The roll‑out of auto‑enrolment pensions in Ireland has now been pushed past September 2025, and the Government has yet to announce a revised start date. When it does launch, this Government plan, nearly two decades in the making, could be the drive for a positive cultural change towards retirement savings within Ireland.

The system has been successfully implemented in many other countries, including the UK and New Zealand, with strong results in boosting pension participation rates. 

But how will it work in Ireland, and what does it mean for you?

• If you are an employee, read on to find out how auto-enrolment will impact you.
• If you are an employer, you can get free advice on auto-enrolment from our specialised team.

What is an auto-enrolment pension? 

Auto-enrolment is a government retirement savings system for employees who are not already actively paying into a pension arrangement through payroll.

It involves mandatory employer and employee pension contributions into a pension pot as well as a top-up from the Government. As the name suggests, every eligible worker in Ireland will be part of the arrangement automatically.

At the time of writing, around 800,000 workers in Ireland don’t have any kind of pension savings[1]. This means that when they retire, they may only have the state pension as their retirement income.

With auto-enrolment, most workers will have their own pension as well as the State Pension.

One thing that’s important to note is that many of these 800,000 workers would be better off joining their company’s pension plan than under auto-enrolment. However, for those who don’t have that option, auto-enrolment is a solution.

Why can’t I just claim the state pension?

Eligible workers in Ireland can claim the state pension, but right now the State Pension (Contributory) comes to a maximum of just over €15,000 per year: €289.30 per week.

It’s far from pocket change, but for most people without private pension savings this would be a huge drop in both annual income and overall living standards.

On top of this, it’s estimated that by 2050 the ratio of working age people to over 65s in Ireland will have dropped dramatically – from the current five to one down to just two to one[2].

The aim of the auto-enrolment system is to build a culture of saving for retirement in Ireland. The idea is that in retirement, most workers will have their own pension as well as the state pension, leading to a better retirement income overall.

How auto-enrolment will work in Ireland 

When auto-enrolment is brought in, contribution rates will be phased in over several years.

Eligibility for auto-enrolment

Auto-enrolment will apply to every private sector worker in Ireland if they are:

• aged between 23 and 60,
• earning more than €20,000 per year,
• and are not currently included in a pension scheme with contributions made via payroll.

Enrolment is compulsory for six months, after which point you will have the opportunity to opt-out. However, opted-out workers will be enrolled again after two years if they remain eligible.

If you don’t meet the age or earnings thresholds for auto-enrolment, you can still choose to opt-in.

Auto-enrolment contribution rates in Ireland

Contribution rates for auto-enrolment will be phased in over a number of years[3].

At the start of the scheme, eligible employees will contribute 1.5% of their gross salary. This will increase by an additional 1.5% every three years until the employee is contributing 6% of their gross earnings.

Employers must match employee contributions and the Government will match one-third of the employee contribution*. In other words, for every €3 the employee contributes, their employer and the Government will contribute a further combined €4.

This means that when auto-enrolment begins, somebody earning €40,000 will be contributing €600 per year, and their employer and the Government will be adding an extra €800 to their pension fund.

Years	Employee Contribution	Employer Contribution	Government Contribution
0 - 3	1.5%	1.5%	0.5%
4 - 6	3%	3%	1%
7 - 9	4.5%	4.5%	1.5%
10+	6%	6%	2%

Source: Houses of the Oireachtas (2024). (Automatic Enrolment Retirement Savings System Act, 2024, p. 49)

*Note: Employer and Government contributions apply only to salaries up to €80,000. If a person earns more than this, the percentage figure for the employer and Government contributions will be limited to the first €80,000 of gross earnings.

Auto-enrolment vs company pensions

Most employees will be better off in a defined contribution pension scheme with their company rather than auto-enrolment.

Company pension schemes have several advantages:

• Higher contribution rates
• Greater income tax relief
• Better fund choice
• Flexibility around retirement age

Of course, auto-enrolment is a far better option than no pension at all – but it’s well worth discussing your company’s pension with your HR department rather than relying on the state solution.

Income tax relief and auto-enrolment pensions

One key difference between auto-enrolment and a company pension plan is that employee contributions in the latter are subject to income tax relief for eligible workers. In other words, the money you contribute to your pension plan is not counted for income tax purposes.

Auto-enrolment employee contributions do not receive the same income tax relief, but a 33% bonus from the Government. Employees under auto-enrolment will bear the full burden of salary contribution without the cushion of income tax relief.

While the Government contribution to auto-enrolment represents a 33% boost to employee contributions, 40% taxpayers can save €40 in income tax for every €100 they contribute to a pension – and up to a much higher percentage of their salary than auto-enrolment contributions.

This income tax relief on current pension contributions is part of what makes a pension arguably the best investment you can make in this country.

What if I’m already part of a workplace/company pension plan? 

If you are saving into a workplace/company pension plan, nothing will change for you when auto-enrolment comes into play.

If you have questions about your own company pension, you’re best off contacting your company's HR or benefits department as no two pension arrangements are identical.

However, if you're interested in getting started with a pension, you can book an appointment to speak to one of our financial advisors.

Final thoughts on auto-enrolment pensions

Auto-enrolment is a great kickstart for the people of Ireland to pay attention to their retirement savings and get started on a positive savings journey for their working life.

If you’re one of the 800,000 people employed but not already in a pension plan, you will be soon! It’s important to get the best pension plan available to you, and for most employees that will be through their employer’s plan (if they  have one). Speak to your HR department or employer today to understand your options and how you can join.

If there is no pension plan on offer, then auto-enrolment is your next best solution and gets you going on the road to retirement readiness.

  

[1] Auto-Enrolment Guide for Employees | Gov.ie – March 2024

[2] State Pensions I Gov.ie - December 2024

[3] Automatic Enrolment Retirement Savings System Act, 2024 │ Houses of the Oireachtas - July 2024