Ireland to introduce a new auto-enrollment pension scheme for employees [Updated]

The Irish government passed legislation in July 2024 introducing the mandatory automatic enrollment of eligible employees into a central government-run defined contribution pension fund.

The Irish government later announced that the introduction of the auto-enrollment pension scheme, called MyFutureFund, would be delayed by three months, postponing the original start date from 30 September 2025 to 1 January 2026. This adjustment aligned the new system with the standard tax year and provided employers and payroll providers with additional time to prepare.

The Department of Social Protection later informed the market that it intended to implement further new regulations by mid-December 2025, to introduce minimum contribution standards to exempt members of occupational pension schemes from auto-enrollment in MyFutureFund.

Update: The Automatic Enrollment Retirement Savings System Regulations (Amendment) (Section 52) Regulations 2025, which set minimum contribution levels for existing workplace pension schemes to qualify for exemption from MyFutureFund, have been introduced unexpectedly, despite significant industry opposition. The regulations took effect from 1 January 2026. This article has been updated to reflect this recent development.

Background

The new state occupational pension scheme is not intended to replace any existing pension plans. The Irish government introduced the auto-enrollment legislation to ensure pension provision for the approximately 750,000 employees earning EUR 20,000 or more per year who currently do not participate in a workplace pension scheme. These employees are usually employed in lower-paid sectors such as tourism and retail where it is uncommon for employers to offer a workplace pension scheme.

The auto-enrollment mandate is expected to lead to greater pension adequacy, better outcomes at retirement, and help bridge the pensions shortfall among private sector workers.

Key details

The new auto-enrollment mandate applies to employees aged 23 to 60 years old earning EUR 20,000 or more per year who are not currently participating in an exempt occupational pension scheme or Personal Retirement Savings Account (PRSA) through their employer. Employees outside the age and earnings thresholds can voluntarily opt into the new pension scheme provided they do not participate in an exempt employer-sponsored plan and are under the state pension age.

MyFutureFund is administered by the National Automatic Enrolment Retirement Savings Authority (NAERSA) to keep management costs to a maximum of 0.5% of assets.

Employees have a choice to invest their contributions in one of four different pension savings funds, ranging from conservative to moderate and higher risk. If no fund is chosen, contributions are automatically invested in a default fund. Employees are able to manage their account via an online portal and may remain enrolled when changing employers.

Contribution rates

The new pension scheme will phase in increasing contribution rates for the employee, employer, and government over a period of ten years.

The contribution rates begin at 1.5% of gross annual salary for the employer and the employee each in 2026. Rates will incrementally increase every three years by 1.5% until they reach the target rate of 6% by employer and employee in year ten (2035). In addition, the government also contributes EUR 1 for each EUR 3 contributed by the employee. Employer and government contributions are subject to a maximum gross annual salary of EUR 80,000. There is no provision at present for employees to make additional voluntary contributions above the established rates, but they can contribute on their salary above EUR 80,000. Those contributions on excess salary will not be matched by their employer or by the government.

Illustration of phased increases to contribution rates:

Employees can choose whether to participate before and after automatic enrollment. After being automatically enrolled in the new pension scheme for six months, employees will have a two-month period during which they can opt out or suspend their participation. If they do, they will be automatically re-enrolled in the scheme every two years and will again have two months to opt out or suspend their participation after six months.

Minimum contribution requirements for exemption from auto-enrollment

It was initially expected that during the first few years of auto-enrollment, any pension contribution greater than zero would be sufficient to exempt an employee, with regulations for the exemption of occupational pension schemes to be introduced by the end of the sixth year of auto-enrollment.

However, the Department of Social Protection later informed the IAPF (see the IAPF’s press release here (opens a new window)) that it intended to implement regulations by mid-December 2025, to take effect from 1 January 2026.

The Automatic Enrolment Retirement Savings System Regulations (Amendment) (Section 52) Regulations 2025 (the “Regulations”) have been introduced unexpectedly, despite significant industry opposition. The Regulations were formally signed by the Minister for Social Protection on 22 December 2025 and took effect from 1 January 2026.

