Pension Auto-Enrolment 2026: What Employers and Employees Need to Know

Introduction

The 1st of January 2026 will mark the introduction of a new statutory based pension auto-enrolment scheme into Irish law.

This article outlines the key considerations for both employers and employees.

Auto-Enrolment Scheme Overview

The new auto-enrolment scheme sometimes referred to as ‘My Future Fund’ will apply to employees aged between 23 and 60 who earn €20,000 or more, and who are not already contributing into a workplace pension or PRSA via payroll.

Employees who fall within this criterion will be automatically enrolled with contributions at 1.5% of salary both from the employer and the employee. This will increase gradually over 10 years until the contributions from the employer and employee total 6%.

The Irish State will also make a top-up contribution of €1 for every €3 contributed by the employee and the employer.

Employees will however have the option to opt-out (after 6 months) or to suspend their participation.

There is an earnings limit of a maximum of €80,000 gross pay to which the contributions will apply. Once an employee has reached the €80,000 gross pay threshold in a given year they will cease to make contributions on earnings after the pay threshold is breached.

Key Considerations for Employers

• Employers Need to Prepare in Advance: Payroll providers and smaller businesses in particular need time to adjust systems to handle deductions, remit contributions and issue notifications etc.

• Use of Existing Pension Schemes: Employers who already offer either occupational pensions or PRSA’s through payroll, should make enquiries to ensure that their existing scheme qualifies for exemption under the auto-enrolment law. In cases where a scheme does not qualify, employers will need to set up new arrangements or adjust their existing scheme.

• Understand the Cost and Budgeting Implications: While contributions will start off modestly, the introduction of auto-enrolment will mean increased labour costs for employers.

• Communicate Effectively with Staff: Employees may have little knowledge of how auto-enrolment works: what their contributions will be, how opt-out works and what benefits they can expect. Clear and early communication will be vitally important.

• Key Upcoming Dates: Employers must register for pension auto-enrolment via the National Automatic Enrolment Retirement Savings System ("NAERSA") portal between 1 December 2025 and 31 December 2025. 

  • Payroll providers need to be ready before the 1st of January 2026.

  • Employers should establish well in advance whether their staff are in an existing pension scheme and identify who is affected in terms of age profile.

Key Considerations for Employees

• Check if you are Already in a Qualifying Pension Scheme: If you are already contributing to a pension through your employer or a PRSA via payroll, you may be exempt from auto-enrolment.

• Know your Eligibility: Auto-enrolment only applies to employees between the ages of 23 and 60, with an earnings threshold of €20,000, who are not in an existing workplace pension. Even if an employee does not meet these criteria, they may be able to opt in voluntarily.

• Understand Opt-Out / Suspension: Employees need to be aware that if they are auto-enrolled, they have the right to opt out of the scheme after six months. If they do opt out, the contributions paid in by them, their employer and the State cannot be withdrawn and will remain in their pension pot.

• Employees Should Think Long-Term: Even though contributions will start off small, they should compound and grow over many years and make a real difference to pension planning.

• Review your Current Pensions: Employees can also consider having a separate private pension, and should familiarise themselves with the available tax reliefs, flexibility and investment options and compare those with what auto-enrolment will offer.

Key Challenges

• Small businesses may struggle with implementation and the cost of introducing systems and with understanding what is required of them.

• Employees may complain and resist if they are not well-informed of the benefits of auto-enrolment.

• Ensuring fairness for those whose earnings fluctuate around the threshold.

• Employers will need to communicate with existing pension providers or schemes to avoid duplication or gaps.

Conclusion

Pension auto-enrolment will present a big change in how many people in Ireland save for retirement.

For employers, it means effective planning, investing in systems and providing clear communications to employees.

For employees, it means being informed about eligibility, contributions and how this interacts with any pension schemes they may already have in place.

If well done, it has the potential to significantly improve retirement outcomes.

Further Information

For expert legal guidance on how the Pension auto-enrolment scheme affects employers and employees, please contact Marc Fitzgibbon (Partner) or Nikita Kelly (Solicitor) in our Employment Team.