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Government has no idea how it will fund bonus payment for auto enrolment pensions – Ó Snodaigh

16 April, 2010 - by Aengus Ó Snodaigh TD

Sinn Féin Social and Family Affairs Spokesperson Aengus Ó Snodaigh has revealed that the Government has no idea where it will source the money required to pay the once off bonus payment in relation to auto enrolment pensions which was included in the recently launched National Pensions Framework.

In response to a parliamentary question from Deputy Ó Snodaigh the then Minister for Social and Family Affairs Mary Hanafin was unable to provide a direct answer to the simple question of where the money would come from.

Speaking today Deputy Ó Snodaigh said:

“It is clear that the Government has thrown in this once off bonus payment as a sweetener for their cynical attempt to make people work till they are 68.

“However, as it turns out, it is a sweetener that dissolves under scrutiny. The Fianna Fáil Green Party Government clearly has no idea how it is going to fund this bonus payment but has announced it in a cynical attempt to buy support for their move to make people work until they are older.

“If it helps them stay in Government it will more than likely become yet another false promise and if they fail to get re-elected then it will conveniently become a problem for the new incoming Government.” ENDS

Editor’s note: Below is the relevant parliamentary question from Deputy Ó Snodaigh and the answer from former Minister Mary Hanafin.

Question No: 580 Ref No: 12624/10

To the Minister for Social and Family Affairs

To ask the Minister for Social and Family Affairs where the money necessary for the proposed once off bonus payment in relation to auto enrolment pensions as described by the recently launched National Pensions Framework will come from
- Aengus Ó Snodaigh.

* For WRITTEN answer on Tuesday, 23rd March, 2010.


The recently published National Pensions Framework is the Government's plan for future pension reform. It encompasses all aspects of pensions, from social welfare to private occupational pensions and public sector pension reform. Development of the framework was informed by the range of views raised during the comprehensive consultation process which followed publication of the Green Paper on Pensions.
The aim of the framework is to deliver security, equity, choice and clarity for the individual, the employer and the State. It also aims to increase pension coverage, particularly among low to middle income groups and to ensure that state support for pensions is equitable and sustainable.
At present only 50% of workers have a private pension, with low levels of coverage among moderate to middle incomes a particular concern. While the State Pension is expected to provide sufficient retirement income for the lowest paid workers, most people will have a significant income gap if they do not have some extra private pension provision. Inertia and procrastination are among the main reasons for not taking out a pension. A key element of the framework is the introduction of a new auto-enrolment system which provides a way of overcoming this problem.
Employees earning above a certain income threshold will be automatically enrolled into this new scheme, with the employee, their employer and the State all making contributions. Those employees already in a more favourable occupational pension scheme will not be enrolled.
For those who are included in the scheme, contributions will only be paid on earnings above a certain minimum level and below a certain maximum. The level of these thresholds will be decided closer to the implementation date and they will be set in such a way as to ensure that the scheme focuses on those on low and middle incomes.
Within these thresholds, the employee will pay 4% of their salary, with this being topped up by 2% from their employer and a further 2% by the State. The State’s contribution will therefore be equivalent to 33% tax relief. The same 33% State contribution will apply to existing occupational and personal pension schemes and will replace the current system of tax relief at the standard and higher rates. This will represent a major increase in State support for the pensions of lower paid workers.
Employees will be able to opt out of the scheme after a period of 3 months. While they will be automatically re-enrolled every 2 years, they can opt out again if they wish. As an additional incentive to encourage people to remain in the scheme, the Government has decided that a once-off bonus payment will be paid, to people who stay in the scheme for 5 years without a break in contributions.
An implementation group is being established to develop the legislation, regulatory and administrative infrastructure required to introduce the auto-enrolment scheme, including in relation to the once off payment, and the other elements of the framework. We expect the implementation phase to take three to five years to complete.
It is intended that the auto-enrolment scheme will be introduced in 2014 but the Government will review the introduction date depending on the prevailing economic conditions closer to the time.


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