Auto-enrolment is a new retirement savings scheme for employees who do not already have a workplace pension scheme or an additional pension arrangement.

Many workers in Ireland, particularly in the private sector, do not have additional pension coverage and, as a result, will depend on the State Pension when they retire. This may see a reduction in their income and living standards when they retire. Auto-enrolment will increase both pension coverage and overall pension adequacy by making it easier for employees to access a quality assured retirement savings scheme.

The legislation underpinning Ireland’s new auto-enrolment system was passed in July 2024. The Irish Government announced that the new scheme was expected to commence on September 30^th 2025 and will then gradually be phased in over a decade.

In April the Government confirmed that the start date for pension auto-enrolment would be delayed from September 30^th 2025 to 1 January 1^st 2026.

Minister for Social Protection Dara Calleary said the commencement of the collection of contributions for the automatic enrolment retirement savings system, called My Future Fund, was being moved to align the new system with the standard tax year.

He said it is also being delayed to give additional time for payroll providers, especially smaller providers, to ready their systems for the launch and to give additional lead-in time for employers, particularly small and micro businesses, to ensure they can be compliant with the legislation from the start.

The new scheme is designed to help over 800,000 workers to begin saving for their retirement.

The National Automatic Enrolment Retirement Savings Authority (NAERSA) will administer the auto-enrolment scheme. NAERSA will act as the caretaker of the participants’ interests and savings.

NAERSA will determine if one is eligible for auto-enrolment using Revenue payroll data, and if they are eligible, it will enrol them.

It will collect all employee, employer and State contributions, and invest the money on their behalf. A default investment strategy will be in place, but some alternative investment options will be available for those who may wish to make an active investment choice. NAERSA will then allocate any investment returns to their savings pot. There will be just one savings pot as one moves from job to job, this is known as the ‘pot-follows-member’ approach.

NAERSA will operate an online portal for employees, to manage employee opt-outs, opt-ins, suspension of contributions and re-enrolment. It will also operate an online portal for employers, to record and facilitate payment of contributions.

All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employments, will be automatically enrolled in the new scheme.

It will be gradually phased in over a decade, with both employer and employee contributions starting at 1.5% and increasing every three years by 1.5% until they eventually reach 6% by year 10. The State will top up contributions by €1 for every €3 saved by the employee. This is in addition to the €3 that will also be contributed by the employer.

Eligible employees will be automatically enrolled but will have the choice after six months participation to opt-out or suspend participation. NAERSA will pay out at State Pension age, which is currently 66.

 

NB – This is a guide for information purposes only and does not constitute legal advice. If you have an issue requiring legal advice, please contact any of the team at Nolan Farrell & Goff LLP, whose numbers can be found on our website www.nfg.ie, or email info@nfg.ie.