A new study has revealed that the proposed implementation of compulsory workplace pensions has significant public backing, although it may initially face some resistance. The survey, conducted by Royal London Ireland, a life insurer and pensions expert, found that over 80% of adults are in favour of the plan to automatically join workers aged 23 to 60 who earn more than €20,000 a year, in an employment-based pension scheme, if they’re not already participating in one.
Despite the resounding support, there are concerns that the scheme’s rollout set for next year may be delayed, in light of the upcoming general elections this autumn and renewed calls from business leaders for a gradual 12-month implementation.
According to the survey, support for auto-enrolment has experienced a slight increase since last year. However, approximately 46% of the polled population anticipate initial reservations before employees begin to appreciate the advantages of the system.
Workers will initially need to contribute 1.5% of their gross salary to the scheme, an amount that will be matched by the employers, and supplemented by additional one-third of the employee’s contribution from the State. Therefore, the combined initial contribution will be 3.5% of the gross salary.
The contribution percentage is set to gradually increase over the years to 3% in the fourth year, 4.5% in the seventh year and 6% in the tenth year of the scheme. At that stage, the total annual contribution to the workers’ funds will be 14%, with 6% deriving from the workers’ salary.
The scheme received support across all age groups in the survey of a thousand participants, with 88% backing from those over 55 years and 85% support from the 25 to 34 year-old respondents.
However, nearly one in five people expressed opposition to auto-enrolment, and 9% disagreed with the idea of workers being mandatorily enrolled in a pension scheme, regardless of their opinions. Women were slightly more likely to object to this feature.
Speaking on the survey results, Royal London Ireland’s pension policy head, Mark Reilly, stressed the importance of enhancing private pension provisions in Ireland to prevent a substantial part of the community from experiencing financial burden upon their retirement. Automatic enrolment may increase the extent of pension protection, thus possibly becoming an incredibly advantageous initiative, especially if inconsistency within the system is dealt with. The widespread approval for this plan would probably encourage the government as it seeks to establish the vital framework for automatic enrolment.