Auto-enrolment pension obligations are now live in Ireland, and employers are already making costly mistakes. From eligibility errors to mishandled opt-outs, here are the pitfalls Purpletree's payroll and HR teams see most often Read more
The auto-enrolment pension system in Ireland is no longer something employers can plan for later. It launched on 1 January 2026, and employees across the country are already being enrolled into the MyFutureFund scheme. For many Irish SMEs, the first few months have brought confusion, missed deadlines, and costly administrative errors. Our payroll team has already fielded dozens of calls from employers who assumed auto-enrolment would be straightforward. It rarely is.
Here are the most common auto-enrolment pension mistakes we are seeing Irish employers make in 2026, and why each one creates real financial and compliance exposure.
This is the single biggest misconception we encounter. Many employers already offer occupational pension schemes or PRSAs and assume that ticks the auto-enrolment box. It does not.
The Automatic Enrolment Retirement Savings Act 2024 created a separate statutory obligation. Employees who meet the eligibility criteria and are not already contributing to a qualifying pension arrangement must be enrolled into the MyFutureFund scheme. Having an existing scheme available is not the same as having every eligible employee actively contributing to it.
The gap often sits with employees who were offered the company pension but never joined, or those who opted out years ago. Under auto-enrolment, these workers must now be enrolled unless they are already making contributions elsewhere. Getting this assessment wrong means you are either failing to enrol people who should be enrolled, or duplicating contributions unnecessarily. Both create problems.
Our HR Essentials clients benefit from a full workforce audit before any enrolment decisions are made. That audit is the only reliable way to identify who falls into scope and who is genuinely exempt.
Auto-enrolment applies to employees aged between 23 and 60 who earn more than €20,000 per year and are not already in a qualifying pension arrangement. That sounds simple enough for salaried, full-time staff. It gets complicated fast for employers in hospitality, retail, and other sectors where variable hours are the norm.
A worker doing 25 hours one week and 35 the next might cross the €20,000 threshold in some months but not others. Seasonal workers may earn above the threshold during peak periods. Employers need to track annualised earnings, not just weekly pay, to determine eligibility accurately.
NAERSA (the National Automatic Enrolment Retirement Savings Authority) uses Revenue payroll data to identify eligible employees. If your payroll reporting is inconsistent or inaccurate, you may find NAERSA flagging employees you thought were below the threshold, or missing employees who should have been enrolled months earlier.
This is where outsourced payroll management pays for itself. Accurate, real-time payroll data is the foundation of auto-enrolment compliance, and getting it wrong at the payroll level cascades into every other obligation.
Employees have the right to opt out of auto-enrolment, but the process is tightly regulated. They cannot opt out during the first six months of enrolment. After that, they have a two-month window to do so. If they miss that window, they remain enrolled until the next opt-out opportunity.
The mistakes we see here fall into two categories. The first is employers actively encouraging employees to opt out, sometimes to avoid the employer contribution cost. This is prohibited under the legislation. Any evidence that an employer influenced an opt-out decision could result in penalties from NAERSA and a requirement to re-enrol the employee with backdated contributions.
The second mistake is processing opt-outs incorrectly. An employee who verbally says “I do not want the pension” has not opted out. The opt-out must follow the prescribed process through the auto-enrolment system. Employers who stop deductions based on an informal conversation are exposing themselves to contribution arrears and compliance action.
A situation we see frequently is managers on the ground making well-intentioned promises to staff about opting out immediately, not realising the six-month waiting period applies. This creates employee relations issues on top of the compliance risk.
Auto-enrolment does not just require a policy decision. It requires your payroll system to calculate, deduct, and remit contributions accurately every pay cycle. The contribution rates for 2026 are 1.5% from the employee, 1.5% from the employer, and a State top-up of 0.5% of gross pay. These rates will increase in phases over subsequent years.
The payroll complexity is significant. Contributions must be calculated on gross pensionable pay, which may differ from total gross pay depending on how your payroll categorises allowances, overtime, and benefits in kind. Some payroll software packages needed updates to handle MyFutureFund deductions correctly, and not every employer applied those updates before the January deadline.
