Auto-Enrolment in Ireland: What You Need to Know

Auto-enrolment (AE) is a significant development in Ireland’s pension landscape, and it will commence on September 30th, 2025. 

In 2024, 66% of working individuals aged 25-69 now have a pension, according to the CSO. However, the average pension pot in Ireland is still just €111,000. This initiative aims to enhance employee retirement savings, ensuring a more secure financial future. 

In this article, we’ll explore the key aspects of auto-enrolment, addressing common questions and concerns to help you understand its implications. 

As this is a new retirement scheme, the rules and regulations are likely to adapt and change in the coming years.

Introduction to Auto-Enrolment

Auto-enrolment (AE) is a government-led retirement savings scheme that automatically includes eligible employees in a pension plan. 

Many people experience a significant drop in income when they retire as they have little provision besides the state pension.

The primary goal of the AE scheme is to increase pension coverage and ensure individuals have sufficient funds upon retirement, reducing reliance on the State Pension. 

The system mandates that employees and employers contribute to the employee’s pension fund, with additional support from the government. 

Private Pensions Falling Short 

The introduction of auto-enrolment addresses the low participation rates in private pension schemes. 

By implementing this system, the government aims to promote a culture of saving for retirement and ensure financial stability for future retirees.

Ireland is not alone in adopting auto-enrolment. Many countries, including the UK, Australia, and New Zealand, have successfully implemented similar systems to boost retirement savings among their populations.

Eligibility & Enrolment Process

To be automatically enrolled in the new pension scheme, you must meet the following criteria:

• Be aged between 23 and 60 years old.
• Earning an income of €20,000 or more per year.
• Not currently part of a pension plan. Private plans paid from your bank account (e.g. a PRSA) are not considered. You are assessed via payroll data.
• You will be automatically enrolled if you previously contributed to a pension but are no longer doing so and meet the other conditions. 

When Will AE Start?

The auto-enrolment scheme is scheduled to begin on 30^th September 2025. 

It will be run by the National Automatic Enrolment Retirement Savings Authority (NAERSA) and not through a financial broker.

This timeline provides employers and employees time to prepare for the upcoming changes.

Contributions & Benefits

Contributions to the auto-enrolment scheme will be structured as follows:

• Employee contributions start at 1.5% of gross pay, increasing over time.
• Employer contributions match the employee’s contributions.
• Government contributions – for every €3 contributed by the employee, the State will add €1, equivalent to a 25% top-up. 

Contribution Rates

The contribution rates will be phased in over the first 10 years of the scheme:

• Years 1 to 3: 1.5% of gross pay.
• Years 4 to 6: 3% of gross pay.
• Years 7 to 9: 4.5% of gross pay.
• Year 10 onwards: 6% of gross pay. 

These contributions are calculated based on your gross earnings, ensuring a proportional and manageable approach to saving for retirement. As the government contributes, there is no tax relief on employee contributions.

Options & Flexibility

While auto-enrolment is designed to be automatic, employees can opt out after six months. However, it’s important to consider the long-term benefits of consistent pension contributions before making this decision. 

After two years of opting out, you will be auto-enrolled again, but you can opt-out again after six months.

Administration & Details

Auto-enrolment contributions will be reflected on your payslip, providing transparency regarding the amounts deducted and contributed to your pension fund.

The scheme will be managed by the National Automatic Enrolment Retirement Savings Authority (NAERSA), an independent body established by the Department of Social Protection. 

Employers are responsible for facilitating the enrolment process and ensuring timely contributions. 

Impact on Other Pensions

Auto-enrolment is designed to supplement the State Pension, not replace it. It provides an additional layer of financial security in retirement. 

If you are already contributing to an occupational or personal pension through payroll, you will not be eligible for auto-enrolment for that employment. However, if you have another job without a pension scheme and meet the eligibility criteria, you may be enrolled for that employment. 

Investment Options

Contributions made under the auto-enrolment scheme will be invested in funds managed by approved providers. Details about specific investment options will be provided closer to the scheme’s launch.

Future Outlook & Adjustments

The phased increase in contribution rates over the first 10 years allows employees to adjust to higher savings rates gradually. This approach ensures individuals can build a substantial retirement fund without experiencing sudden financial strain.

Additional Considerations 

Currently, the auto-enrolment scheme is focused on employees. Self-employed individuals are not automatically included but are encouraged to consider personal pension plans to secure retirement.

Company directors who are classified as employees and meet the eligibility criteria will be included in the scheme.

During probationary periods, you will be automatically enrolled if you meet the age and income criteria and are not contributing to another pension.

Contributions may be paused during unpaid leave periods for those on maternity leave but can resume upon returning to paid employment.

Should you emigrate, there isn’t currently a plan to allow you to move funds to another country.

The funds from the Auto Enrolment scheme cannot be moved to a new company pension scheme or another private pension.

Conclusion

Auto-enrolment represents a proactive step towards enhancing retirement savings in Ireland. 

It is important to check if your company offers a pension scheme that you can join. A company pension scheme may provide greater benefits and allow more flexibility than AE. 

While this article provides an overview, it’s important to note that it is for informational purposes only and does not constitute financial advice. 

Everlake is not an agent for the AE scheme, and we cannot give specific or tailored advice to individuals or companies about it. 

For more information, please visit official auto enrolment sources such as Citizens Information & gov.ie