Employers will not be hit for pension bill, says minister
STRUGGLING employers will not be hit by an extra bill when the new compulsory pension plan comes into effect, the Government claims, writes Fionnan Sheahan.
Fears of workers' pay cuts and reductions in the amounts paid into existing schemes have followed the unveiling of the most radical pensions' shake-up in the history of the State.
Employers have warned they may be forced to cut workers' pay to compensate for having to contribute to their pensions.
Under the new measures, all workers will have to pay 4pc of their incomes into a pension scheme for their retirement.
Their pensions will be boosted by a 2pc contribution from employers and a further 2pc from the State.
But Social Affairs Minister Mary Hanafin says the new scheme is not intended to place more pressure on employers struggling in the current economic climate.
"The earliest we will be introducing this is 2014 because we are very conscious of the fact employers are having a difficult time and many are struggling with the pay bill they have at the moment," she said.
"The 2pc contribution they will be making to the employee won't, in fact, be 2pc extra on top of their pay bill, because they will continue to get tax relief on that and it will also be within a band of earnings. So probably a maximum of 2pc up to about €51,000, that's what we're looking at."
The minister said the Government would be consulting with employers before the introduction of the scheme.
"We will be very cognisant of the economic conditions prevailing at the time," she said.