Which employers must offer PRSAs?
All employers are required to enter a contract with a PRSA provider to provide access to at least one Standard PRSA for all ‘excluded employees’.
An employee is considered an ‘excluded employee’ if
· Their employer does not offer an occupational pension scheme, or
· They are included in an occupational pension scheme for death-in-service benefits only, or
· They are not eligible to join the company’s occupational pension scheme or will not become eligible to join the scheme within six months from the date they began work there, or
· They are included in an occupational pension scheme that does not permit the payment of additional voluntary contributions (AVCS) by the members.
Does an employer have to contribute to PRSAs on behalf of their employees?
Employers may contribute to employees’ PRSAs, but are not obliged to do so.
What must an employer do to provide access to a Standard PRSA?
An employer must
· Enter into a contract with a PRSA provider. There is no charge for doing this
· Notify ‘excluded employees’ that they have a right to contribute to a Standard PRSA
· Allow the PRSA provider or intermediary reasonable access to ‘excluded employees’ at their workplace
· Allow reasonable paid leave of absence, subject to work requirements, so that ‘excluded employees’ can set up a Standard PRSA
· Make deductions from payroll at the request of employees and remit these to the PRSA provider (employers cannot charge for deducting and remitting contributions)
· Advise employees in writing (normally on their payslip) at least once a month of their total contribution including the employer’s contribution, if any.
If an employer has a small workforce of less than five employees, is access to a Standard PRSA still necessary?
Yes, all employers, regardless of the size of their workforce, must provide access to a Standard PRSA if those employees fall into the category of ‘excluded employees’.
If an employer has a number of part-time, fixed-term contract and seasonal employees, is access to a Standard PRSA for these employees still necessary? Yes, all employees, whatever their status, must be given access to a Standard PRSA if they fall into the category of ‘excluded employees’.
Does an employer have to provide access to a PRSA even though there is an occupational pension scheme in place?
No, provided all employees – including full-time, part-time, seasonal, temporary, contract or casual employees – are eligible to join the scheme for pension benefits within six months of joining employment and the scheme permits the payment of additional voluntary contributions (AVCs).
Even if there is only one excluded employee, the employer must provide them with access to a Standard PRSA.
What about additional voluntary contributions (AVCs)?
If an employer has an occupational pension scheme that does not allow employees to make AVCs, they must make a Standard PRSA available, either as part of the existing occupational pension scheme (this requires an amendment to the scheme rules) or as a separate AVC scheme.
If an employer enters into a contract with a PRSA provider, must their employees who want a PRSA take it out with that provider?
No, an employee can go to any authorised PRSA provider, but an employer is not obliged to make deductions from payroll for that employee. If an employee goes to another provider, they make their PRSA contributions directly, by direct debit or cheque.
Does an employer have to give any advice to employees in relation to PRSAs? No, but the employer must allow their PRSA provider or intermediary reasonable access to their employees to brief them on PRSAs.
Does an employer have any responsibility for the investment performance of PRSAs?
If your employer provides you with access to a Standard PRSA, your employer is not responsible for the investment performance of your PRSA.
Does the on-the-spot fine regime apply to employers?
Yes, employers may be subject to an on-the-spot fine if (a) they fail to respond to a request by the Pensions Authority to furnish information about their provision of access to a Standard PRSA for ‘excluded employees’ and (b) they do not provide at least once a month a statement to employees showing employee contributions deducted and employer contributions paid in the previous month.
For further information you can contact Michael on 086 844 0541, email firstname.lastname@example.org or you can log on to the Pensions Authority website (www.pensionsauthority.ie)
Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland