Page 6 - Group Insurance and Retirement Benefit IC 83 E- Book

There are many variations on the way an employer‘s contribution may be established and

the following are all examples taken from schemes actually in operation:
● a fixed pension contribution, with the cost of death benefits and possibly also disability

benefits paid in addition;
● a fixed overall contribution rate, with death and disability costs charged as a first

charge against that contribution, the balance going to pension provision.
● different rates of contribution at different starting ages – the older the employee when

the scheme starts, the higher the contribution made by the employer. There are variations

on this also – contributions that increase in line with the member‘s age, or with service
completed.

Contributions can be at any suitable level but there are some conditions attaching to
them:

1. The employer must make a ―meaningful‖ contribution to the cost of benefits in any

particular year. This was originally set by the Revenue Commissioners at one third of the
total cost for each member. Later, they reduced this to one sixth, largely in response to

demands by members of schemes where the level of employer contributions was low –

the limit made it difficult for these people to pay the maximum allowable personal
contribution. After the increase in allowable employee contributions to an age-related

scale, the rules were further relaxed. The Revenue requirement for an employer to make a
―meaningful‖ contribution can be satisfied if the employer pays the establishment and

ongoing running costs of the scheme and the cost of death benefits, OR not less than 10%
of the total ordinary contributions to the scheme.

2. The benefits likely to be generated by both employer and employee contributions
combined will not exceed the maximum limits which the Revenue impose on an

employee by reference to salary and completed service at retirement.

3. Employee contributions themselves are limited to an overall maximum percentage of

gross pay, including any contributions required by the rules of the scheme. The maximum