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Employers: What you need to know about Pension Auto-enrolment

My Future Fund: The new auto-enrolment scheme has arrived. The new scheme impacts employers that do not operate a workplace pension scheme already.

Last updated 19 Jan 2024 | First published 19 Jan 2024

5 min read

Pension Auto-enrolment Payroll Employers

Pension Auto-enrolment has been discussed in Ireland for many years and it finally was introduced in January 2026. Here is what employers need to know: 

 

What is Auto-enrolment?

Auto-enrolment is a pension savings scheme for certain employees who are not already paying into a pension. These employees are automatically included in the scheme. The scheme is called My Future Fund. 

A Central Processing Authority, the National Automatic Enrolment Retirement Savings Authority (NAERSA), has been set up to administer the auto-enrolment scheme.

Under the scheme, the employee, the employer and the Government all pay a certain amount into the employee’s fund.

 

What does Auto-enrolment scheme mean for employers?

If you do not have a workplace pension scheme established, all your employees that meet the scheme’s requirements are enrolled into the auto-enrolment pension.

 

Employer Contributions

You need to match the contributions made by employees. The amount an employee pays will be a set rate of their annual salary. Employers match the contributions and the Government contribute an additional amount. Employees cannot pay more or less than the set rate.

The employer and employee pay 1.5% of the employee’s annual salary into the pension in the first year. This will increase to 6% by year 10.

The table below sets out the rates you, your employee and the Government pay:

Year

Employee Contribution Rate

Employer Pays

Government Pays
1 to 3 1.5% 1.5% 0.5%
4 to 6 3% 3% 1%
7 to 9 4.5% 4.5% 1.5%
10 and after 6% 6% 2%

 

Both an employer’s and the Government’s contributions are capped at €80,000 gross annual salary. This means for the first 3 years, the maximum amount an employer will contribute is €1,200 a year. This is because 1.5% of €80,000 is €1,200. The maximum amount the Government can contribute is €400 a year, which is 0.5% of €80,000. If an employee’s salary is greater than €80,000, an employee can still contribute but the employer or the Government won't match the contributions on any income over €80,000.
 

 

Tax

It is important to note that employer contributions to this scheme are tax deductible. 
 
 

Who is enrolled in the scheme?

The National Automatic Enrolment Retirement Savings Authority (NAERSA) will determine which employees are eligible for auto-enrolment using Revenue payroll data. 
 
Employees are automatically enrolled in the scheme if they are:
 
  • aged between 23 and 60
  • are not currently part of a pension plan
  • They earn €20,000 or more per year
 
If someone earns less than €20,000 per year, or are not aged between 23 and 60, they can choose to join the scheme if they are not already part of a pension scheme.
 
After someone is enrolled, they must stay in the plan for at least 6 months. They can choose to leave the plan in month 7 or 8 if they wish.
 
They can also stop or pause contributions, in certain circumstances. However, employees will be re-enrolled (added back to the plan) after 2 years if they are still eligible for the scheme.
 

Additional contributions

As yet, there is no possibility of the employee making additional contributions. This is usually an option with private pensions, as long as the additional contributions are within Revenue’s limits in terms of tax relief.
 

Is there any choice for the employee where their contributions go? 

In terms of contributions, an employee can either opt for a default fund or choose from a choice of funds, which will have varying risk profiles from high, to medium, to low. For the default fund, the risk will decrease as the employee gets older.
 

Can employees opt-in even if they do not qualify for auto-enrolment?

Yes, employees who do not meet the automatic eligibility criteria (age 23 to 60 and earning €20,000 or more per year with a single employer) can still choose to opt in voluntarily, but with important conditions.
 

Key points employers should know:

  • Employers must accept opt-in requests from employees aged 16 to 70
  • Once opted in, the employer must make matching contributions, just as they would for automatically enrolled employees
  • Opt-in employees have the same rights to pause contributions, rejoin later, and receive employer and State top ups
  • Employers cannot discourage employees from opting in
This is particularly relevant for part time staff earning under €20,000, seasonal workers, and students aged 16 to 22. If they ask to join, the employee must do so themselves through the NAERSA employee portal at www.myfuturefund.ie
 
 

What do employers need to do to be compliant with auto-enrolment?

 
  • Employers must register on the NAERSA portal
  • Employers must notify employees of enrolment in the scheme. There are sample letters available through the portal. 
  • Employers must make sure contributions are made on time via payroll. Once an employee has been identified, NAERSA will send an Automatic Enrolment Payroll Notification (AEPN) through payroll software. 
 
 

When will NAERSA collect contributions?

 
NAERSA will collect employee and employer contributions on a pay period basis:
 
  • For weekly payrolls, contributions will be taken weekly
  • For fortnightly payrolls, contributions will be taken fortnightly
  • For monthly payrolls, contributions will be taken monthly
 
This differs from Revenue as they collect PAYE, PRSI, and USC monthly, regardless of pay frequency, so this is one of the biggest practical changes employers feel with the introduction of auto-enrolment.
 
 

Are there penalties for not fulfilling your auto-enrolment responsibilities?

If, as an employer, you do not meet your auto-enrolment obligations, there are penalties and/or prosecution. Non-compliance may result in fines of up to €50,000 and/or imprisonment. NAERSA will also publish details of employers that do not fulfil their auto-enrolment obligations.
 
 

Does auto-enrolment affect self-employed people?

Auto-enrolment is for PAYE workers only, so if you are a sole trader this won’t impact you (unless you are an employer).

 

Can employers set up their own pension scheme instead of using auto-enrolment?

Employers may consider setting up their own pension scheme. Employers can avoid using the State auto-enrolment system if they operate a pension scheme but only if the scheme meets strict qualifying scheme rules.  
 
To qualify, the employer's own scheme must:
 
  • Provide equal or better employer contributions than auto-enrolment
  • Allow all eligible employees to join
  • Have no waiting periods
  • Meet auto-enrolment standards for charges, investment options, governance, and portability
 

Why would an employer choose their own scheme?

Some employers are choosing their own scheme for reasons such as:
 
  • More control over investment options
  • Ability to offer enhanced employer contributions
  • Better alignment with existing benefits packages
  • Avoiding dual systems (auto-enrolment plus occupational scheme)
 
However, employers must be careful. If the scheme does not meet auto-enrolment standards, they will still be required to operate the State auto-enrolment system in parallel.

 

 

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Last updated 19 Jan 2024 | First published 19 Jan 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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