For employees to be exempt from MyFutureFund under an existing workplace pension arrangement (occupational scheme or Personal Retirement Savings Account (PRSA)), the following minimum contribution levels must be met:

• Total Contribution: The lesser of 3.5% of an employee’s gross annual salary or EUR 2,800 per annum

• Employer Contribution: The lesser of 1.5% of an employee’s gross annual salary or EUR 1,200 per annum

In publishing these regulations, the Minister for Social Protection stated:

“We don’t want to cut-across any well established, well designed and well operating schemes. However, it is also important that such occupational schemes, if they are to be exempt, serve their purpose in allowing participants to accumulate sufficient retirement savings to fund a decent pension in retirement. That is why it is necessary to set exemption standards.”

The Minister also noted that NAERSA will be responsible for ensuring schemes comply with these standards, rather than imposing penalties. Lockton Ireland’s understanding is that NAERSA will assess contribution levels over a three-month period and where the contribution amount, over this period, is less than the specified 3.5%, the employer will be contacted with a view to assisting them to become compliant.

Key employer considerations

One of the most significant and obvious impacts that auto-enrollment will have on employers is the cost of employer contributions. Businesses will need to budget for it, but there are many other key areas that employers will need to consider. Much will relate to what pension plan, if any, employers have in place for their employees and how this will compare to what is outlined under the new auto-enrollment mandate.

What this means for employers who do not offer a plan:

Employers who do not offer their own occupational pension need to weigh the benefits of introducing a company pension scheme or PRSA versus relying on the auto-enrollment system. No employer should just default into the auto-enrollment solution without considering all options for pension provision for their employees. Employer plans can offer more flexibility in design, broader investment options, and optional voluntary contributions. The Regulations (and any future increases to minimum contribution levels) should be considered in determining the overall contribution structure should a company pension scheme or PRSA be adopted.

What this means for employers offering occupational pension schemes or PRSA:

The introduction of the Regulations (see above section on “Minimum contribution requirements for exemption from auto-enrollment”) has implications for employers who have schemes with contribution structures that are less than the minimum requirements.

There are a few steps that employers should take now:

1. Determine if contribution tiers are below the specified minimum and the number of employees potentially impacted. If contributions are above the specified minimum, no action is required.

2. For any cohorts where contributions are less than the specified minimum, consider whether to uplift the contributions in the existing scheme to meet the minimum or to default these employees into MyFutureFund. For those schemes which may have had a non-contributory employee contribution tier and where the existing scheme will continue to be used for the specified minimum contributions, employee consent will be required.

   1. If an employer chooses to maintain contribution levels below the specified minimum, they will be required to enroll the affected employees in MyFutureFund and cannot offset MyFutureFund contribution obligations with contributions made to their existing occupational scheme. In effect, no offsetting mechanism exists. Therefore, employers should update any arrangements that could inadvertently lead to employees being enrolled in both systems. This will help prevent unnecessary double enrollment and minimize additional administrative and cost burdens.

3. The contribution structure and pension vehicle for new hires may also need to be amended to reflect the new specified minimum contributions.

4. Communications to employees and any HR pension policies and member guides will need to be revisited.

5. The payroll and employment contract implications of decisions made will also need to be factored in.

Having already made huge efforts to encourage pension participation in 2025, some employers are unfortunately now faced with having to revisit their pension structures considering the unexpected developments.

If you would like to discuss the impact of the Regulations or explore any adjustments needed to your current pension arrangements, please contact your Lockton Consultant or a member of the Lockton Ireland People Solutions team (opens a new window).

Further Information

Auto-enrolment – Employer frequently asked questions (Gov.ie) (opens a new window)

Automatic Enrolment Retirement Savings System Act 2024 (irishstatutebook.ie) (opens a new window)

Automatic Enrolment Retirement Savings System Regulations (Amendment) (Section 52) Regulations 2025 | Irish Statute Book (opens a new window)

Written in collaboration with:

Ray McKenna

Head of Lockton Ireland, Europe People Solutions

ray.mckenna@lockton.com (opens a new window)

Ross Mitchell

Head of Production, Lockton People Solutions Ireland

ross.mitchell@lockton.com (opens a new window)