# Employer announced they are taking pension contribution holiday



## Round Tuit (19 Feb 2009)

Our employer has to date made the minimum 3% contribution to those of us in the group pension scheme. They've just announced they are taking a 12 month holiday from making these contributions to save money. They also implied it was a bad time to be making contributions (employee and employer) given the current climate. I would have thought the opposite - surely we get more for our money now given this is a very long term investment for most of us. 
2 questions: Can they do this? and; Should we consider reducing or pausing our own contributions?


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## Ned_ie (19 Feb 2009)

*Re: Employer annuced they are taking pension contribution holiday*

Definately do not stop your own contributions. Now is an excellent time to be investing in a pension. I think your emoloyer has been wrongly informed too in relation to the "cost saving" of stopping thir contribution. The after tax cost of their element would be quite small. Who is the pension with?


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## Round Tuit (19 Feb 2009)

*Re: Employer annuced they are taking pension contribution holiday*

It's with New Ireland. 
They said it would save them over E50k.


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## Jdun (19 Feb 2009)

*Re: Employer annuced they are taking pension contribution holiday*

Assuming it is a defined contribution company scheme, the employer will have to pay at least 10% of the employee contributions.......the employees cannot continue to fund with zero employer contributions. An employer "top up"of 10% of whatever the employees contribute would cost the company nothing as they will be saving 10.75% in employer PRSI. 
If on the other hand, it is a PRSA scheme the employees can pay without the need for an employer contribution.
You are right it is a good time to buy especially if you are younger and have more than 10 years to retirement.


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## Round Tuit (19 Feb 2009)

AFAIK it is Defined contribution. 
It was in existence before PRSAs were introduced. 
Our employer has only ever made a 3% contribution.

PS: thanks to whoever corrected my spelling in thread title, I couldn't figure out how to get back and edit that.


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## boaber (19 Feb 2009)

*Re: Employer annuced they are taking pension contribution holiday*



Jdun said:


> Assuming it is a defined contribution company scheme, the employer will have to pay at least 10% of the employee contributions



Not necessarily.  As long as they make a meaningful contribution to the scheme, that's enough.

This is from the Revenue's Pension Manual:



> "While Revenue will not insist that there be a stated minimum level of employer contributions, it will continue to be a requirement that such contributions be “meaningful” in the context of the establishment, operation of and the provision of benefits under a scheme. For instance, in the circumstances where an employer would bear the cost of the establishment of a scheme and the ongoing operating costs of the scheme in addition to meeting the costs of the provision of death in service benefits under the scheme, such overall contributions would generally be considered to be meaningful.
> In other circumstances, an employer’s contributions, which would not be less than 10% of the total ordinary annual contributions to a scheme (exclusive of employee voluntary contributions), would always be considered to be meaningful.
> It will always be open for employers and their advisers to approach the Pensions Business Unit to discuss the circumstances of particular schemes.


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