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Pension Auto-Enrolment is coming – Be prepared
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What is Pension Auto-Enrolment ?

The Pension Auto-Enrolment scheme is a Pension scheme that the Government is scheduled to launch in Q4 2024 whereby anyone between 23 and 60, who is not already in a pension scheme, and who earns over €20,000 annually will be automatically enrolled into this new government’s pension scheme.

Why does Ireland need a Pension Auto-Enrolment scheme ?

Ireland is the only country in the OECD that does not have a Pension Auto-Enrolment scheme. It is estimated that only 35% of private sector workers have a supplementary pension provision as measured by the Central Statistics Office (approx. 750,000 employees) with the Government having a long-standing policy to increase this to 70%.  The Pension Auto-Enrolment scheme is to ensure that these employees have adequate income when they retire, and not to be solely dependent on the state pension.  The country’s demographics also influence the decision to implement a Pension Auto-Enrolment scheme. In the future there will be far more retirees than workers, and this will put pressure on the sustainability of the government’s Social Insurance Fund. It’s therefore important for the overall pensions landscape in Ireland that pension coverage and adequacy are increased, and auto-enrolment will strive to achieve that.

Who will be automatically enrolled into the scheme ?

Anyone aged between 23 and 60 years of age, who earn a gross salary of €20,000 or over, and who are not already part of an occupational pension scheme will be auto enrolled into the scheme. If an employee has income over two employments e.g. €10,000 from one, and €12,000 from the other – they will also be automatically enrolled and contributions will have to be paid for both employments. However, if the employee has an occupational pension for one of these employments Auto-Enrolment won’t apply to that particular employment.  Auto-Enrolment is applied regardless of contract type – e.g. employee on probation, or a part-time worker if the above criterion are met.

Who will not be auto-enrolled  ?

Employees that are already part of an occupational pension scheme will not be auto-enrolled.

Workers who are self-employed (e.g. whose tax is social insurance is class S PRSI) will not be auto-enrolled. These would include farmers, professional people (for example, doctors, dentists, and solicitors), certain company directors, People in business on their own (sole traders) or in partnerships, people with income from investments, rents, or maintenance payments and certain artists and childminders who are exempt from income tax.  Non-earners will also be exempt.

How much will it cost and who pays ?

Because it is a new scheme the government are phasing in the contributions both from the employer and the employee over a 10-year period. The employer must match the employee’s contribution and the government will pay a top contribution.  Contributions will start at 1.5% of gross salary before deductions for the employer and employee,and rise by 1.5% every three years until 6% is reached in year 10. The Government’s top-up contribution of .5% initially will also increase by .5% every three years until a maximum of 2% is reached by year 10.

Note this phasing in is for the first 10 years of the Auto-Enrolment scheme, and not the first 10 years of an employee’s career. All new employees joining after year 10 will start at the 6% rate.

To help ease the cost for employers, contributions will be calculated up to a maximum gross salary of €80,000.

Year Employer Contribution rate Employer pays Government Pays
1 to 3 1.5% 1.5% .5%
4 to 6 3% 3% 1.0%
7 to 9 4.5% 4.5% 1.5%
10 and after 6% 6% 2%


Some Key Features of the Auto-enrolment scheme

Opting out

Employees will have to stay in for the first six months, but will be able to opt out in months 7 and 8 and get a refund of their contributions.

Throughout the first ten years of the scheme, participants will also be able to opt out in months 7 and 8 following a contribution rate change. They’ll get the difference between the old and new rate back. At any other time, a participant can suspend their contributions but they won’t get any refund.  While employees  will be able to opt-out as outlined above, after two years they’ll be enrolled back in again – unless they don’t meet the eligibility criteria anymore.

Pension fund

The Government are adopting a pot-follows-member approach to the employee’s accumulated pension fund. So if an employee moves from job to job throughout their career, they keep the same fund.  If an employee opts out of the scheme, the employer and State contributions will stay in the participant’s fund. This is because once the contributions are paid, they become the property of the employee, and it will help them to still build up a pension fund.

