Finance Updates

Auto-Enrolment Pensions Are Coming to Ireland: What Employers Need to Know Before 2026

A New Era for Workplace Pensions in Ireland

From January 2026, employers across Ireland will face a major change in how pensions are handled. The government is introducing a mandatory auto-enrolment pension scheme called My Future Fund.

For the first time, private sector employees without a pension will be automatically enrolled in a State-run retirement savings plan and employers will be legally required to contribute.

This shift is designed to tackle Ireland’s pension gap. Today, more than 750,000 private sector workers have no private pension and are on track to rely solely on the State Pension currently just over €15,000 per year. Auto-enrolment aims to fix that by making it easier, more automatic, and more inclusive for workers to save for retirement.

But it’s not just about employees. This new system creates new financial and compliance responsibilities for employers too. This guide walks you through exactly what to expect and how to prepare for it well before January 2026.

What Is Auto-Enrolment?

Auto-enrolment means employees will be enrolled into a workplace pension scheme automatically rather than having to opt in. The State is introducing this model to ensure every worker earning over €20,000 per year has access to a pension, even if their employer doesn’t currently offer one.

Once the scheme is live, eligible employees will be enrolled into the national pension system My Future Fund  and contributions will be taken directly from payroll. Employers must match the employee’s contribution, and the State will add a top-up.

The entire system will be run by a new body called NAERSA (National Automatic Enrolment Retirement Savings Authority), which will handle administration, investment management, and employee accounts.

Employers won’t need to set up their own pension scheme unless they want to but they will need to ensure payroll is configured correctly, and contributions are paid on time.

Who Will Be Enrolled?

Eligible employees are those who:

• Are aged between 23 and 60

• Earn €20,000 or more per year across all employments

• Are not already contributing to a qualifying workplace pension scheme

Employees outside these parameters such as part-time staff, those under 23, or over 60 won’t be auto-enrolled, but can choose to opt in voluntarily.

If an employee already has a pension through work, they won’t be auto-enrolled. However, employers will need to record these schemes in payroll so the State knows they are exempt.

What Are the Contribution Rates?

Contributions will be shared by the employee, employer, and the State.

Initial contributions will start small:

• Year 1–3: 1.5% from employer, 1.5% from employee, and 0.5% from the State

• Year 4–6: 3% employer and employee, 1% State

• Year 7–9: 4.5% employer and employee, 1.5% State

• Year 10 onward: 6% employer and employee, 2% State

By 2035, that adds up to a total of 14% of an employee’s gross salary being saved toward their retirement — of which less than half comes directly from the employee’s own pay packet.

Employer contributions are tax deductible and not treated as a benefit-in-kind for the employee. Employee contributions do not receive traditional tax relief, but the State top-up acts as an equivalent.

Can Employees Opt Out?

Yes but only after they’ve been enrolled for 6 months.

There is a specific opt-out window during months 7 and 8. If an employee opts out during that time, they’ll receive a refund of their own contributions. Employer contributions and the State top-up remain locked into the fund the employee can’t access them, but they’re still credited toward their retirement.

If an employee opts out, they’ll be automatically re-enrolled after about two years if still eligible.

Employees also have the option to suspend contributions temporarily for up to 2 years, without a refund.

When Does It Start?

Auto-enrolment was originally planned for late 2025 but has now been confirmed to begin with payroll cycles in January 2026.

This aligns with the tax year and gives employers time to adjust systems and budgets. Expect the system to go live in Q4 2025 in terms of setup and configuration.

All employers  regardless of size will be included from day one. There is no staggered rollout.

What Employers Need to Do

As an employer, you won’t need to set up your own pension plan. But you will need to:

• Identify eligible employees in your workforce

• Configure your payroll software to handle auto-enrolment

• Deduct employee contributions and match them

• Remit all contributions (employee, employer, and State) to NAERSA promptly

• Notify employees of enrolment and their rights

You’ll receive ‘AEPN’ notifications through payroll systems to guide the exact deductions. Most payroll providers are updating software to support this automatically.

Employers who don’t comply may face fines or enforcement action. Failing to remit contributions or discouraging employees from staying enrolled is not just non-compliance — it’s a legal offence.

Benefits for Employers

• You’re contributing to your employees’ long-term financial wellbeing a major plus for retention and recruitment.

• You don’t have to manage a pension scheme. The State runs it for you.

• Contributions are tax deductible and don’t incur PRSI or benefit-in-kind complications.

• You can use this to show that you value your team without taking on the administrative load of a private scheme.

Challenges to Be Aware Of

• Employer contributions start small but will rise to 6% of gross salary by 2035 a real cost you need to plan for.

• Payroll updates and process changes will take tim

e, especially if you manage payroll internally.

• Contributions are non-refundable, even if employees opt out. Your money stays in their pension.

• Failure to comply could lead to enforcement, penalties, or reputational damage.

How to Prepare Now

Here’s how to stay ahead of the 2026 launch:

1. Review your current pension setup. If you already offer one, check if your employees will be exempt.

2. Work with your accountant or payroll provider to update your systems before Q4 2025.

3. Budget for the 1.5% employer contributions starting in January 2026 and for future increases.

4. Plan employee communications. Be clear, transparent, and supportive many will be new to pensions.

5. Follow NAERSA updates and use their resources to understand your obligations in full.

Final Thought

This scheme represents one of the most significant updates to Ireland’s pension landscape in decades. While it comes with new responsibilities, it also brings clarity, structure, and a shared investment in your team’s future.

With some thoughtful preparation now, auto-enrolment can be a positive change for your business not just another compliance box to tick.

Contact us today at Pathway Financial Management of you have any questions at all, we are always here to help and offer free one – one consultations.