Ireland will soon introduce an auto-enrolment pension system to help employees save for retirement. This new initiative will affect all employers in Ireland and understanding its implications will be essential to ensure compliance. In this article, we explain the key aspects of the scheme, outline employer obligations and provide clarity on how it will impact your workforce.
What is auto-enrolment?
Auto-enrolment is a new mandatory retirement savings scheme for employees who do not currently have a workplace pension or personal retirement savings account (PRSA) arrangement. While initially slated to begin at the end of September 2025, this may be subject to change and could be delayed until 2026.
How will the scheme work?
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will administer the auto-enrolment system. NAERSA will oversee employee, employer and State contributions, managing these funds and investing them on behalf of employees.
NAERSA will determine employee eligibility using payroll data provided by Revenue; this information will be communicated to employers for payroll purposes. Under auto-enrolment legislation, employers are legally obliged to inform their employees of their enrolment status and the date of enrolment.
Who will be enrolled?
Employees who meet the following criteria will be automatically enrolled in the pension scheme:
- Aged between 23 and 60
- Earning €20,000 or more per annum across all employment*
- Not currently covered by an existing supplementary pension scheme administered through payroll
*Gross earnings across all employments will be used to determine eligibility. Therefore, if an employee earns less than €20,000 in each job individually but exceeds €20,000 in total earnings across all jobs, they will still be eligible for auto-enrolment.
What about existing pension schemes?
If an employer already provides a pension scheme, it will continue alongside the auto-enrolment system. Employees who are already enrolled in an existing pension scheme, with contributions tracked through payroll, will not be automatically enrolled in the new scheme.
What is included in the definition of salary or earnings for auto-enrolment?
An employee’s gross earnings, as reported on payroll, will be assessed for both the income threshold and the calculation of contributions. This means that any income included in the gross pay field will be subject to assessment for auto-enrolment purposes.
What are the contribution rates?
Contribution rates for auto-enrolment will increase gradually over the first 10 years of the scheme:
| Employee | Employer | State | |
| Year 1 to 3 | 1.5% | 1.5% | 0.5% |
| Year 4 to 6 | 3% | 3% | 1% |
| Year 7 to 9 | 4.5% | 4.5% | 1.5% |
| Year 10+ | 6% | 6% | 2% |
Is auto-enrolment a legal requirement?
Yes – all organisations with employees in Ireland, regardless of company size or structure, must facilitate the auto-enrolment scheme for eligible employees, as well as for those who wish to opt in.
Opt-in / opt-out provisions
Employees have the option to opt out of the scheme at the following stages:
- Six months after initial enrolment, in months seven and eight
- Six months after any change in contribution, in months seven and eight
If an employee opts out, any employer or State contributions previously made will remain in the scheme. Additionally, any employee who opts out but still meets the eligibility criteria will be automatically re-enrolled after two years.
Employers who prevent employees from joining, force them to opt out or fail to make the required contributions could face prosecutions, fines and penalties.
Will company directors be enrolled?
This depends on the Pay Related Social Insurance (PRSI) class. Directors who pay PRSI as employees and meet the eligibility criteria will be enrolled in the auto-enrolment scheme. However, directors who are registered as self-employed (class S) will not be eligible.
How does an auto-enrolment pension compare to a private pension?
While private pension schemes provide tax relief set at the highest rate of income tax an employee pays, auto-enrolment offers a 33% top-up from the government. For example, an employee earning less than €44,000 annually and paying at the 20% tax rate may find the auto-enrolment scheme more beneficial due to the government’s contribution, even without the tax relief typically available in a private pension scheme.
The introduction of auto-enrolment in Ireland marks a significant shift in the way retirement savings will be handled for employees. As an employer, it’s essential to understand your obligations under this new system and ensure compliance.
Looking for further guidance on how to navigate the impact of the auto-enrolment scheme? Contact our team in Ireland.
The information provided in this article is for general informational purposes only and does not constitute legal, financial or professional advice. While every effort has been made to ensure the accuracy and relevance of the content, the auto-enrolment pension scheme in Ireland is subject to change and the details outlined in this article may be updated as new regulations or guidance are issued. Employers and employees should consult with legal, tax or financial professionals to understand their specific obligations and options under the scheme. The authors and publishers of this article do not accept responsibility for any loss or damage resulting from reliance on the information provided.
Further information:
gov.ie – Auto-enrolment: Your questions answered
gov.ie – Auto-enrolment retirement savings system for employees
