One in six workers does not have access to a pension in their workplace, according to the latest data on pension coverage from the Central Statistics Office (CSO). It seems an extraordinary figure after over a decade of concerted cajoling from the government, industry and others to ensure people are better prepared financially for retirement.
And when you consider that number includes the public sector where coverage is essentially 100 per cent, the figure for the private sector is damning.
According to the CSO figures, 69 per cent of all workers have some form of occupational cover. That means 31 per cent do not and the CSO says that 53 per cent of that group report that their employer simply does not offer the option.
Apart from being a really poor way to treat your staff, those employers face a rude wake-up call with the looming activation of auto-enrolment. Some sectors fare worse than others with part-time workers and foreign nationals in general more likely to get a raw deal.
From September, this new mandatory workplace pension scheme called My Future Fund will force employers to sign up any staff aged 23-60 who are earning more than €20,000 a year all told and do not have occupational pension cover.
Initially, the employer will have to contribute 1.5 per cent of the employee’s gross salary to the fund – alongside a similar contribution from the worker and a third of that from the State. But that figure will rise to 6 per cent in 2034 and stay there going forward.
That will see employers forced to pay more into staff pensions than might have been the case if they had gone the more traditional occupational pension route. And with poorer tax relief available to the worker.
It will no doubt provoke howls of outrage, not least in the accommodation and food services sector – hotels and restaurants – which have already been lobbying intensely at rising costs in their sector. However, not even one in four workers in that sector has pension cover, according to the CSO, so whatever they are doing, employers there certainly do not appear to be helping staff plan for their future. The only other sector with fewer than half its staff covered is wholesale, retail and motor trades.
And, as the CSO figures show that only three in 10 of those likely to be affected by auto-enrolment are even aware of it, employers who have consistently ignored the need for pensions will have to explain why there will now be less money in their workers’ take-home pay.
