From 1st January 2026, every Irish Organisation with eligible Employees will be required to participate in the new auto-enrolment pension scheme. Known as My Future Fund, the scheme is designed to provide pension coverage for and estimated 800,000 Employees who do not currently participate in a pension scheme.
For Employees with no pension coverage, the scheme should boost their retirement savings, but for their Employers, the short-term challenge is ensuring compliance with the new legal framework governing workplace pensions. As well as considering the financial implications of increased labour costs under auto-enrolment, Organisations with eligible Employees face sanctions for non-compliance. With the January deadline now in sight, it is therefore important to use the remaining time to ensure your Organisation is prepared ahead of implementation.
How Do Employers Determine Eligibility of Employees?
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will identify whether Employees are eligible for auto-enrolment, so Employers will not need to determine whether their Employees meet the eligibility criteria.
Automatic Enrolment Criteria
Employees who meet the following conditions will be automatically enrolled:
- aged between 23 and 60
- earning €20,000 or more per annum across all employments
- do not have existing supplementary pension coverage
Employees Eligible to Opt-in
Employees who are under 23 or over 60 years of age, or who earn less than €20,000 a year, will be able to opt in if they wish. All auto-enrolment conditions such as contributions from the Employer, the Employee and the State also apply to any Employees who opt in.
How are Employees Auto-enrolled?
NAERSA will use Revenue payroll data to identify eligible Employees. Where an Employee within the eligible age bracket has a record of earnings, NAERSA will examine it to see if the Employee has earned €20,000 or more in the previous 12 months.
In determining if an Employee has met the earnings threshold, a lookback period of up to 13 weeks will be used. If the lookback period indicates that an Employee has earned the proportionate amount in that period, the Employee will be enrolled.
There will be no waiting period in the auto-enrolment scheme, so Employees will be enrolled as soon as they are deemed eligible. This means that if your Organisation’s occupational scheme has a waiting period, Employees could be automatically enrolled before they can join your workplace scheme. If this happens, and the Employee later wants to join the occupational scheme, they will be able to do so. That employment will become exempt from auto-enrolment. Any overlapping contributions will be refunded, and the employee’s auto-enrolment savings pot will continue to be managed by NAERSA.
Restrictions on Opting Out
The auto-enrolment scheme will not be fully mandatory. Employees will be able to opt out of the scheme at the following times:
- six months after enrolment, in months seven and eight.
- six months after a contribution rate change, in months seven and eight.
How Much Are the Contributions?
The contribution rates for auto-enrolment will be phased in over the first 10 years of the operation of the scheme:
- Employer contributions will start at 1.5% of gross pay
- in year 4 they will increase to 3%
- in year 7 they will increase to 4.5%
- in year 10 they will increase to the maximum rate of 6%
Employers will match their Employees’ contributions. Instead of tax relief on Employee contributions, the State will provide a top-up contribution at a rate of €1 for every €3 paid in by the Employee. The contributions are fixed at the set rate, and it will not be possible for either Employers or Employees to pay more or less than the prescribed rate.
Contributions will be calculated on the Employee’s gross earnings which includes all income in the gross pay field of a payroll file. Contributions will not, however, be levied on any gross pay over €80,000.
Enforcement Provisions
The Automatic Enrolment Retirement Savings System Act 2024 includes enforcement provisions to ensure that Employers meet their auto-enrolment obligations. Employers who prevent Employees from joining the scheme, or who force Employees to opt out or suspend contributions, may be prosecuted and will be subject to fines and penalties. Withheld or underpaid contributions will attract interest payments and NAERSA will also publish a list of Employers who have been convicted of non-compliance.
Immediate and Ongoing Compliance
Employers face both immediate and ongoing compliance challenges in connection with auto-enrolment.
In December, Organisations should focus on the following priorities:
- payroll system readiness
- engaging/registering with NAERSA
- employment documentation reviews, and
- Employee communications.
From January, it will be necessary to:
- continue processing new Employees with NAERSA
- ensuring contributions are remitted to NAERSA
- maintaining clear records for Revenue inspection, and
- providing Employees with information on scheduled changes.
If your Organisation requires assistance with compliance, documentation, or any HR advisory matters, we recommend engaging early to ensure full readiness ahead of implementation.
To learn more about managing auto-enrolment or to discuss how Adare can support your broader HR and Employment Law needs, please contact us at info@adarehrm.ie or by phone at 01 561 3594.