Ireland's auto enrolment pension scheme launched on 1 January 2026. Every employer with eligible staff must now act. Purpletree HR breaks down the contribution rates, opt-out rules, payroll changes, and compliance deadlines Irish businesses need to know Read more
Ireland’s auto enrolment pension scheme, officially called “My Future Fund“, launched on 1 January 2026, marking the biggest change to workplace pensions in decades. If you’re an Irish employer, the auto enrolment pension in Ireland isn’t optional. Every eligible employee must be automatically enrolled in a retirement savings scheme, with mandatory contributions from you, your employees, and the Government.
At PurpleTree, we’ve been helping Irish SMEs prepare for auto enrolment since the legislation was signed into law in July 2024. In this comprehensive guide, we’ll break down everything you need to know: who’s affected, how much it costs, what your obligations are, and how to ensure your business is fully compliant with auto enrolment pension requirements in Ireland.
Auto enrolment is Ireland’s new mandatory retirement savings system that requires employers to automatically enrol eligible employees into a pension scheme. Unlike traditional workplace pensions where employees choose to opt in, auto enrolment works in reverse: employees are enrolled by default and can only opt out after six months.
The scheme, branded as My Future Fund, is designed to address Ireland’s pension coverage gap. Before the launch, around 800,000 private sector workers had no supplementary pension, leaving them reliant solely on the State Pension (currently just over €17,000 per year). Auto enrolment aims to change this by making pension saving the default for all eligible workers in Ireland.
The Irish Government signed a 15-year contract with Tata Consultancy Services (TCS) to manage enrolment records and benefit disbursement through the My Future Fund platform, with operations run from its Global Delivery Centre in Letterkenny. The three investment managers appointed to the scheme are Irish Life Investment Managers, BlackRock, and Amundi.
The scheme is supervised by the Pensions Authority, ensuring proper governance and investment management.
From 1 January 2026, employees are automatically enrolled if they meet all three of these criteria:
NAERSA assesses employee eligibility, including casual and probationary employees, and notifies employers. Employers can then accept the recommendations or explain why someone shouldn’t be enrolled. Understanding employee eligibility is closely linked to your broader obligations around annual leave entitlements and workplace rights. Auto enrolment applies to all employment types, including:
Important: The €20,000 threshold applies to total earnings across all jobs. A lookback period of 13 weeks is used by NAERSA to determine whether an employee meets the earnings threshold. If an employee works multiple part-time positions and earns over €20,000 combined, they’re eligible.
Employees are not automatically enrolled if:
However, employees who don’t meet the age or earnings criteria can opt in voluntarily if they wish to participate. Employees who previously contributed to a pension but currently don’t will be auto-enrolled if they meet the criteria above.
No. Due to the challenges of integrating them into a payroll-based system, self-employed people are not part of the auto enrolment scheme. However, this may be revisited in future. Self-employed individuals can still set up a PRSA (Personal Retirement Savings Account) or RAC (Retirement Annuity Contract) and take advantage of available tax reliefs. If you need employment advice on how auto enrolment affects your workforce structure, our team can help.
Contributions are phased in over 10 years to allow both employees and employers to adjust gradually. Here’s the complete breakdown:
| Years | Employee | Employer | Government | Total |
|---|---|---|---|---|
| 1–3 (2026–2028) | 1.5% | 1.5% | 0.5% | 3.5% |
| 4–6 (2029–2031) | 3.0% | 3.0% | 1.0% | 7.0% |
| 7–9 (2032–2034) | 4.5% | 4.5% | 1.5% | 10.5% |
| 10+ (2035+) | 6.0% | 6.0% | 2.0% | 14.0% |
For every €3 an employee contributes:
This is a powerful incentive for employees, offering an immediate 133% return on their contribution before any investment growth. Employee contributions are deducted from net income (after income tax, PRSI, and USC have been applied).
| Years | Employee Pays | Employer Pays | Government Pays | Total Annual |
|---|---|---|---|---|
| 1–3 | €300 | €300 | €100 | €700 |
| 4–6 | €600 | €600 | €200 | €1,400 |
| 7–9 | €900 | €900 | €300 | €2,100 |
| 10+ | €1,200 | €1,200 | €400 | €2,800 |
| Years | Employee Pays | Employer Pays | Government Pays | Total Annual |
|---|---|---|---|---|
| 1–3 | €750 | €750 | €250 | €1,750 |
| 4–6 | €1,500 | €1,500 | €500 | €3,500 |
| 7–9 | €2,250 | €2,250 | €750 | €5,250 |
| 10+ | €3,000 | €3,000 | €1,000 | €7,000 |
Employer and Government contributions are capped at a gross annual salary of €80,000.
Example: An employee earning €100,000:
Note: Employees cannot make Additional Voluntary Contributions (AVCs) to their auto enrolment pension pot. Those who want to save more for retirement must set up a separate pension arrangement.
One of the most common questions employers and employees ask is how auto enrolment pension tax relief compares to traditional pension schemes. The answer is important for understanding the true value of the scheme.
