Ireland will introduce a supplemental mandatory defined contribution program into its retirement system in 2020, according to a reform package by the Irish government.
The reform, unveiled Wednesday, is expected to overhaul the national retirement savings system by incorporating new mandatory employee contributions, which are to apply beginning in 2020. This new program, known as a "total contributions approach," aims to set a formal benchmark target that employees would receive at least 34% of average earnings as their total retirement income.
Previously, there wasn't a mandatory defined contribution system.
Ireland will also introduce an automatic enrollment program into its retirement system in 2022, according to the reform package.
Regina Doherty, Ireland's minister for employment affairs and social protection, also confirmed Wednesday that two separate national public consultations will be undertaken in the second quarter to finalize the details of the total contributions system and the automatic enrollment program.
Ms. Doherty said in a news release: "Many people will be faced with a serious reduction in their living standards when they retire — a fall in income they clearly do not want. Having examined the options and looked at international experience, the government has decided that a new automatic enrollment supplementary retirement savings system, where the individual retains the freedom to opt out, is the best approach to take."
Prime Minister Leo Varadkar added in the news release: "It is important and timely that we now move to establish a more equitable and transparent state system. To do this, we promote better levels of private coverage to help supplement future retirement incomes."