Auto Enrolment FAQ: Guide for employers

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What is Auto Enrolment?

Auto-enrolment is a new pension savings scheme for employees who are not paying into a pension. They will be automatically included in the scheme but can opt out after 6 months.

The introduction of the Auto-Enrolment Retirement Savings Scheme, called My Future Fund, will start from 1 January 2026.

Under the scheme, the employee, employer, and Government all pay a certain amount into the employee’s pension fund.

What does it mean for employers?

Auto-enrolment will ensure that employees are looked after in retirement without a need for to set up an occupational pension scheme.

What are the benefits of Auto-Enrolment for employers?

• No costs associated with establishing a company pension scheme
• Reduced administrative burden, as scheme management is handled externally
• Assurance that employees’ long-term financial wellbeing is supported
• Enhanced competitiveness and employer brand attractiveness
• Employer contributions qualify as deductible expenses for corporation tax purposes

As auto-enrolment is a new employment right, employers have responsibility to ensure that all eligible employees have access to the scheme.

The legislation sets out compliance and enforcement provisions to ensure that employers meet their auto-enrolment obligations.

Employers who prevent their employees from joining the scheme, or who force their employees to opt out or suspend contributions, may be prosecuted and will be subject to fines and penalties. Withheld or underpaid contributions will attract interest payments.

Employers will also be obliged to inform their employees when they are first enrolled.

The National Automatic Enrolment Retirement Savings Authority will also publish a list of employers who have been convicted of non-compliance.

Who will be automatically enrolled?

Employees will be automatically enrolled in the new pension scheme if they meet the following criteria:

• Aged between 23 and 60
• Not currently part of a pension plan
• Earn €20,000 or more per year

If employees previously contributed to a pension but are not currently contributing, and they meet the other conditions, they will be automatically enrolled.

For employees earning less than €20,000 per year, or not aged between 23 and 60, they can choose to join the pension scheme if they are not already part of a pension plan.

What do employers need to consider?

Employers should be aware that:

• all of your employees meeting the eligibility criteria, who do not already have pension coverage in respect of their employment with you will be auto-enrolled
• you will need to ensure that your payroll software, when updated, can take instruction for enrolment, calculate and pay employee and employer contributions to NAERSA
• you will be required to match members’ contributions up to an eventual maximum of 6% subject to an earnings threshold of €80,000
• if you fail to meet your auto-enrolment obligations as an employer, you will be subject to penalties and possibly to prosecution

How much does it cost?

The amount employees pay will be a set rate of their annual salary. The employer will match these contributions, and the Government will contribute an additional amount. Employees cannot pay more or less than the set rate.

The employer and employee will pay 1.5% of the employees annual salary in the first year. This will increase to 6% by year 10.

Year of the auto-enrolment scheme	Employee Contribution Rate	Employer pays	Government pays
1 to 3	1.5%	1.5%	0.5%
4 to 6	3%	3%	1%
7 to 9	4.5%	4.5%	1.5%
10 and after	6%	6%	2%

Example of an employee earning €20,000 a year: 

Year of the auto-enrolment scheme	Employee pays	Employer pays	Government pays	Total payments per year
1 to 3	€300	€300	€100	€700
4 to 6	€600	€600	€200	€1,400
7 to 9	€900	€900	€300	€2,100
10 and after	€1,200	€1,200	€400	€2,800

What is the maximum contribution?

For every €3 that your employee contributes to their pension fund, the employer will contribute  €3, and the Government contribute €1. This means that for every €3 the employee contributes, €7 will be added to their pension fund.

Both an employer’s and the Government’s contributions are capped at €80,000 gross annual salary.

This means for the first 3 years, the maximum amount an employer can contribute is €1,200 a year. This is because 1.5% of €80,000 is €1,200. The maximum amount the Government can contribute is€400 a year, which is 0.5% of €80,000.

For employees earning over €80,000, they can still contribute but the employer or the Government are not obliged to match the contributions on any income over €80,000.

For more details on auto enrolment please contact on Auto Enrolment William McCarthy Payroll Specialist at OSK, or visit Gov.ie 

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