From January 2026, the Irish government will launch a new nationwide auto-enrolment occupational pension scheme[i]. The aim is twofold: an extra pension option for employees who already have a workplace scheme or a primary pension plan for employees who do not have a scheme. For employers the auto-enrolment pension involves important financial, compliance and administrative responsibilities.
This article will provide an overview of the new pension scheme and its key benefits, rules and contributions, as well as looking at how businesses can manage the transition smoothly.
What is the auto-enrolment pension scheme?
Auto-enrolment is a mandatory workplace pension scheme for employees in Ireland earning more than €20,000 annually. Employers must automatically enroll eligible employees into a pension scheme in this new initiative.
Key rules & contributions for auto-enrolment
Who is eligible?
Employees who meet the following conditions will be automatically enrolled:
- aged between 23 and 60
- earning €20,000 or more per annum across all employment
- no existing supplementary pension coverage
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will use revenue payroll data to identify eligible employees. Employees will stay enrolled even if their earnings subsequently fall below €20,000.
Can employees opt out of auto-enrolment?
Employees have the option to opt out of the auto-enrolment pension scheme. However, they can only opt out during specific periods:
- Employees can opt out during the seventh and eighth months into enrolment. In this case, their contributions will be refunded
- They can also opt out during the seventh and eighth months following a change in the contribution rate
- After two years, any employee who opted out but still meets the eligibility criteria will be automatically re-enrolled in the scheme
Benefits of auto-enrolment pension for employees
- Ensures employees save enough money for retirement, even if they wouldn’t voluntarily opt for a pension
- Enhances retirement savings with contributions made by the employee, employer and government
- Auto-enrolment means no employee action is required — unless they choose to opt out
- Pension pot remains with the employee if and when they change jobs
- Opt-out option after six months and receive a refund of their contributions if desired
How much do employers and employees contribute?
Contribution rates are likely to gradually increase over the first ten years. Employee contributions will begin at 1.5% of their gross pay. In the fourth year, these contributions will rise to 3%, and in the seventh year to 4.5%. By the tenth year, employee contributions will reach the maximum rate of 6%.
The government will add 33% of the employee’s annual contributions, and the employer matches the employee’s contributions equally. That means that the total contributions will equal 14% of an employee’s gross earnings by year ten. Here is a breakdown of contribution for an employee earning €30,000 annually:
|
Year |
Employee |
Employer |
State |
Total |
|
Year 1 |
€450 (1.5%) |
€450 (1.5%) |
€150 (33% of employee’s total contribution) |
€1,050 (3.5% of total annual earning) |
|
Year 10 |
€1,800 (6%) |
€1,800 (6%) |
€600 (33% of employee’s total contribution) |
€4,200 (14% of total annual earning) |
How can employers prepare for auto-enrolment?
Review existing pension schemes
- Employers should evaluate whether their current pension offerings align with the new pension scheme, or if adjustments are needed
- Guidance from pension consultants or legal advisors will help identify gaps, ensure full regulatory compliance and avoid penalties
Estimate employer contributions
- Under the new pension scheme, employers must contribute a fixed percentage of employees’ salaries. These rates may increase over time, requiring employers to stay abreast of changes
- Incorporating these contributions into long-term financial planning will help in payroll budget preparation and future liabilities forecasting
- Employer contributions to pension schemes may be eligible for tax deductions, reducing some of the financial burden
Communicate with employees
- Employers can conduct workshops and training sessions informing employees about the process, their rights and the benefits of long-term retirement savings
- Maintain transparency with regards to contribution levels of employees and employers to ease any workforce concerns
Introducing a new pension scheme presents an exciting opportunity but requires thorough assessment to ensure everyone understands its implications. For employers, it’s essential to communicate how the scheme works, its benefits and what it means for an employee’s financial future. Engaging with employees throughout this process will be key for a successful implementation. By closely monitoring its impact on the workforce and business operations, employers can make any necessary adjustments for a smooth transition.
What will the consequences be for non-compliance?
Employers failing to adhere to the new pension scheme guidelines are likely to encounter strict action from regulatory authorities. Initially, they may receive a compliance notice requiring them to address the issue within a specified timeframe. Failing to do so can result in fines or legal action.
The government is expected to closely monitor the development of the new pension scheme and employers’ contributions. Full engagement with the auto-enrolment scheme, setting up internal systems and timely planning will be key to upholding the guidelines and avoiding penalties.
Get your business auto-enrolment ready for 2026 with Gallagher
Assessing potential implications and taking early action can help significantly with compliance and financial planning. By partnering with Gallagher, businesses will gain access to expert advice on workforce protection, financial services and long-term pension strategies.
Our tailored pension solutions ensure businesses meet regulatory requirements while minimising administrative burdens and staying focused on their core operations. Contact us to consult with a Gallagher specialist on protecting your workforce and preparing for the new auto-enrolment pension scheme.
[i] “Auto-Enrolment Retirement Savings System for Employees.” Department of Social Protection, updated 15 Apr 2025.
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