busy evening for proposed employment law legislation as one of the other legislative developments promised by an Taoiseach at that event related to pension auto enrolment.

Taoiseach Varadkar has for some time been a fan of the introduction of a law to require employers to automatically enrol employees in an occupational pension scheme. Such a scheme would see part of an employee’s salary redirected to a pension fund, in addition to a mix of contributions from the employer and the government. See our earlier blog reporting on his views on this matter.

His recent speech at the IBEC President’s Dinner moves this matter along. The Government says it will publish a consultation paper on the new scheme by the end of the year and it anticipates the first payments being made into such new schemes by 2021.

While it is early days yet with no likelihood of any immediate draft legislation, employers should note that it does seem to be only a matter of time before an auto enrolment arrangement will be imposed on them. The UK launched a pension auto enrolment scheme in 2012. Five years on it has been deemed to be very successful, with a low employee opt-out rate of between 6 – 12%. It is likely that the government would seek to introduce a similar system here.

Some employer groups are likely to voice concern over such changes on the basis of increased regulation and cost. In addition, older employees and those on lower incomes may be wary of participating. Nevertheless, the proposal may well have broad support, particularly in light of what is a widely acknowledged pension time bomb, especially for many private sector employees in Ireland. Currently two-thirds of private sector workers have no occupational pension. In light of this, bodies such as Insurance Ireland have welcomed an Taoiseach’s announcement, stating that “a universal pension model is a key policy tool to increase pension coverage”, in circumstances where increasing numbers of people rely solely on the State pension.

We will, as always, continue to keep you updated on any such developments.