Auto-enrolment pensions in Ireland: everything you need to know

Ireland’s new auto-enrolment pension scheme has passed into law and is due to start next year. Under this new initiative, certain employees will be automatically enrolled into a retirement savings scheme.

Discover whether you qualify for this retirement savings system, how contributions work, and how both employees and employers can benefit from automatic pension enrolment.

From 30 September 2025, employers will automatically enrol eligible workers into a workplace pension scheme as part of a Government initiative to get more people saving for retirement.

The auto-enrolment pension in Ireland is being introduced to tackle the retirement savings gap in Ireland. According to data from 2023, nearly a third of workers in Ireland have no pension coverage other than the State Pension*. Depending on their desired lifestyle in retirement, these individuals might need an additional source of income to maintain it.

So, the Government aims to overhaul the current system by introducing the automatic enrolment pension. The Department of Social Protection has said that more than 750,000 workers will be automatically signed up to this new pension in Ireland. This will allow employees to save for their retirement little by little throughout their working life, and prevent them having to rely on the State Pension alone.

Auto-enrolment in Ireland works on a contribution-matching basis to incentivise workers to stay in the scheme and build up their pension pot. What this means is that the pension receives contributions from the employee, employer, and the Government to bolster its funds.

When you contribute €3 to your pension fund, your employer matches it with €3, and the Government will put in €1. The exact amount you and others pay into the scheme will be based on a fixed percentage of your salary before tax.

Contributions to an auto-enrolled pension are calculated on salaries of up to €80,000. If you earn more than this, you will only pay contributions on the initial €80,000.

Contributions to the auto-enrolment pension will be based on a set percentage of your salary or monthly wages and then deducted through payroll. To start with, you contribute 1.5% of your income before tax. The rates will gradually increase over 10 years, with an additional 1.5% added every three years.

Your auto-enrolment pension contributions are then matched by your employer, while the State’s contributions equate to a third of your contributions. So, from 2035 onwards, the pension contribution limit will be 6% per employee, 6% per employer, and a 2% top-up from the Government.

The gradual roll-out of automatic enrolment in Ireland is designed to make it easier for both employee and employer to adjust to new procedures and the difference in income.

Here’s an example of how this will look for someone with a salary of €40,000:

These rates refer to the auto-enrolment pension in its first years of operation, and contributions will of course vary if your earnings increase or decrease. The amount you end up with in your pension pot will also include returns generated from investments.

You’ll be automatically enrolled in your workplace’s pension scheme if you meet the following criteria:

• Aged between 23 and 60
• Not currently enrolled in a private or occupational pension scheme
• Earning over €20,000 a year (the total across all jobs you hold)

If you meet these three criteria, you’ll be added to an automatic enrolment pension without having to do anything. However, if you earn less than €20,000, or you fall outside the specified age range, you can still choose to opt in if you don’t already pay into a company pension scheme.

The auto-enrolment pension scheme in Ireland works on an opt-out rather than an opt-in basis, as the State wants to encourage participation. However, it is not a mandatory pension in Ireland, and if you’re already enrolled, there are three ways you can opt out.

You can withdraw from the auto-enrolment pension in months seven and eight, or any time the contribution rates increase during the initial 10-year period. If you choose to opt out in either of these ways, any contributions you’ve made yourself will be refunded, while your employer’s and the state’s contributions will stay in your savings pot and continue to be invested.

If you’re having trouble coping with the loss of immediate income, you can also choose to suspend your contributions to the auto-enrolment pension, although this amount won’t be refunded. If you decide to leave the scheme, you can rejoin at any time after leaving. Keep in mind that if you opt out, and you’re still eligible two years after that, you’ll be automatically re-enrolled.

It’s important to note that every eligible employee, whether new or existing, will be automatically enrolled in the scheme, regardless of their work or employment status. Your employer will take care of your enrolment, regardless of whether you work full-time, part-time, are in your probationary period, or casual employment. As long as you’re not already enrolled in another pension plan and meet the automatic enrolment criteria, the scheme will apply to you.

You don’t have to do anything if you change jobs, as the auto-enrolment pension in Ireland is designed to follow you throughout your working life. This means that you can take the savings you’ve accumulated in previous jobs to any new job.

The assessment criteria for the auto-enrolment pension will be based on your total salary from all jobs where you are not enrolled in a supplementary or occupational pension.

Here’s an example to illustrate this:

John is 28 years old and has two jobs where he hasn’t made any pension contributions through payroll in either employment. In the first job, John earns €18,000 annually, and in the second job, he earns €10,000. As John’s total earnings exceed €20,000, he qualifies for automatic enrolment. He will contribute 1.5% of his gross pay for each job, which will be matched by both employers and topped up by the Government.

If you have any other questions related to auto enrolment in Ireland and your own financial circumstances, you can contact the Department of Social Protection by emailing autoenrolment@welfare.ie.

Under the auto-enrolment rules, you can select from four retirement savings funds based on your risk preference. These options include conservative, moderate risk, and higher risk funds, each offering different levels of risk and expected return. If you don’t specify a preference, the default option will be a ‘lifestyle/lifecycle’ investment profile.

Automatic enrolment for pensions has already been successfully adopted in countries like the UK, Australia, Sweden, and Denmark, and the new Irish scheme has been designed to draw on what has worked particularly well in these countries while avoiding some of the pitfalls.

Here are some of the benefits and drawbacks of auto-enrol pensions:

Pros for employees:

• Provides a guaranteed retirement income.
• Your employer contributes to your pension fund as well.
• The state top-up is easy to understand and treats every worker equally, regardless of their income tax rates.
• You will have a range of investment options to choose from.
• An online portal will be introduced to make it easy to manage your pension.
• Offers flexibility as the scheme stays with you even if you change jobs.

Cons for employees:

• The self-employed are excluded from auto-enrol pension schemes. If you are self-employed, you may want to consider a Personal Retirement Savings Account (PRSA).
• You will only get access to the funds in your auto-enrolment pension once you’ve reached the retirement age set by the Government, which will be linked to the State Pension age of 66.
• Because the contribution amounts are fixed, you cannot contribute more, even if you wanted to. This makes them less flexible than, say, a private pension, where you can usually choose your contribution amounts.

Pros for employers:

• Employers don’t have to go to the effort of setting up an occupational pension scheme.
• Any contributions employers make are tax-deductible for corporation tax.
• Creates a more level playing field, so that all employers become more attractive to job applicants.
• It’s a kind of virtuous cycle, as retired people will have more disposable income, boosting businesses and the economy.
• A central processing authority (CPA) will be set up to ease the administrative burden.

Cons for employers:

• Companies have an obligation to contribute to automatic pension schemes in Ireland, impacting short-term cash flow.
• A new scheme could be met with resistance from employees, who may then opt out, affecting overall participation rates.
• While the idea is to make its introduction as smooth and effortless for employers as possible, some level of administration will inevitably be needed to manage the scheme.

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*https://www.cso.ie/en/releasesandpublications/ep/p-pens/pensioncoverage2023/