Pension plan could see State contributing €1 for every €3 saved

It is expected workers and their employers will be expected to contribute up to 6% of their salary - with a further top-up from the State.

Auto-enrolment pensions should be phased in over two to five years, according to business group ISME.

Cabinet will be updated tomorrow by Social Protection Minister, Heather Humphreys, on plans for the State and employers to contribute towards employee pensions.

It is expected workers and their employers will be expected to contribute up to 6% of their salary - with a further top-up from the State.

Auto-enrolment was initially meant to start this year before the pandemic put it on the long finger.

In its most simple form, the scheme would mean employees being automatically entered into a pension scheme, with employers and the State also having to pay into it.

Pensions timebomb

It is designed in a bid to head off the coming pensions timebomb.

With people living longer they will be drawing the State pension for much longer and with birth rates falling there will be far fewer working people paying taxes to support the retired.

The move will have a big impact on businesses with CEO of ISME Neil McDonnell saying they need a lead in time.

"I would have thought two to three years at a minimum, potentially as long as five years to get to the full 6%," said Mr McDonnell.

Tomorrow the Cabinet will be updated on plans by Social Protection Minister Heather Humphreys.

Keenly watched will be how much the State is going to contribute, potentially as much as €1 for every three an employee saves, in what is being billed as an SSIA scheme for pensions.