According to the Department of Social Protection, Ireland is currently the only OECD country without an auto-enrolment or similar mandatory pension scheme. That position is about to change with the imminent rollout of its (arguably long overdue) Auto‑Enrolment Retirement Savings System, expected to commence in early 2026. Commonly referred to as “auto-enrolment” or “pension auto-enrolment”, the scheme will actually be branded as My Future Fund.
The original plan was that the scheme would be launched in January 2025. However that launch date was first pushed back to September 2025, and has since been postponed again to January 2026. While these delays may be frustrating, they do give employers and employees extra time to prepare for what will be one of the most significant workplace pension changes in decades. And going by a poll we ran recently, this grace period is definitely required - we asked attendees of a recent webinar if they were ready for auto enrolment and a whopping 80% said no.
The key to a successful transition for employers is preparation. By putting the work in now to prepare for the rollout of My Future Fund, you can reduce the risk of compliance issues, ease the payroll changes required, and position your organisation positively with current and future employees.
In this guide, we will outline the key elements of the new pension auto-enrolment process and provide guidance for Irish employers in relation to preparing for the new scheme.
What is pension auto-enrolment?
Pension auto-enrolment is a system that automatically enrolls eligible employees into a supplementary retirement savings scheme, helping to increase pension coverage and provide financial security in retirement.
Auto-enrolment vs occupational pension schemes
Traditional occupational pension schemes are set up voluntarily by individual employers and often vary in structure, participation levels, and contribution rates. Some businesses provide generous pension benefits, while others may not offer a scheme at all.
By contrast, auto-enrolment is mandatory for employers and will apply consistently across the workforce. This standardisation ensures that all eligible employees are included, regardless of whether their employer currently has a pension scheme in place.
What is the purpose of pension auto-enrolment?
According to the Department of Social Protection:
“around 35% of private sector workers in the State have no occupational or private pension meaning they will be solely reliant on the State Pension when they retire.”
Think about that - over two thirds of all private sector employees in this country have no workplace pension and are not saving for their retirement. This means that many of these people will see an unwanted drop in their living standards when they retire.
The objective of the State sponsored auto-enrolment scheme is to ensure that all workers have access to a contributory retirement savings scheme to supplement the basic State pension. This system will make it easier for people to access retirement savings options to help them meet their own income expectations for when they retire and bridge the gap that would have existed for many who did not have access to a workplace pension previously.
Fundamentally, the scheme will ensure that private sector workers without an occupational pension have a simple and consistent way to save for retirement. Employees who qualify (more on that later) will be automatically enrolled, with contributions matched by their employer and topped up by the State. An estimated 800,000 employees who have not yet saved for their future pensions are expected to be automatically enrolled.
Employee eligibility criteria - who needs to be enrolled?
Eligibility for auto-enrolment will be based primarily on age and income. Employees between the ages of 23 and 60 who earn €20,000 or more per year will be automatically enrolled, provided they are not already members of a qualifying occupational pension scheme.
This covers most categories of workers, including those on full-time, part-time, and fixed-term contracts. However, contractors and those who are self-employed fall outside the automatic enrolment rules, meaning they will need to make their own private pension arrangements.
The scheme operates on an opt-out basis meaning that all eligible employees will be automatically enrolled, but they can choose to opt out after an initial six-month participation period. If they do, they will receive a refund of their own contributions, though employer and State contributions will not be returned. Importantly, those who opt out will not be permanently excluded. Instead, they will be automatically re-enrolled after two years, unless they no longer meet the eligibility criteria. This design aims to encourage long-term savings habits while allowing some flexibility for employees facing short-term financial pressures.
Employers are also given a small degree of flexibility through the postponement period. They can defer enrolling an eligible employee for up to three months, typically to manage situations such as short-term contracts. However, employees can request to join earlier if they wish, meaning postponement cannot be used as a way to exclude staff who want to participate.
Auto-enrolment contributions and costs
One key feature of the new auto-enrolment system is the way contributions are shared between employees, employers, and the State. Contributions to the new scheme will be implemented on a phased in basis which will mean that requirements will be increased every three years. By design, this gradual increase should help employees adjust to saving without a sharp reduction in take-home pay.
Employers are required to match their employees’ contributions on eligible earnings, ensuring that both parties contribute equally to building retirement savings. Employees will see contributions automatically deducted from their wages.
From day 1, both employers and employees must contribute a percentage of gross salary, starting at 1.5% each, then increasing every three years until year 10 when the contributions will reach 6% each. In line with the Government commitment, a State contribution equal to 33 per cent tax relief will be provided in respect of pension contributions made by the employee (within a band of earnings).
Proposed phases
| Employer | Employee | Government | |
| Years 1-3 | 1.5% | 1.5% | 0.5% |
| Years 4-6 | 3% | 3% | 1% |
| Years 7-9 | 4.5% | 4.5% | 1.5% |
| Years 10+ | 6% | 6% | 2% |
For example, someone earning €20,000 per year will contribute €300 annually in the first three years, matched by their employer, with an additional €100 from the State. By year ten, this will rise to €1,200 each from the employee and employer, with €400 from the State, totaling €2,800 annually.
