The Chartered Institute for Personnel and Development is calling on organisations to ensure workers are aware of and getting the best benefits from an existing company pension scheme or auto enrolment.

There is less than eight weeks to go until the new state-sponsored My Future Fund Retirement Savings Scheme begins on January 1.

Speaking on Morning Ireland, CIPD’s Market Director Ireland Alison Hodgson said everybody has a responsibility to understand what it means for them personally, and as an employer.

“I think it’s hugely important because societally it’s the right thing to do,” said Ms Hodgson.

“Whilst the short-term benefits, or the short-term reality may be harsh, I think the long-term benefits will be real. It’s about taking a holistic approach and it’s all to do with financial well-being as part of the wider workplace,” she added.

The Government is pulling payroll data this month, meaning any eligible workers aged over 22 and earning the equivalent of more than €20,000 and who are not already registered in a company pension scheme will be automatically enrolled in the My Future Fund scheme.

For many lower-paid workers, the decision to remain in a pension scheme is not just about understanding the system, its about affordability juggling bills, rent, and groceries.

“If you’re earning €20,000 a year, in the first year you’re required to make a €300 contribution, that’s 1.5% of your annual earnings,” explained Ms Hodgson. “That equates to €28 a month, so in the current cost of living climate, that will be tricky”.

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“At a typical salary of in around €44,000, your annual contribution will be €663, that’s a monthly deduction and reduction in your take-home pay of €60,” she said.

“And then it maxes out at €80,000 annual earnings, and your annual deduction will be €1,200, which equates to €110 per month,” she added.

Once these contributions begin in January, workers will be required to stay in the scheme for at least six months before opting to remain or leave.

After two years, eligible employees without a pension plan will be automatically re-enrolled again.

“Inertia is one of the biggest challenges of the pension landscape. If you haven’t joined your pension scheme from day one, you feel like you’re losing out on your pay because you got used to having that,” said Ms Hodgson.

“Whereas if you joined from day one, you never had that money in your cash flow in the first place, and the compound interest effect is where the real value is,” she concluded.