1. Pensions Auto-Enrolment
The introduction of a Pensions Auto-Enrolment Scheme, which will be known as “My Future Fund,” will commence in Ireland on 30 September 2025. This is a delay from the initially planned introduction of January 2025. The legislation that governs this is the Automatic Enrolment Retirement Savings Systems Act 2024.
Key points of the scheme include:
- Eligibility: Workers aged 23-60 who are employed but not enrolled in an occupational pension scheme or PRSA and who earn more than €20,000 annually. Employees younger than 23 and older than 60, or those earning less than €20,000 per year, will be able to opt into the scheme if they wish.
- Contributions: Employee contributions will be matched by employers and topped up by the State. The scheme will be phased in over 10 years, with initial employee and employer contributions starting at 1.5% of gross salary and increasing in 3-year intervals by 1.5% until eventually reaching 6% by the tenth year. Contributions will be capped at €80,000 of gross earnings. The State will provide a top-up contribution at a rate of €1 for every €3 contributed by an employee and employer. Contributions will be fixed at a set rate, and it will not be possible for an employee or their employer to pay more or less than the fixed rate.
- Opt-out & suspension: Employees can opt out during months 7 and 8 after enrolment and receive a refund of their contributions. In that event, employer and state contributions will stay in the employee’s pension pot, and will not be refunded to the employer or State. Employees will also be able to suspend auto-enrolment for a minimum of one year and a maximum of 2 years, if they wish. If that suspension happens, the employer and State contributions will also be paused during that time.
- Administration: The National Automatic Enrolment Retirement Savings Authority (NAERSA) will manage the scheme, commencing operations on 31 March 2025. NAERSA will be responsible for administering the scheme, ensuring compliance, collecting all the contributions, and investing the money on an employee’s behalf. NAERSA will use Revenue payroll data to determine eligibility and will manage an online portal for both employees and employers to facilitate the scheme’s operation.
- Purpose: To encourage earlier pension contributions, ensuring individuals have more than solely the State pension upon retirement.
Employers are advised to:
- Stay informed and keep up to date with the latest information from the Department of Social Protection, the Pensions Authority, and NAERSA.
- Map out the workforce to determine who is or isn’t going to be enrolled. Employers should review their current pension arrangements and eligibility requirements to determine how their scheme(s) will interact with My Future Fund and whether there will be employees who will be eligible for auto-enrolment. If employers do have a pension scheme currently in place, but not all employees are enrolled – employers might consider inviting those employees to be members of your existing pension scheme rather than having them auto-enrolled.
- Develop some form of communication strategy with employees about My Future Fund, how it will affect them, the contribution rates, and the opt-out process, particularly if employers have a large number of employees who will be enrolled.
- Budget for contributions and plan for the additional cost of employer contributions, which will start at 1.5% of eligible employees’ salaries;
- Prepare payroll systems. Employers should work with payroll providers to ensure their systems can handle the new contribution requirements.