September 15th, 2003, is the day that all employees with more than six months' service have the right to demand that they be let in to an occupational pension scheme or that their employer make payroll deductions on their behalf to a Personal Retirement Savings Account (PRSA).
Employers who don't comply with the statutory requirements risk being convicted of a criminal offence, incurring fines ranging from €1,500 to €12,700 or prison terms of one or two years.
As the cost of compliance is a fraction of the possible maximum fine, it makes sense for employers to stay within the law, says Mr Ian Mitchell, managing director of authorised adviser Burns & Mitchell.
Employers may face litigation from their employees if they do not comply with the legislation, Mr Mitchell warns. "If public awareness of employer responsibility increases then this, I feel,moves from the 'highly unlikely' category into a more tangible business threat," he says.
To avoid this potential fate, employers, regardless of the size of their workforce, must make sure all employees excluded from occupational pensions have access to a standard PRSA.
Excluded employees are those whose employer who does not offer any occupational scheme, employees who are included in a scheme for death-in-service benefits only, or employees who will not become eligible to join a scheme within six months of the date they started their employment.
This includes part-time, fixed-term contract and seasonal employees.
Employers must:
enter into a contract with at least one PRSA provider and notify excluded employees that they have the right to contribute to a standard PRSA;
allow the PRSA provider or intermediary reasonable access to excluded employees at their workplace in order to give them information on PRSAs;
allow reasonable paid leave of absence to enable such employees to set up a standard PRSA;
make deductions from payroll at the request of employees and pass over the contributions, together with any employer contribution, to the PRSA provider within 21 days of the end of the month in which they were deducted;
advise employees and the PRSA provider in writing at least once a month of the total amount deducted from employees' salary and the total amount of the employer contribution, if any;
amend existing pension scheme rules if the scheme does not offer a facility for additional voluntary contributions (AVCs) or allow employees to make AVCs to a PRSA through payroll deductions.
