Auto-enrolment: A new era of pension savings in Ireland
Ireland’s long-awaited pension auto-enrolment scheme is set to launch on 1 January 2026 and promises to overhaul the nation’s approach to retirement savings, Caroline Reidy reports
Print27 August 2025
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The pension auto-enrolment scheme ambitious reform is aimed at addressing a significant gap in retirement planning, with nearly 800,000 Irish workers currently without employer-supported pensions. As Ireland remains the only OECD country without an auto-enrolment system, the new “My Future Fund” scheme represents a vital step in securing financial stability for the country’s aging workforce. Here, we break down how the scheme will work, who it will affect, and what businesses need to know to prepare.
What is auto-enrolment?
Auto-enrolment is a government-led initiative designed to increase retirement savings among workers who don’t currently have access to occupational pensions. Under the scheme, eligible employees will be automatically enrolled into a State-backed pension fund, with contributions from the employee, their employer, and the government.
This marks a shift from the current system, where employers are not obliged to provide pension schemes. At present, if an employer does not have a company Pension Scheme, they must only provide employees with access to a Personal Retirement Savings Account (PRSA), though the employer is not currently required to contribute to it.
Key details of the scheme
The auto-enrolment system has been designed to be accessible and beneficial for a wide range of workers. Key aspects of the scheme include:
- Eligibility requirements:
- Employees between the ages of 23 and 60, earning more than €20,000 per year and do not have existing supplementary pension coverage, will be automatically enrolled.
- Workers who don’t meet the eligibility criteria but are aged between 18 and the state pension age (currently 66) will have the option to opt into the scheme on a voluntary basis.
- Self-employed individuals, and those not currently earning an income through an employer, will not be eligible.
2. Contribution structure:
- Contributions to My Future Fund will come from three sources: employees, employers, and the government.
- Employer contributions will be tax-relieved, while employee contributions will not receive tax relief but will be supported by a government top-up.
- Contributions will apply on income up to €80,000 annually, with phased increases in contribution rates over a ten-year period to ease both employees and employers into the system.
3. Investment and benefit options:
- My Future Fund will offer four investment options: default (lifecycle), low-risk, medium-risk, and high-risk.
- Benefits will become payable at the state pension age, with an initial option to take a lump sum. Provisions for early access are limited but may be permitted in cases of ill-health or incapacity.
4. Opt-out options and changes in circumstances:
- Enrolled employees will have an opt-out period, enabling flexibility if circumstances change. Contributions may cease if an individual’s earnings fall below the €20,000 threshold or if they join an alternative qualifying pension plan.
Financial implications for employers
For businesses, implementing auto-enrolment will bring new financial obligations as they will be required to contribute a portion of their employees’ salaries to their pension funds.
While this change may initially strain budgets, it is important to consider the long-term benefits of helping employees build retirement savings. It is hoped that government will take steps to alleviate other business associated costs possibly in the form of tax relief or other incentives.
Operational and compliance requirements
Employers will have certain responsibilities to ensure smooth implementation:
Payroll adjustments: Employers will be responsible for calculating, deducting, and remitting contributions to the National Automatic Enrolment Retirement Savings Authority (NAERSA).
Employee notifications: Employers must inform employees of their auto-enrolment status and provide details about the scheme and contribution rates.
Handling opt-outs and other changes: Employers must be prepared to accommodate employees who wish to opt-out, as well as manage changes when an employee’s status affects their eligibility or contributions.
Compliance and sanctions
Auto-enrolment comes with strict guidelines to protect employees from discrimination. Penalising employees who participate or obstructing their access to the scheme is prohibited. Employers must adhere to compliance notices from National Automatic Enrolment Savings Authority (NAERSA) and meet their obligations to pay and remit contributions accurately. Failure to comply can lead to sanctions, including fines and in more severe cases possible prosecution.
Preparing for auto-enrolment: A strategic business decision
As the launch of auto-enrolment approaches, businesses should view this as an opportunity to bolster their benefits offerings. Employers should:
Evaluate current pension arrangements: Employers will need to choose between two options: either adjusting their current workplace pension plan to meet the new auto-enrolment standards or keeping their current plan as it is and enrolling any ineligible employees separately into the auto-enrolment system.
Prepare communications: Educating employees on the benefits of the Company’s Pension Scheme and My Future Fund will be essential for ensuring buy-in and reducing confusion around contributions.
Long-term outlook for Ireland’s retirement landscape
While the auto-enrolment scheme entails financial and operational changes for both employers and employees, it represents a progressive step in addressing the shortfall in Ireland’s retirement savings. As January 2026 draws near, planning now will position businesses to effectively support their employees through Ireland’s new era of pension security.
If you are an organisation based in the Republic of Ireland and require further information or advice relating to HR, please do not hesitate to contact our office on (066) 7102887 or email us at info@thehrsuite.com.
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