Auto-Enrolment
The introduction of the long awaited Auto-enrolment retirement savings scheme, called My Future Fund, is postponed to start from 1 January 2026. This new pension savings scheme is designed for employees who are not currently contributing to a pension.
Under the scheme, the employee, employer, and Government all pay a certain amount into the employee’s pension fund.
Who will be auto-enrolled?
Employees will be automatically enrolled, if they
- earn more than €20,000 per year
- are aged between 23 and 60
- are not already in an occupational pension scheme
Employees can choose to enroll, if they
- do not have a pension scheme
- earn less than €20,000 per year
- are aged outside, the 23 - 60 bracket
How does it work?
For every €3 the employee puts in, the employer puts in €3, and the state adds €1, resulting in €7 left in the employee's account.
| Employee | Employer | State | Employee's account | |||
|---|---|---|---|---|---|---|
| €3 | + | €3 | + | €1 | = | €7 |
Contributions
Contributions are calculated on employee’s gross earnings up to €80,000 per year. It's important to note, that employee contributions are not relieved for tax, USC, or PRSI, but the state top up of €1 for every €3 paid by the employee is equivalent to 25% tax relief.
| Year 1-3 | Year 4-6 | Year 7-9 | Year 10+ |
|---|---|---|---|
| 1.5% | 3% | 4.5% | 6% |
Auto-enrolment or a regular workplace pension?
Auto-enrolment enables employees to build retirement savings without relying solely on the State Pension. It automatically includes them in a pension scheme, removing the need to opt-in manually.
However, for employers, control over the Auto-enrolment scheme is limited; covering areas like costs, investment choices, and service providers. In many cases, a tailored approach may offer better financial outcomes for employees and greater flexibility for your business.
The Auto-enrolment route: key steps for employees & employers
Auto-enrolment checklist for employers
If you decide to go with the Auto-enrolment route, we recommend you follow these steps. If you have staff making private pension contributions, or you are interested in opening up a company pension scheme we recommend you reach out to a specialised provider, like us.
Understand your obligations: Review your current pension arrangements to ensure contributions are recorded on payroll; otherwise, all eligible staff will automatically be enrolled in the new system. Alternatively, you can set up a workplace pension scheme for your employees for more flexibility and control.
Communicate with your team: We advise you to start conversations with your team about the upcoming changes as soon as possible, to ensure they are aware of how they'll affect them.
Check your payroll systems: Ensure your payroll systems can accommodate the new requirements.
Auto-enrolment checklist for employers
Review your eligibility: Check your payslip to see if you're already in a pension scheme. If not, and you're aged 23 to 60, earn €20,000 or more annually, you will be automatically enrolled. If you earn less than €20,000, and aged outside, the 23 - 60 bracket you can choose to opt-in. If you are uncertain, talk with your employer. Class S directors and self-employed will not be Auto-Enrolled.
Contribute to your pension: If you join auto-enrolment you'll be required to contribute a fixed percentage of your gross earnings. This will be done automatically by your employer.
Manage your status: The National Automatic Enrolment Retirement Savings Authority (NAERSA) will operate an online portal for employees, to manage employee opt-outs, opt-ins, suspension of contributions and re-enrolment.
Auto-enrolment is a new employment right, an your employer must ensure all eligible employees have access to the scheme. As an employee, you have the right to opt-out of auto-enrolmen, and/or set up a private pension, however you can't control wether your employer sets up an occupational pension for you.
