Launch date for Auto-enrolment (AE) confirmed – it’s time to start the conversations

Having everything in order from an Auto-enrolment (AE) procurement perspective for a January start date was always going to be a challenge, and it is right that more time is given to employers so that they have the time to get their business AE ready. It has also been announced that the new scheme will be called My Future Fund. 

The scale of AE should not be underestimated. In or around 800,000* employees will be in scope and more so, each of their employers will also be impacted. Employers will need to consider what is best for their own circumstances. Trying to have all those conversations before the 1st of January 2025 would have been a significant challenge for both employers and their advisors. However, now is the time to start the conversation and take time to assess the needs of your business properly.

Getting your business AE ready

As we move towards 2025, there are several things that you should consider for your business.

Updating your existing employee benefit package

Ahead of the launch of auto-enrolment, consideration should be given to changing your existing employee benefit package so that it negates the need for AE – perhaps a review of membership and joining period is required. For example, should your existing pension be changed for new joiners to your company – making membership compulsory from day one. Is there a budget within your firm for this – and if not, should you be planning for it now?

Are there suitable alternative options?

The delay will allow time to compare AE with offerings within the private pensions industry and determine the best fit for your company.

What about contribution levels?

A common theme that is coming up in many conversations regarding auto-enrolment is that of contribution levels. One easy oversight for employers is the fact that combining the gross deduction from net salary alongside overall earnings (most occupational pension schemes have earnings calculated on basic salary where auto-enrolment is calculated on overall earnings) does mean that 1.5% in auto-enrolment is a higher contribution when measured up against the master trust/group PRSA (personal retirement savings account) equivalent. This is something that employers will need to consider if they are considering trying to mirror AE contribution levels.

Take the time now to discuss the pros and cons of each offering. Once a nationwide communications campaign starts, the enquiries are likely to significantly increase from employees so it is important to be adequately prepared and informed.

Help your business attract and retain employees

Employers need to consider their options carefully at this point. Employees and job candidates have become a lot more sophisticated in terms of their pensions knowledge and this is having an increasing influence on their choice of employer.

Companies offering a Defined Contribution pension scheme with competitive contribution levels will enjoy a distinct advantage in the talent market while also enjoying an enhanced employer brand. And they can achieve that with the Zurich Master Trust which offers market leading active investment performance**, governance expertise and streamlined administration, all in a highly cost-effective package.

To find out more about the Zurich Master Trust, visit zurichcorporate.ie, get financial advice from Zurich for free or find an external advisor to provide you with more information about the pension plans and options. 

Sources:

*Auto-enrolment at www.gov.ie

**Zurich, November 2024