Ireland's employment landscape is set to undergo a significant transformation with the introduction of Pension Auto-Enrolment. This government-led retirement savings programme will redefine how employees save for retirement and how employers manage their obligations. For businesses of all sizes, understanding and preparing for auto-enrolment is essential to ensure compliance and to support employees effectively.
What is Pension Auto-Enrolment?
Auto-enrolment is designed to ensure that employees who are not already in an occupational pension scheme are automatically enrolled into one. From 1st January 2026, employees will automatically enrol into the scheme called ‘My Future Fund’.
The aim of Pension Auto-Enrolment is to make sure that all workers build up sufficient retirement savings in addition to the state pension, so they have more secure and adequate income for later life.
What is the overall aim of Pension Auto-Enrolment?
The programme is designed to increase pension coverage among private sector workers, by making saving for retirement the default option.
Pension Auto-Enrolment aims to:
Boost participation and bring a large proportion of workers into pension saving
Ensure people have more than just state pension to rely on in retirement
Promote fairness whereby contributions are shared between the employee, employer and the State
Encourage a long-term savings culture so retirement saving becomes automatic, not optional
Key Auto-Enrolment Facts Employers Need to Know
1. Eligibility
Employees aged 23 to 60 who earn over €20,000 per annum (across all employments) will be automatically enrolled. Those outside this bracket, such as younger or older workers, or those earning less, can opt in voluntarily. Employees already contributing to an existing workplace pension scheme will not be included in auto-enrolment.
2. Contributions
Contributions will be shared between the employee, employer, and the State. To ease the transition, these will phase in over ten years:
Years 1-3: 1.5% from employee and employer.
Years 4-6: 3% from each.
Years 7-9: 4.5% from each.
Year 10 onwards: 6% from both employee and employer.
The State will also contribute €1 for every €3 saved by the employee. Under Pension Auto-Enrolment, employee contributions will not qualify for traditional income tax relief, (which means that contributions are paid out after income tax) instead the State contribution compensates for this.
For employers, contributions will be tax-deductible, offering a financial benefit.
How to Prepare Your Business
1. Understand Your Workforce
Conduct a thorough review of your employee base from permanent to temporary/contract staff. Identify who is eligible for auto-enrolment and take note of any workers already covered by existing pension schemes. Having a clear picture of your workforce will help you to plan effectively.
2. Estimate Financial Impact
From a budgeting perspective, employers need to plan carefully for the phased introduction of Pension Auto-Enrolment. It represents a significant additional cost to employers who should subsequently carry out cash flow modelling to understand the short, and medium to long term financial impacts. It is also important to compare the costs and benefits of relying solely on auto-enrolment with the option of enhancing or expanding an existing occupational pension scheme. This may offer greater flexibility and help position the business as a more attractive employer in a competitive market.
3. Educate Your Employees
Auto-enrolment will be unfamiliar to employees. Clear communication is essential to help them understand how the system works, what their contributions mean, and how the State’s matching contributions benefit them. Transparent, consistent messaging builds trust and prevents confusion.
4. Stay Compliant
Non-compliance with auto-enrolment regulations can lead to profound consequences, including fines and reputational damage. Employers must ensure they meet all deadlines, which will be set out in due course by the National Automatic Enrolment Retirement Savings Authority (NAERSA).
What’s Still Unclear?
While the Automatic Enrolment Retirement Savings System Act 2024 is in place, there are grey areas where regulations need to be written to fill in the blanks for employers. Employers are awaiting further guidance on:
How NAERSA will be set up, and its role.
Specific processes for onboarding and offboarding workers.
What decision will be made on Additional Voluntary Contributions (AVCs)
Clarity is needed on retirement benefits and drawdown options
While offences and penalties are mentioned in the Act, specific reporting requirements, compliance deadlines and enforcement mechanisms have yet to be specified
High level rules exist but the operational process for payroll, employee communication, and re-entry is not defined.
At Cpl, we’re closely monitoring updates and will keep our clients informed as new information becomes available.
Moving Forward: A Proactive Approach
Preparing for auto-enrolment is not just about compliance, it’s an opportunity to strengthen workforce management and support employees’ financial wellbeing. By taking proactive steps now, businesses can navigate the transition smoothly and create a more supportive environment for their teams.
Key Steps to Take Now:
Conduct a Workforce Audit: Assess eligibility and identify potential gaps in your current pension provision.
Engage Payroll Providers: To confirm capability to handle Pension Auto-Enrolment, contributions, opt-outs, and re-enrolments.
Communicate Clearly with Employees: Provide resources and support to help them understand the changes.
Partner with a Staffing Expert: The administrative burden of managing auto-enrolment for a temporary workforce can be significant. By partnering with a leading talent solutions provider like Cpl, you can delegate this complexity. We ensure that all compliance, payroll integration, and communication are handled correctly, freeing you to focus on other priorities.
Conclusion
Pension Auto-Enrolment is a transformative change for Ireland’s workforce, ensuring more employees save for their retirement. While it introduces new responsibilities for employers, it also provides an opportunity to enhance workforce management and demonstrate a commitment to employee financial wellbeing.
By understanding the requirements, and communicating clearly with your employees, your business can stay compliant and support its employees through this transition effectively.
Our next blog on this topic, The Hidden Compliance Challenge: Temporary Workers and Auto-Enrolment will explore the unique complexities of managing auto-enrolment for temporary staff and how to stay compliant.