Auto-enrolment is a new pension savings scheme. It is expected to be introduced in early 2025 for certain employees who are not already paying into a pension. These employees will be automatically included in the scheme but can opt out after six months. The primary goal of this scheme is to increase pension coverage and decrease pension inadequacy in Ireland. It is hoped that 850,000 people will be auto-enrolled into the system once it is established.

Who will be automatically enrolled?

You will be automatically enrolled in the pension scheme if you are an employee and:

  • Are aged between 23 and 60
  • Earn more than €20,000 per year, and
  • Are not currently part of a pension plan

The benefit of this new system is that people will have additional income when they retire and will not be solely relying on the State pension.

If a person is not aged between 23 and 60 or does not earn more than €20,000 a year, they will not be automatically enrolled. However, they can still opt in to the pension scheme if they are not already a member of a pension plan.

What are the employer’s obligations?

The employer must contribute into the auto-enrolment pension scheme, along with the employee and the State. For every €3 that an employee puts in, the employer will also put in €3 and the State will top this up by €1.

In the first year of the scheme, the employer and employee will contribute 1.5% of the employee’s annual salary. This will increase to 6% by year 10. Both the employer’s and the State’s contributions are capped at €80,000 gross annual salary. Neither the State nor the employer will be obligated to match an employee’s contribution on income above this cap.

The benefit of the scheme for employers is that they’ll be able to look after their employees without the administrative burden and cost of setting up a pension scheme themselves.

If the employer fails to fulfil their obligations regarding the scheme, they will be subject to penalties and possibly to prosecution. If the employer does not make contributions on behalf of the employee, they may be fined and must make repayments with interest.

For more information and expert advice, contact a member of our Pensions team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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