Money Matters

My Future Fund: What Irish employers need to know about workplace pensions

Discover how your business can operate under the new auto-enrolment workplace pension savings scheme, which is now in effect from 1 January 2026.

2 January, 20268 min read Share

The Irish government has announced details for the auto-enrolment pensions savings scheme, entitled My Future Fund.

It’s designed to encourage workers to save for their retirement and make it more straightforward for businesses to offer a workplace pension option.

Currently, only around 35% of employees in the private sector have a supplementary retirement saving scheme.

Legislation for the Automatic Enrolment Retirement Savings System for Ireland was voted in to law in 2024.

This article offers an overview to small and medium-sized employers, and HR and payroll teams, on what auto-enrolment means for them and their employees, how auto-enrolment works, and how it is being phased in.

It also helps businesses operate under the new legislation, which is now in effect from 1 January 2026.

Here’s what we cover:

What is auto-enrolment?

Auto-enrolment (short for automatic enrolment) is a pension investment scheme for employees, which involve their employer matching their contributions of a set percentage of their gross income with a top-up from State funds.

An estimated 800,000 employees (not including the self-employed) earning more than €20,000 per annum and aged between 23 and 60, and who are not already enrolled in an occupational pension scheme, will be automatically enrolled in the new scheme.

The accumulated funds plus investment returns will be paid to participants upon their retirement in addition to the State pension, and drawdown will be linked to the State pension age, which is currently 66 (subject to future changes).

How auto-enrolment will work

All employees—current and new—who fit the eligibility criteria and who are not already enrolled in a workplace pension scheme are automatically enrolled in the scheme.

Eligibility

Employees aged between 23 and 60 earning more than €20,000 per annum across all employments will be eligible to participate in the new scheme. 

Those earning below the income threshold or aged outside of the parameters will be able to opt in to the system if they wish.

Employees who are already members of a qualifying occupational pension scheme will not be automatically enrolled for that employment.

Employees who are on probation, or are casual, or working on a part-time basis will be assessed by a newly created National Automatic Enrolment Retirement Savings Authority (NAERSA) to determine eligibility. 

Employer/employee contributions

Initial contributions by both employee and employer are 1.5% of gross income.

This amount increases on a phased basis over 10 years, with 1.5% added every 3 years until a total of 6% is reached.

As an employer, you’ll match your employees’ contributions and the pension will also be topped up by the State at 33%, with employer and State contributions capped at €80,000 of earnings.

Here’s how contributions will be raised over the 10 years:

Years	Employee	Employer	State
1 to 3	1.5%	1.5%	0.5%
4 to 6	3%	3%	1%
7 to 9	4.5%	4.5%	1.5%
10+	6%	6%	2%

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.

So, for every €3 an employee contributes, they will receive a further €4 into their pension pot. Therefore, the total invested will be €7. 

The added incentives are aimed at encouraging workers to remain in the scheme by reducing their costs of saving for retirement.

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. 

However, participation is optional and operates on an opt-out basis. 

Employees who have been automatically enrolled can choose to opt out or suspend their participation after 6 months. 

Those who opt out will be auto-enrolled after 2 years have elapsed and they can opt out again after another 6 months. 

If an employee opts out, they’ll receive a refund of their (employee) contributions, but employer and state contributions will remain invested in their pot. 

Members will be able to pause their contributions after 6 months of saving, suspending their contributions for a maximum of 2 years. 

They won’t receive a refund on what they’ve saved so far and can restart their saving at any time before the auto-restart. 

Choice of funds

Employees will have a choice of 4 retirement savings funds to choose from, depending on the level of risk they prefer. 

3 of these funds will have differing risk/return profiles comprising a conservative fund, a moderate risk fund, and a higher risk fund. 

The fourth option–a ‘life-style/life-cycle’ investment profile–will be the default fund provided if the employee doesn’t express a preference. 

Moving jobs

The scheme will be set up on a ‘pot follows the member’ basis, so an employee’s pension is not linked to their employment but follows them as they move jobs. 

This means workers will not have to join a new scheme each time they change employer and those who have more than 1 employment will have their pension savings combined into 1 pot. 

Participants of the new scheme will be able to access their account via an online portal. 

They’ll be able to view account balances, contributions and investment returns, and update information or suspend their payments. 

When will the auto-enrolment scheme begin?

Legislation and processes are now implemented, with the scheme and paid contributions in effect from 1 January 2026, following a rescheduling from the previous date of 30 September 2025.

Contributions will be gradually phased in over 10 years, with employee and employer payments beginning at a modest level of 1.5% and increasing every 3 years by 1.5% until they reach 6%. 

How businesses can prepare for the new legislation

The workplace pension scheme is designed to minimise the administrative burden on employers who will not need to set up and run an occupational pension scheme.

Instead, employers will be responsible for recording employee-related data via a simple payroll instruction.

The scheme is introduced on a phased basis, with contributions starting at a modest level in 2026 and increasing at a set rate until 2034.

Businesses should ensure ongoing compliance with the scheme.

You’ll need to review the following areas and plan accordingly:

• Payroll
• Contracts
• Communication with employees
• Financial management.

An employer who fails to fulfil their obligations under the scheme, including implementing a payroll instruction for enrolment, and/or deduction or remittance of contributions as required, is subject to penalties.

Payroll systems

Consultations with providers of payroll systems and software used by employers are planned to ensure smooth and accurate integration of the new scheme with existing systems.

If you already use software to process your payroll, your provider can advise on how the new scheme will affect your payroll system.

Employment contracts

In advance of the legislation coming into force, you’ll need to review employment contracts.

You should consult your solicitor well in advance of the 2026 roll-out to ensure your employment contracts are updated to include the provision for pension contributions and any other legal details required. 

Communication with employees

Employers are expected to inform employees about how the scheme works.

You should communicate with your employees about how it works.

You should provide details of the scheme and advise employees on the 4 fund options, how much they will contribute, tax implications and the benefits of the scheme, including the employer and State contribution. 

Employee contributions will be taken from net income, after deductions of income tax, pay related social insurance (PRSI) and universal social charge (USC).

Tax relief won’t apply in respect of these contributions. Instead, the State tops up the pension fund at 33% of the employee contribution.

Participants in the new scheme will still be entitled to receive a ‘benefit-in-kind’ tax exemption in respect of their employer’s contribution.

Financial management to cover the contributions

The scheme is designed to be as simple as possible for employers to set up and implement.

The new CPA will oversee the scheme and minimise administrative costs to employers with a cap of 0.5% per annum of assets proposed on management charges.

The new arrangements will be phased in gradually and contributions will start at a modest level and increase over time.

Employers will be required to match members’ contributions starting at 1.5% of gross income up to an eventual maximum of 6% subject to an earnings threshold of €80,000.

How taxes will be affected

Under the new scheme, tax relief on pension contributions will change for employees as explained in the ‘Communication with employees’ section above.

However, employer contributions will be deductible against corporation tax in the same way contributions to existing pension schemes can be offset.

The scheme will be overseen by the Pensions Authority, governed by a board of directors and will be held to account by the Financial Services and Pensions Ombudsman.

Final thoughts: Providing financial security for your employees

The new pensions savings scheme incentivises employees to save for retirement, and through employer and State contributions, participants see the benefits of staying in the scheme.

Under the auto-enrolment scheme, pension pots move with the employee throughout their working life, providing assurance of retirement income and helping maintain a reasonable standard of living.

The scheme simplifies and streamlines the pension process, reducing the admin burden on employers and providing financial security for employees.

Editor’s note: This article was first published in February 2020 and has been updated for relevance.