Legally, as an employer in Ireland, you are not required to offer a pension or retirement scheme. However, if you don't have an employer pension scheme (or an occupational scheme), or you have 'excluded employees', you do need to offer access to at least one standard Personal Retirement Savings Account (PRSA).
If you're trying to make a decision on what to offer your employees, we've covered some common questions here.
What's the difference between PRSA and occupational schemes?
What's the difference between PRSA and occupational schemes?
Here's a summary description of the different pension types you can offer to your staff:
PRSA
The employer can facilitate opening a pension plan for their staff (as is required by every employer in Ireland), but they are not required to contribute any money towards it.
Defined Benefit (DB) occupational pension scheme
The employer contributes a specific amount of money towards the employees' pension - this is guaranteed. When the employee retires, pension income will be paid based on the employee's final salary and number of years of service with their employer. DB occupational pension schemes have become a rare offering by employers in the last number of years.Defined Contribution (DC) occupational pension scheme
The employer and the employee contribute towards the employees' pension pot. Employers can choose to match employees' contributions up to a certain amount. This is the pension scheme type offered by Kota. We work with Irish Life to provide you with such a scheme, and they apply the contributions made to the EMPOWER Lifestyle Strategy.
What is an excluded employee?
What is an excluded employee?
An employee employed by a company that does not have an employer pension scheme
An employee not eligible to join the employer scheme, and even six months from employment won't be eligible to join the scheme
An employee who's only in a scheme for 'death in service' benefits
An employee who's in a scheme that does not allow employees to pay Additional Voluntary Contributions (AVC)
Check out more on this here.
How can I offer my employees access to PRSA?
How can I offer my employees access to PRSA?
Kota doesn't include this product in benefits packages. Yet, there are a few guidelines we can share with you once you've found a PRSA provider:
Communicate to all excluded employees that a PRSA is available and they have the right to contribute to a PRSA
Allow the PRSA provider reasonable access to excluded employees at their workplace
Allow a leave of absence that is reasonable in order for excluded employees to set up a Standard PRSA
Run the PRSA deductions through their payroll as requested by employees (employers cannot charge for deducting and remitting contributions)
Alert employees at least once a month of their total contribution at that point, including what the employer is contributing, if applicable. This is usually done on the employee's payslip.
What are the advantages of a Defined Contribution Occupational Scheme?
What are the advantages of a Defined Contribution Occupational Scheme?
The choice of this pension type by employers has been increasing in the last few years. This is because it comprehends several advantages to employees, and thus plays an important role in their motivation and engagement towards their employer. Here are a few examples:
Fees are likely to be lower mostly because there are more people on this scheme.
The scheme is overseen by professional, qualified trustees independent of the provider.
Employees can add money to their pension, and this is deducted from their gross pay (not their net pay), so it's tax-deductible.
As employers can choose to match the percentage of money the employee contributes to their pension account (up to a certain point), the accumulated amount in the employees' pot will be greater.
At Kota, we provide a Defined contribution occupational scheme. You can see more information on it here.