The Department of Social Protection has warned that some employers are trying to avoid the new pension auto-enrolment system by forcing employees to join less favourable pension schemes.
The pension auto-enrolment scheme, "My Future Fund", starts on 1 January and is designed to help over 800,000 workers to begin saving for their retirement.
All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employments, will be automatically enrolled in the new scheme.
It will be gradually phased in over a decade, with both employer and employee contributions starting at 1.5% and increasing every three years by 1.5% until they eventually reach 6% by year 10.
The State will top up contributions by €1 for every €3 saved by the employee.
In a letter to Owen Reidy, General Secretary of the Irish Congress of Trade Unions (ICTU), the Secretary General of the Department of Social Protection said that they understand that some employers are compelling staff to join pension schemes.
"We also understand that payments into these pension scheme consist solely of an employer contribution of about 1% of salary," the letter stated.
"Such a low contribution level is less than 30% of the initial contributions payable under the My Future Fund scheme and less than 10% of those that will ultimately be payable under that scheme."
"It is, essentially, a nominal contribution that is unlikely to yield any material pension benefit," the Secretary General wrote.
Mr Reidy said ICTU welcomes plans by the Government to sign secondary legislation to protect the integrity of the new pension auto-enrolment scheme.
"New regulations will mean a token employer pension contribution will no longer satisfy the requirements of the Act, cutting off this avenue for those employers looking to violate the spirit of the law," Mr Reidy said.
"Workers coming under pressure from their employer to waive their right to a pension or one that will be at least as favourable to them as the new auto-enrolment pension should contact their trade union for advice," he added.
The effort by some employers to avoid pension auto-enrolment was first reported by the Irish Independent.
Minister urges employees to get familiar with pension scheme
The Minister for Social Protection has urged all employees to read about the government pension scheme.
Dara Calleary said he is aware of a "very small" number of companies who are telling employees that they need to enroll them into 'any' pension scheme, and are pushing them to sign up to schemes that would require the companies to pay less in contributions ahead of start of the government scheme in January.
Mr Calleary said this is not the case and employees, without a payroll provided pension, will be auto- enrolled into the My Future Fund from the 1 January 2026.
He said anyone who is currently being offered a pension scheme should compare it to the My Future Fund, and ask themselves why they haven't been offered a pension scheme before now.
Mr Calleary said that this pension fund can be carried from job to job.
"It's not owned by the company or the Government," he added, "but belongs to the employee."
"For every three euro an employee puts in, that three euro becomes seven," he said on RTÉ's Today with David McCullagh.
My Future Fund offers certainty, he added, and a 25-year-old earning €25,000 euro a year could potentiall have a nest egg of €196,000 by the time they get to the age of 66, before any investment returns.
Mr Calleary said the Government is putting protections in place to prevent companies from undermining the scheme.
An estimated 750,000 workers are due to be signed up to the My Future Fund from early January.
Ireland the last country to introduce auto-enrollment
Mr Calleary said Ireland is the last country in the OECD to introduce auto-enrollment and hundreds of thousands of workers currently have no pension scheme in place which means they would be solely dependent on the State pension when they retire.
He said the fund will be operated independently of Government by NAERSA.
The portal will go live on 1 December, he said, and once the employer registers an employee details there, NAERSA will take over management of it.
Mr Calleary said employees will be able to see their own fund and its contributions.
He said that the fund has been set up in a fair and established manner.
"This is a very good thing for employees. It will give certainty in retirement, and that's what it's all about," he added.