Unlike traditional occupational pensions or PRSAs, auto enrolment does not offer income tax relief on employee contributions. Instead, the Government provides a top-up equivalent to one-third of the employee’s contribution, effectively a 25% tax relief equivalent.
This means:
| Feature | Auto Enrolment (My Future Fund) | Traditional Pension (PRSA / Occupational) |
|---|---|---|
| Tax Relief | Government top-up (25% equivalent) | Income tax relief at marginal rate (20% or 40%) |
| Contribution Source | Deducted from net income | Deducted from gross income (pre-tax) |
| Benefit for Standard Rate (20%) Taxpayers | Slightly better (25% vs 20%) | 20% tax relief |
| Benefit for Higher Rate (40%) Taxpayers | Worse (25% vs 40%) | 40% tax relief (more beneficial) |
| Employer Contributions Tax-Free? | Yes (not treated as benefit-in-kind) | Yes (not treated as benefit-in-kind) |
Good news for employers: your auto enrolment contributions are deductible against corporation tax, just like occupational pension contributions. This means your employer contributions are effectively reduced by 12.5% (the standard corporation tax rate). Our payroll services team can help you manage these deductions efficiently.
While auto enrolment is mandatory for employers, employees have flexibility to opt out or suspend their contributions.
Employees can opt out during specific two-month windows:
What happens if they opt out:
In the first 10 years of the scheme (until 2035), when contribution rates gradually increase, employees who opt out in months 7 or 8 following a rate change are refunded the difference between the old and new contribution amounts paid over the previous six months.
Employees can suspend their contributions at any time without getting a refund:
This flexibility recognises that financial circumstances change, and employees might need to suspend contributions temporarily during periods of financial difficulty.
Under the auto enrolment scheme, employees don’t need to choose an investment strategy unless they want to. The scheme includes a default lifecycle fund that automatically adjusts the investment mix as employees approach retirement, starting with higher-risk growth assets and gradually moving to more conservative investments.
For employees who want more control, there are typically four fund options:
Funds are managed professionally by the three appointed investment managers (Irish Life Investment Managers, BlackRock, and Amundi) with oversight from the Pensions Authority. The Government has indicated that annual management charges (AMCs) will be kept below 0.5% of assets.
Important: Employees can only access their auto enrolment pension pot when they reach the State Pension age (currently 66). Unlike occupational pension schemes, where funds may be accessible from age 50 in certain circumstances, there is no provision for early drawdown from auto enrolment, except in cases of ill health.
Auto enrolment brings significant new obligations and costs for Irish businesses. Here’s what you need to know:
NAERSA sends an Automatic Enrolment Payroll Notification (AEPN) through payroll software, detailing the contribution amounts an employer (and their employee) must pay. The easiest payment option is a variable direct debit, which can be set up through the auto enrolment employer portal. Contributions must be paid at the same time as the employee is paid, and details must be included on the employee’s payslip.
Year 1–3 Cost (1.5% of salary):
Year 10+ Cost (6% of salary):
Remember: employer contributions are deductible against corporation tax, so the effective cost is reduced by 12.5%.
Non-compliance with auto enrolment can result in:
The Pensions Authority has enforcement powers to ensure employers meet their obligations. If you need guidance on your compliance obligations, our employment advice team can assist.
If you already offer a workplace pension, you might not need to make major changes, but you need to check carefully.
Employees are exempt from auto enrolment if they’re already in:
However, the employer pension plan must be open to all employees from their day of hire (or from the day of hire for those over 23, or over 23 earning more than €20,000). Even if your employees don’t contribute to your existing scheme, they’re exempt from auto enrolment as long as you continue to make contributions on their behalf.
If your current pension scheme doesn’t meet the criteria, you’ll need to either:
Key Consideration: Many existing schemes are voluntary (employees choose to join). Auto enrolment is mandatory, and you must enrol all eligible employees by default.
| Feature | Auto Enrolment (My Future Fund) | PRSA | Occupational Pension |
|---|---|---|---|
| Enrolment | Automatic (mandatory) | Voluntary (employee opts in) | Voluntary (employee opts in) |
| Government Contribution | Yes (0.5%–2%) | No | No |
| Tax Relief | Government top-up (25% equivalent) | At marginal rate (20% or 40%) | At marginal rate (20% or 40%) |
| Portability | Yes (pot follows member) | Yes | Varies |
| Administration | Centralised (NAERSA) | Provider managed | Employer/provider managed |
| Contribution Flexibility | Fixed rates only | Flexible | Often flexible |
| AVCs Allowed | No | Yes | Yes |
| Early Access | No (State Pension age only) | From age 60 (or earlier) | From age 50 (in some cases) |
The National Automatic Enrolment Retirement Savings Authority (NAERSA) is a new public body established to run the scheme.
Auto enrolment is now live. Here’s what you need to have in place:
Auto enrolment launched on 1 January 2026, following delays from the originally planned September 2025 rollout. The scheme, branded as My Future Fund, is now live and all eligible employers must be compliant.
