Colm Fagan
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It seems that the Department of Social Welfare (DSP) faces a potentially insuperable problem in relation to defining exempt employment under the AE scheme.
The purpose of Section 51 (Exempt employment) and Section 52 (Standards for purposes of Section 51) of the AE Act is to exempt employments which offer equivalent or better benefits than will be provided under the scheme.
That could pose insuperable problems for DC (or DB) schemes where contributions (and/or benefits) are determined by reference to pensionable earnings, i.e., earnings less an offset for Social Welfare entitlement. The high-level objective of the offset is to provide an adequate pension, inclusive of the individual's state flat-rate pension entitlement.
It's many a long year since I was at the pensions coalface but I calculate that the pensionable earnings for someone in a scheme which aims to deliver a pension of 2/3 of earnings, inclusive of state flat-rate entitlement, will be earnings less €21,600 a year (€277.30*52*1.5).
Suppose the employer's contribution under an existing occupational scheme is 15% of pensionable earnings, that's equivalent to 9.6% of earnings for someone earning €60,000 a year, but it's only 4.2% of earnings for someone earning €30,000 a year. (Correct me if my sums are wrong). So, is the €60k earner exempt from mandatory inclusion in the AE scheme but the €30k earner must be included? What happens when/ if someone crosses the earnings threshold?
PS: I should have added that they don't face the same problem in the UK (or at least not to the same extent) because the UK already has an offset for flat-rate state pension entitlement. Only earnings between £6,240 and £50,270 qualify for AE.
The purpose of Section 51 (Exempt employment) and Section 52 (Standards for purposes of Section 51) of the AE Act is to exempt employments which offer equivalent or better benefits than will be provided under the scheme.
That could pose insuperable problems for DC (or DB) schemes where contributions (and/or benefits) are determined by reference to pensionable earnings, i.e., earnings less an offset for Social Welfare entitlement. The high-level objective of the offset is to provide an adequate pension, inclusive of the individual's state flat-rate pension entitlement.
It's many a long year since I was at the pensions coalface but I calculate that the pensionable earnings for someone in a scheme which aims to deliver a pension of 2/3 of earnings, inclusive of state flat-rate entitlement, will be earnings less €21,600 a year (€277.30*52*1.5).
Suppose the employer's contribution under an existing occupational scheme is 15% of pensionable earnings, that's equivalent to 9.6% of earnings for someone earning €60,000 a year, but it's only 4.2% of earnings for someone earning €30,000 a year. (Correct me if my sums are wrong). So, is the €60k earner exempt from mandatory inclusion in the AE scheme but the €30k earner must be included? What happens when/ if someone crosses the earnings threshold?
PS: I should have added that they don't face the same problem in the UK (or at least not to the same extent) because the UK already has an offset for flat-rate state pension entitlement. Only earnings between £6,240 and £50,270 qualify for AE.
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