No matter how big or how small your company may be – or whether your employees are part-time, seasonal or fixed-term – every Irish employer is obliged to enter into a contract with a PRSA provider and to provide access to at least one standard PRSA for all ‘excluded employees’.
What are ‘excluded employees’?
Employees are considered to be ‘excluded employees’ if:
- their employer does not offer a pension scheme, or
- they are included in a pension scheme for death-in-service benefits only, or
- they are not eligible to join the company’s pension scheme or will not become eligible to join the pension scheme within six months from the date they began working there, or
- they are included in a pension scheme that does not permit the payment of additional voluntary contributions (AVCs).
Even if there is only one ‘excluded employee’, an employer must:
- enter into a contract with a PRSA provider (there is no charge for doing this)
- provide employees with access to a Standard PRSA
- allow reasonable paid leave of absence, subject to work requirements, so that excluded employees can set up a Standard PRSA
- make deductions from payroll if required
- advise employees in writing (normally on their payslip) at least once a month of their total contribution, including employer’s contribution, if any.
What an Employer is NOT responsible for:
- You’re not obliged to give any advice to employees in relation to PRSAs, but you must allow your PRSA provider or intermediary reasonable access to your employees to brief them on PRSAs.
- You don’t have to contribute to PRSAs on behalf of your employees, but if you decide to do so, your contributions must be paid to the PRSA provider within 21 days of the end of the month in which the employer contributions are due. And please note that you cannot make any deductions from this payment.
- You are not responsible for the investment performance of PRSAs
What are the consequences of non-compliance?
Be aware that there are significant penalties for failing to discharge your obligations. The Pensions Board will issue on-the-spot fines and prosecute any employers found in breach of the obligations, so it pays to get it right.
As an Employer you may be subject to an on-the-spot fine if:
(a) You fail to respond to a request by The Pensions Board to furnish information about their provision of access to a Standard PRSA for ‘excluded employees’ and
(b) You do not provide at least a monthly statement to employees showing contributions deducted and employer contributions paid in the previous month.
The bottom line is that this is not an issue that you can afford to get wrong. To find out more about your obligations, there’s a very helpful booklet on the Pension Board’s website.
IFG have many years of experience of providing Pension Scheme Design & Risk Advisory services to Irish companies. They would be delighted to answer any and all of your pension queries if you would like to find out more www.ifg.ie .