Employers: What you need to know about Pension Auto-enrolment
Pension Auto-enrolment has been a discussed in Ireland for many years and it finally looks set to be introduced later this year. Here is what we know about the scheme so far ...
What is Auto-enrolment?
Auto-enrolment is a new pension savings scheme for certain employees who are not already paying into a pension. These employees will be automatically included in the scheme once the scheme commences. The scheme is called My Future Fund.
A new 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 will all pay a certain amount into the employee’s pension fund.
What does Auto-enrolment scheme mean for employers?
If you do not already have a workplace pension scheme established, all your employees that meet the scheme’s requirements will be enrolled into the auto-enrolment pension.
Employer Contributions
You will need to match the contributions made by employees. The amount an employee pays will be a set rate of their annual salary. Employers will match the contributions and the Government will contribute an additional amount. Employees cannot pay more or less than the set rate.
The employer and employee will 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 will 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 will be tax deductible.
Penalties
If as an employer you do not meet your auto-enrolment obligations, there is provision for penalties and/ or prosecution.
Who will be enrolled in the scheme?
Employees will be automatically enrolled in the new pension plan 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 pension plan 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.
When is Auto-enrolment being introduced in Ireland?
Despite lots of delays, 1st January 2026 appears to be the real start date. The government have appointed the necessary agencies and people and have started to advertise heavily to build awareness amongst the general public. So, as of today, employers have 120 days to prepare for this change.
Who will manage auto-enrolment?
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will determine which employees are eligible for auto-enrolment using Revenue payroll data. Once an employee has been identified, NAERSA will send an Automatic Enrolment Payroll Notification (AEPN) through payroll software.
NAERSA will operate an online portal for employees, to manage employee opt-outs, opt-ins, suspension of contributions and re-enrolment. It will also operate an online portal for employers, to record and facilitate payment of contributions.
The information we have so far is that in the lead up to the go-live date of 1st January 2026, employers will be asked to complete their profile on the employer portal, select a payment method for contributions and inform employees who have been enrolled of their enrolment date. This is critical for employer readiness so we await further information.
What should employers do now to get ready for Auto-enrolment?
We advise that you look at your payroll system and ensure that it will be able to take instruction for enrolment, calculate and pay employee and employer contributions to NAERSA. Read our article How should I prepare for Auto-enrolment? for more ways on how you can prepare for the change.
Will 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).
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