When we onboard new payroll clients, the auto-enrolment configuration is now one of the first things we check. Incorrect deductions, even by small amounts, compound over time and create reconciliation headaches that are far more expensive to fix retrospectively than to get right from the start.
Employers who breathed a sigh of relief when employees opted out need to understand that auto-enrolment is not a one-time event. Employees who opt out must be automatically re-enrolled every two years. This is a recurring administrative obligation, not a set-and-forget process.
The re-enrolment cycle means employers need a tracking system to flag when opt-out periods expire and re-enrolment is triggered. Miss that window and you are non-compliant. Rely on manual diary notes and you will inevitably lose track, especially as your workforce changes over time.
In our experience advising employers across Ireland, this recurring obligation catches businesses off guard more than the initial enrolment. The initial rollout had heavy media coverage and industry support. The quiet, ongoing re-enrolment cycle two years later will not have that same visibility, and that is exactly when mistakes happen.
Auto-enrolment means deductions from employee pay. Even though it is a statutory requirement, employees who do not understand what is happening will be frustrated, confused, or both when they see a smaller net pay figure.
Employers have a legal obligation to provide information about auto-enrolment to eligible employees. Going beyond the legal minimum with clear, plain-language communications is not just good practice; it prevents the wave of payroll queries that we see overwhelming HR teams and line managers in the first pay cycle after enrolment.
The communication challenge is compounded in workplaces with multiple languages, shift patterns that make team briefings difficult, or high turnover where new starters need to be brought up to speed continuously. This is operational HR work that Purpletree’s HR Essentials service handles as part of ongoing client support.
Many employers have handed the entire auto-enrolment rollout to their accountant or bookkeeper. While the financial mechanics sit in payroll, the people management side is just as significant.
Employee queries, opt-out conversations, new starter onboarding, policy documentation, manager training on what they can and cannot say about opting out: all of this is HR territory. Employers who treat auto-enrolment purely as a numbers exercise end up with disengaged employees, inconsistent messaging from managers, and compliance gaps that only surface when NAERSA comes looking.
When we guide clients through auto-enrolment at Purpletree, we coordinate across payroll, HR policy, and employee communications. That joined-up approach is the difference between ticking a box and actually being compliant in a way that holds up to scrutiny.
Auto-enrolment touches payroll, employment contracts, employee communications, and ongoing compliance tracking. It is not a single task; it is a permanent addition to your employer obligations.
Purpletree’s payroll service ensures contributions are calculated and remitted correctly every cycle. Our HR Essentials service covers the policy updates, employee communications, and ongoing administration that auto-enrolment demands. And our strategic consulting team can review your existing pension arrangements alongside auto-enrolment to make sure nothing conflicts or duplicates.
If you are unsure whether your auto-enrolment setup is compliant, or you are already seeing issues, get in touch with our team before small errors become expensive ones.
NAERSA has the authority to issue compliance notices and, where employers fail to correct errors, impose financial penalties. The exact penalty structure allows for escalation, so repeated or deliberate non-compliance carries heavier consequences than a genuine administrative error corrected promptly. The legislation also provides for criminal offences in cases of persistent non-compliance.
No. Only the employee can choose to opt out, and only during the permitted opt-out windows. Employers must not encourage, incentivise, or pressure employees to opt out. Doing so is a breach of the auto-enrolment legislation and can result in enforcement action from NAERSA.
Employees who are already making contributions to a qualifying pension arrangement (occupational pension scheme or PRSA) at the point of eligibility assessment are excluded from auto-enrolment. The operative word is “contributing.” Having access to a pension scheme but not actively paying into it does not count as being in a qualifying arrangement.
Act quickly. Enrol the employee as soon as the error is identified and make good on any missed contributions (both employer and employee portions). Documenting the error and the corrective steps taken demonstrates good faith. For employers who are unsure how to handle retrospective enrolments, Purpletree’s payroll and HR teams can manage the correction process end to end.
This article is for general informational purposes only and does not constitute legal advice. Employment law is complex and fact-specific. For advice on your specific situation, contact the Purpletree HR team directly.
Our team of HR specialists advises Irish employers on exactly these issues every day. Get in touch for a confidential conversation.
Speak to Our Team
Register Now:
You will receive a confirmation email with a Zoom invitation in advance of the Breakfast Briefing.