In Years 1–3 (2026–2028): 1.5% employee, 1.5% employer, 0.5% Government (3.5% total). By Year 10+ (2035+): 6% employee, 6% employer, 2% Government (14% total). Rates increase every three years.
Yes. Employees can opt out during a two-month window after 6 months of being enrolled, and again each time contribution rates increase. If they opt out, they receive a refund of their own contributions but employer/Government contributions remain in their fund and continue to be invested.
Yes, as long as they meet the eligibility criteria: aged 23–60, earning €20,000+ annually, and not already in a pension scheme. Hours worked don’t matter. Only age, earnings, and pension status are considered.
The pension pot follows the employee to their new job under a “pot-follows-member” system. There’s no need to set up a new pension, as NAERSA manages the transfer automatically. If an employee is leaving due to redundancy, their auto enrolment pension pot is entirely separate from any redundancy entitlements they may be owed.
Yes. Auto enrolment is a centralised state-run scheme with mandatory enrolment and Government top-up contributions. PRSAs are individual pension products offered by private providers with income tax relief at marginal rates (20% or 40%) instead of a Government top-up. However, employees already contributing to a PRSA with employer contributions are exempt from auto enrolment.
Employer and Government contributions are capped based on a salary of €80,000. Employees can contribute on higher salaries, but employer/Government matching stops at €80,000. The maximum employee contribution rate will be 6% from Year 10 onwards.
It depends. Directors who are employees for PRSI purposes are included. Directors who are self-employed for PRSI purposes (usually those with controlling shareholdings) are not eligible.
Simple formula: Number of eligible employees x Average salary x Employer contribution rate
Example: 20 employees x €35,000 average salary x 1.5% = €10,500/year (Years 1–3). Remember this is deductible against corporation tax.
They’re eligible for auto enrolment. The €20,000 threshold applies to combined earnings across all employments. Each employer must enrol them and contribute based on the earnings paid by that employer.
No. Auto enrolment does not change or replace the existing State Pension. It is designed to supplement the State Pension by helping workers build an additional retirement fund. Eligible workers will receive both their auto enrolment pension and the State Pension in retirement.
Employees can only access their My Future Fund pension pot when they reach the State Pension age (currently 66). There is no provision for early drawdown, except in cases of retirement due to ill health. If an employee passes away, their savings are incorporated into their estate.
Yes. The UK introduced auto enrolment in 2012 with strong results, as only around 10% of people opt out. Other countries with similar systems include New Zealand, Germany, France, the Netherlands, Poland, Italy, Turkey, and Lithuania.
Employees aged over 60 are not automatically enrolled in the auto enrolment pension scheme. However, they can opt in voluntarily if they wish to participate. Employer and Government contributions still apply if they choose to join. Employees aged 23 to 60 who are already enrolled remain in the scheme even after turning 60, but they simply stop being eligible for automatic re-enrolment if they previously opted out.
NAERSA provides an online calculator on the My Future Fund website where both employers and employees can estimate contribution amounts based on salary and the current phase of the scheme. For employers with multiple staff, our payroll team can run a full cost projection across your entire workforce.
If an employee opts out of auto enrolment or suspends their contributions, they are automatically re-enrolled after 2 years if they still meet the eligibility criteria (aged 23–60, earning over €20,000, not in another pension scheme). This means employers need ongoing processes to handle cyclical re-enrolments, not just a one-time setup. Our HR software can automate this tracking.
The combination of minimum wage increases in Ireland and auto enrolment contributions means employment costs are rising for Irish SMEs. In Year 1, the 1.5% employer contribution is modest, but by Year 10 the 6% obligation on top of any wage increases creates significant additional costs. Employers should budget for both together and consider how auto enrolment interacts with their broader employee benefits package.
Auto enrolment represents a significant change for Irish businesses. At PurpleTree, we’re helping SMEs navigate auto enrolment with:
Our HR Duo software integrates seamlessly with auto enrolment requirements:
We’ll help you create:
Auto enrolment is now live, and every eligible Irish employer must be compliant. The businesses that prepared properly are handling the transition smoothly. If you haven’t set up your processes yet, act now to avoid penalties, errors, and stressed HR teams.
Don’t wait any longer.
Contact PurpleTree today and let our experienced team guide you through auto enrolment pension compliance. Our essential HR services cover everything from auto enrolment setup to ongoing compliance management. We’ve helped hundreds of Irish SMEs navigate complex HR compliance, and auto enrolment is just the latest challenge we’re ready to solve with you.
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About PurpleTree: We’re Ireland’s trusted HR partner for SMEs, providing practical compliance support, cloud-based HR software (HR Duo), and expert advice on employment law, workplace relations, and health & safety. Our team brings decades of experience helping Irish businesses work smarter.
Related reading: What Are the Different Types of Employee Benefits? | Why Financial Planning Matters and How Payroll Software Can Help | Sick Pay Ireland 2026 | Minimum Wage Ireland 2026 | Annual Leave Ireland | Bereavement Leave Ireland
Auto-enrolment – Employer frequently asked questions (Gov.ie)
Automatic Enrolment Retirement Savings System Act 2024 (irishstatutebook.ie)
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