Who will manage the scheme ?

A new Government body called the Central Processing Authority will be set up to administer the Auto-Enrolment system.  It’ll be within the Department of Social Protection initially, before becoming an independent body. The Central Processing Authority will administer the scheme in the best interests of the employees, and its remit will include collecting contributions, allocating investment returns, operating an online portal for employees, and facilitating the pot-follows-member approach. It will collect the contributions from the employee, employer and State, and then pool and allocate them to the investment management companies, who will invest the money and returns. This will then be allocated to the employee’s personal fund by the Authority,  and paid on their retirement.

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So how will it actually work ?

Firstly, The Central Processing Authority will use Revenue data to identify eligible employees. When they have been identified, they will be enrolled immediately. This means there are no waiting periods for Auto-Enrolment. The Authority will then send a payroll notification through payroll software, just like Revenue sends payroll notifications for the collection of tax. Employers will apply the payroll notification and calculate the contributions, which will then be sent to the Central Processing Authority. The Authority will collect the State top-up separately.

The contributions will then be sent to the investment management companies, who will invest the money to grow the employee’s pension fund. The Authority will manage the fund, facilitating the pot-follows-member approach and giving employees access to information about it.

Department of Social Protection

How will it impact Employers ?

Budgeting – As an employer you will need to budget for Auto-Enrolment. Based on the contributions outlined previously employers will need to assess and budget for it.

Legal implications – Auto-Enrolment will be enforced by way of legislation so employers will have to facilitate it’s implementation.  There will be a number of protections for employees, including fines and penalties for employers who prevent their employees from joining or who force them to opt-out or suspend contributions. Any withheld or underpaid contributions will attract interest payments.

Administration – The scheme will use existing payroll software that employers already have.  Employers who don’t use payroll software will have access to an employer hub online where they’ll be able to make contributions and check their record. It is being designed to keep the administration impact as low as possible for employers.

Pension schemes & Contracts – Employers will need to review employees’ contracts especially if they currently operate an occupational pension scheme.  If a Company has a waiting period before a new employee is included into their pension scheme, then it is possible that the new employee will be auto-enrolled before they join the Company’s scheme. Employers may need to re-consider employees’ contracts.

How does Auto-Enrolment compare to an occupational pension scheme ?

Auto-Enrolment is a positive move and will improve the Irish pension landscape into future.  However employers and employees should engage with Financial Brokers like Jameson Financial to ensure the best options are taken with regards to their pension decisions. For many employees it will be more advantageous to opt for an occupational pension scheme or a private pension arrangement. Below are the reasons why.


  • Auto-enrolment is rigid and apply fixed criteria in terms of contributions. Occupational schemes provide total flexibility subject to Revenue limits.
  • Additional Voluntary Contributions (AVCs) are not allowed. Occupational schemes will allow AVCs
  • One off contributions are not allowed. Occupational schemes will allow one off contributions.

Tax Benefits

  • There is no tax relief on contributions. This benefits lower rate tax payers but higher rate tax payers are worse off. Occupational schemes offer tax relief at 40% subject to Revenue’s limits.

Retirement Age

  • There is no early access allowed as the retirement age will be in line with the State Pension Age, currently 66 but to increase to 68. Occupational schemes provide access from 50 years onwards.

Fund choices

  • Fund choices are confined to four fund types. Occupational schemes offer much greater fund investment options.


  • There is no financial advice provided and charges will be set for the scheme. Using a Financial Broker like Jameson Financial ensures Staff and Employers receive extensive advice on all options with clarity, negotiation and agreement on charges.


Auto-Enrolment is to be welcomed but employers should ensure they are fully informed of the implications it raises for them and for their staff. Employers should proactively engage now by contacting Jameson Financial or their Financial Brokers to ensure they provide the best pension solutions for their staff and their businesses. Pensions are for the long-term and deserve long-term thinking.

Contact Jameson Financial today  at (086) 2597809

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