The upcoming Pension Auto-Enrolment in Ireland, set to commence in 2026,involves the following key elements.
Automatic Enrolment
Contributions
The government will provide a top-up of €1 for every €3 contributed by the employee.
Opt-out Option
The primary goal is to increase retirement savings among private-sector workers who currently have no occupational pension coverage.
This initiative aims to enhance financial security for future retirees by ensuring broader participation in pension savings.
Employer Alternatives to Auto Enrolment
Employer Alert:
Employer Alert:
Employers should note that the Auto-Enrolment compulsory contribution rise to 4.5% to 6% after 5 years in the scheme. This may simply be unaffordable for some employees, employers & other sections of industry.
Why a PRSA is the cheapest alternative
Once an employer has a group PRSA for eligible employees, they are exempt from enrolment to the gradually increasing AE scale. Accordingly, an employer who had a Group PRSA connected to e.g. for example, 3% contribution of salary, is not obliged to follow the increased AE scale each year. Putting a PRSA in place now, will eliminate the risk of higher scaled contributions in future years i.e. avoiding the necessity of providing 4.5% upwards per annum in the future. This is an important cost control consideration.
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FAQ’s
Frequently Asked Questions
❓ What is auto-enrolment pension in Ireland?
Auto-enrolment pension Ireland is a new State‑run pension savings system called My Future Fund, launching on 1 January 2026.
Auto‑enrolment (AE) in Ireland is a new State‑run pension savings system called My Future Fund, launching on 1 January 2026.
Eligible workers aged 23‑60, earning at least €20,000/year, will be automatically enrolled unless they already contribute to a payroll‑based pension.
Contributions come from three sources: the employee, their employer, and the State.
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will administer the scheme, using payroll data to determine eligibility and handling the investments and contributions. According to gov.ie, the scheme is designed to be simple for employers: there’s a portal accessed via ROS, and most of the administrative burden is handled by NAERSA.
🧐 What is the key difference between Auto-Enrolment and a Private Pension Scheme for my business?
The fundamental difference for employers lies in flexibility, tax efficiency, and the ability to attract and retain staff. Choosing a compliant Private Pension Scheme can exempt your eligible employees from the State AE scheme, giving you more control.
1. New Government Auto-Enrolment (AE) Scheme
This is the mandatory, standardised solution designed for administrative simplicity.
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Mandatory: You must automatically enrol all eligible staff.
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Tax Relief: Employee contributions are made after tax. The employee receives a State top-up (equivalent to 25% tax relief), which is less tax-efficient for higher earners (40% tax rate).
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Limited Control: Investment funds are standardised, and benefits are rigid.
2. Setting up a Private Pension Scheme
Setting up an alternative, qualifying scheme (like a Master Trust or PRSA) is a strategic business decision.
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Flexible: You retain full control over contribution rates, fund options, and can tailor a benefits package to suit your staff needs.
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Superior Tax Relief: Employee contributions are made before tax, offering immediate relief at their marginal rate (20% or 40%). This is highly attractive to higher-earning staff.
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Enhanced Benefits: These schemes allow for Additional Voluntary Contributions (AVCs) and can easily include benefits like Life Cover or Income Protection, making your overall compensation package more competitive.
Take the Next Step: Speak to an Expert
The transition to Auto-Enrolment is a complex issue with significant financial and staffing implications. Don’t wait until 2026 to make a decision that affects your team and your business finances.
Get clarity on the best pension strategy for your company—before the deadline hits.
Book your confidential 15-minute chat with a qualified Pension Expert today.
Get Expert Advice on My Future Fund
Learn how your business can stay compliant with the latest pension rules and take control of employee pensions today.
For each €1 saved by an employee, €2.33 would be credited to their pension savings account comprising their €1 personal contribution, plus €1 from their employer, plus €0.33 from the State.
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So for every €3 an employee contributes, they will receive a further €4 into their pension pot. Detailed examples of projected earnings for different life and work situations can be found in the Department of Social Protection document, The Design Principles for Ireland’s Automatic Enrolment Retirement Savings System. Opting in/out option: All eligible employees will be automatically enrolled in the scheme. |
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However, participation is optional and operates on an opt-out basis. |
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Participants of the new scheme will be able to access their account via an online portal run by the CPA. |
Employer contributions will stand at 1.5% of gross pay.
- In year 4 that will increase to 3%
- In year 7 that will increase to 4.5%
- In year 10 that will increase to the maximum rate of 6%
Contributions will be fixed and employers and employees won’t be able to contribute less or more than the set rate.
State Contributions under Auto-Enrolment: (Information extracted from Gov.ie Jan 2024)
| Year 1 – 3 | 0.5% |
|---|---|
| Year 4 – 6 | 1% |
| Year 7 – 9 | 1.5% |
| Year 10+ | 6% |
However, benefits may not be extracted until employees reach full statutory retirement status (age 66+) It may be in both employer and employee’s interest to start a PRSA contribution which may lead to early retirement benefits.
Note: Once there is an employer PRSA with employer benefits being regularly extracted through the payroll system, both employer and employee are exempt from enforced auto-enrolment.
In the past it was up to employers to decide whether they wanted to have a pension scheme or not and it was up to the employee to decide whether they wanted to join their employer’s scheme.
Once enacted, people who do not have a pension scheme, earn more than €20,000 per annum and are aged between 23 and 60 will be automatically enrolled into the new mandatory system.
Employers can contribute to a PRSA and since 2023 there is no limit on the employer’s contribution. However, there is no obligation on the employer to contribute, at present.
Employees who are not entitled to gain access to an employer’s Occupational Pension Scheme or Group scheme within 6 months of service must be given access to a PRSA by their employer.
There is no legal obligation for an employer to set-up or contribute to a pension at present. However,
- The government of Ireland intend on introducing Auto-Enrolment in 2024.
Find out more about Auto-Enrolment→ - If an employee does not have a pension scheme, the employee will need to provide an employee with access to at least one standard Personal Retirement Savings Account i.e. a PRSA
However, when the current legislation which has passed all stages of Oireachtas is introduced in 2025, all employers and employees who are not contributing to an employer based regular payroll pension and PRSA scheme will be auto-enrolled at the minimum statutory levels required for their income and age.
Typically, an employer based PRSA which administers the payroll deduction process is the best and cheapest way for both employer and employees to make contributions and be exempt from auto-enrolment enforcement.
