Ireland’s Auto Enrolment (AE) scheme has been 20 years in the making and was finally signed into law in 2024, with a launch date of September 2025. It has also been announced that the scheme will be called ‘My Future Fund’. Automatic enrolment in Ireland is being mooted as a measure that could bridge the pension gap. But how will auto-enrolment pension work and how will it affect your pension plan?
The objective of the proposed auto-enrolment scheme is to ensure that every worker will have access to a workplace pension to supplement the basic state pension.
The aim is to increase active participation of the private sector workforce in supplementary pension provision from a current level of approximately 35%, as measured by the Central Statistics Office, to the long since stated government policy objective of 70% and beyond.
The scheme will mean that all employees not already contributing to an existing employer pension scheme who are aged between 23 and 60 and earning €20,000 or more across all employments, will be required to automatically enrol in the new scheme.
The proposed design envisages matching contributions from employers and employees, with a 33% uplift of the employee contribution from the State in lieu of income tax relief. The initial contribution proposed is 1.5% by both employer and employer and a 0.5% state contribution, totalling 3.5% of an employee’s salary, in year one.
The phase-in of the scheme will mean that contribution requirements will increase every three years by 1.5% for employer and employee, reaching a total contribution of 14% in year 10, made up of 6% each for employers and employees and 2% from the state. These contributions will apply to earnings up to €80,000.
While the proposed scheme is voluntary, the approach is opt-out rather than opt-in. Employees will be able to opt out after month six following commencement and after six months of each tri-annual increase within a two-month window, with employees to receive a refund of their own contributions.
Outside these timeframes the option exists to suspend contributions without a refund. In each case the employer and state contributions also cease. Employees will automatically be enrolled again two years after cessation with the option to further suspend.
Can I rely on the State pension?
Many workers expect the State pension to be their main source of income and this reliance on the State pension will place even more pressure on already strained resources. Therefore, auto enrolment is seen as a viable solution to the pension problem and could encourage people to be more financially aware of the importance of saving for their retirement.
What's best for me?
It's generally considered more beneficial to join your company's existing pension scheme, if they have one in place, rather than relying solely on the auto-enrolment scheme, for a few reasons:
• Company pension schemes usually offer higher employer contributions compared to the minimum contribution requirements of the AE scheme.
• Company pension schemes usually offer more flexible investment options.
• Your company pension provider can give you 24/7 access to your pension, along with helpful tools and calculators to help no matter what life stage you are at.
• You will have access to financial advice and resources to ensure you are on track to meet your retirement goals.
In order to secure a financial future, starting a pension is one of the smartest financial decisions you can make. When choosing a pension, having all the information you need is key. Sound advice is invaluable, so it's a good idea to seek advice from a financial advisor. An independent financial advisor can guide you through the process and help you select the right plan for your circumstances. You can find a local financial advisor near you with the Zurich Advisor Finder. Alternatively, our Financial Planning Team can provide you with more information about Zurich's pension plans and options.