Another important feature of the system is the capped earnings limit. Employer, employee, and State contributions will apply only on gross annual earnings up to €80,000. Income above this level will not attract additional contributions, effectively setting a ceiling on the amount that can be built up under the scheme each year.
Employer considerations - what does auto-enrolment mean for employers?
From an employer's perspective, the new auto-enrolment scheme will bring with it a number of associated challenges - mainly financial and administrative. Participation in the scheme is mandatory so employers must take proactive steps to ensure their systems and processes are ready well before the scheme goes live.
Payroll system adaptation
One of the most immediate considerations for employers will be in relation to payroll systems. Organisations will need to ensure that payroll can handle automatic deductions and employer contributions in line with the phased contribution schedule. They will also need to apply the payroll notifications received from the National Automatic Enrolment Retirement Savings Authority (NAERSA), ensuring the correct contributions are deducted and forwarded on time.
Regulatory compliance
Employers are legally obliged to enrol all eligible employees into the scheme and to meet their contribution requirements. Failing to comply can lead to financial penalties and, in serious cases, prosecution. To support compliance, employers will be required to register for the auto enrolment employer portal (My Future Fund), set up an appropriate payment method, and stay up to date with auto enrolment notices issued by NAERSA.
Financial costs
Obviously, the financial cost of employer contributions is another critical factor. As we’ve explained, contributions start at 1.5% of salary and rise to 6% over a ten-year period. This creates a significant long-term expense for employers, making forward budgeting and financial planning essential.
Employee Communication
As usual when it comes to any major organisational change, communication is key. Employers will need to clearly explain the scheme, how contributions will affect employees’ take-home pay, and what the benefits will be over time. Ongoing updates are important too, as employees may have questions about opt-outs, re-enrolment frequency, or changes to their benefits.
The employee perspective of pension auto-enrolment
For employees in the private sector, auto enrolment is focused on building financial security for retirement. Basically, the system has been introduced to ensure that workers who do not currently have a pension will be automatically included in one, without needing to take any action themselves. Key implications for employees include:
- Universal pension savings: Any employee who meets the eligibility criteria will be automatically provided with a pension savings account, making it easier to build a retirement fund consistently over time.
- Employer contributions: For the first time, many employees will see their retirement savings boosted by their employer, in addition to the deductions made from their own pay.
- State incentives: Rather than relying on traditional tax relief, the government will top up employee contributions by one third. In practical terms, this means that for every €3 an employee contributes, the State will add €1, significantly increasing the overall savings rate.
- Opt-out choice: Employees have an opt-out choice if they feel the contributions are not affordable. They can opt out after six months and receive a refund of their own contributions. However, to encourage long-term saving, anyone who opts out will be automatically re-enrolled after two years, provided they still meet the eligibility rules.
- Portability: Pension savings accounts are tied to the individual, not the employer. Using each person’s Personal Public Service Number (PPSN) as a unique identifier, savings can be carried seamlessly between jobs, ensuring continuity and growth regardless of where an employee works.
How auto-enrolment will be managed
A new public body - National Automatic Enrolment Retirement Savings Authority (NAERSA) - will be set up to administer auto enrolment in Ireland. NAERSA’s role will be to manage contributions, ensure compliance, and appoint a panel of investment management providers to handle employee pension funds.
To provide choice and flexibility, NAERSA will make available a range of investment fund options, including low, medium, and high-risk portfolios. Eligible employees will have the option to select from various risk-based investment strategies or opt for the default lifecycle strategy, which automatically adjusts the investment risk level as they approach retirement. Employees will have access to online tools that enable them to monitor their savings and make adjustments to their investment choices or contribution plans as needed.
Preparing your business for pension auto-enrolment
As we’ve mentioned previously, preparation is key to a smooth and successful transition to the new auto-enrolment process. Priorities for employers in advance of the introduction of the new scheme in January 2026 are as follows:
- Identify whether auto enrolment is best for your organisation: Is a private scheme more appropriate? Get expert guidance from us to assist you in this regard.
- Identify eligible staff: Confirm which employees will be automatically enrolled under the scheme.
- Review payroll and HR systems: Ensure payroll can handle automatic deductions, employer contributions, and reporting to NAERSA.
- Plan and budget for costs: Factor in the phased employer contribution rates and build them into long-term budgets.
- Re-evaluate existing pension arrangements: Assess current pension plan structures and contribution levels to check if they meet or exceed auto enrolment requirements.
- Remove pension waiting periods: Align any existing schemes with auto enrolment by removing waiting periods where applicable.
- Review employment contracts: Update contract terms to reflect auto enrolment obligations and contribution details.
- Assign responsibility: Nominate a dedicated contact or resource within your business to oversee compliance and handle employee queries.
- Draft employee communications: Prepare clear, accessible information to explain the scheme, contributions, opt-out rules, and re-enrolment.
- Consider external support: Decide whether to appoint a professional adviser to provide guidance to your HR team and employees.