From 1st January 2026, a major change is coming to the way pensions work in Ireland. It’s called Auto Enrolment (AE) — and it will mean that, for the first time, certain workers will be automatically signed up to a pension scheme, with contributions from themselves, their employer, and the State.
It’s being introduced because too many people in Ireland — roughly 1 in 3 workers — have no private pension and will rely solely on the State Pension in retirement. AE is designed to close that gap.
What Is Auto Enrolment?
Auto Enrolment is a government-backed pension savings system known as My Future Fund.
It’s a defined contribution scheme, meaning the amount you get in retirement will depend on the contributions paid in and how the investments perform.
The key points are:
- Automatic sign-up for eligible employees (see below)
- Contributions from three sources – Employee, Employer, and the State
- Gradual increases in contribution levels over the first 10 years
- Choice of investment risk or a default “lifecycle” strategy that reduces risk as retirement nears
Who Will Be Enrolled?
The rules are simple:
- Aged between 23 and 60
- Earning more than €20,000 a year
- Not already in a qualifying workplace pension
If you meet these criteria, you’ll be automatically enrolled — no forms, no application.
How Much Will Be Paid In?
At the start (2026), the contribution rates will be:
- Employee: 1.5% of gross pay
- Employer: 1.5% (matching the employee)
- State: 0.5%
By Year 10, the rates will be:
- Employee: 6%
- Employer: 6%
- State: 2%
Contributions are capped at a maximum salary of €80,000.
Opting Out
Employees can opt out between months 7 and 8 after being enrolled or at future contribution step-ups.
- If you opt out early, your contributions will be refunded
- You can also suspend contributions for 1–2 years after month 6
- You’ll be automatically re-enrolled every two years if you’re still eligible
Where Will The Money Go?
Funds will be invested through leading asset managers including ILIM, Amundi, and BlackRock.
- Default Option: Lifecycle fund, which starts higher risk and reduces risk as you approach retirement
- Self-Select: Low, medium, or high risk options
When Can I Access My Pension?
Under AE, benefits will be available at the State Pension age (currently 66). You will be able to:
- Take up to 25% of the fund as a tax-free lump sum (subject to lifetime limits)
- Use the rest to buy an annuity or transfer to an Approved Retirement Fund (ARF)
AE vs Private Workplace Pension
While AE is a great step forward, it has limitations compared to private pensions.
Private pensions can offer:
- Higher contribution limits
- Earlier access (from age 50 in some cases)
- Greater investment choice
- Additional Voluntary Contributions (AVCs)
- Potentially more tax efficiency for higher earners
- Personal financial advice
Employers who offer a competitive private pension scheme instead of just the State AE can use this as a powerful staff retention and recruitment tool.
For Employers – Your Action Plan
- Review Your Current Workforce
Identify which staff are already in your pension and who will be auto-enrolled. - Check Your Pension Scheme
If you have one, is it competitive enough to keep staff from opting for AE? - Talk to Payroll
Ensure your payroll provider can handle AE deductions and reporting. - Budget for Contributions
This is a new cost for many employers — factor it into your 2026 budgets. - Update Contracts & Handbooks
Seek HR or legal advice to ensure compliance. - Communicate Early
Staff need to understand the benefits and the changes to their pay-slips. - Get Expert Help
A financial adviser can help you decide whether to use AE or set up a more flexible private scheme.
For Employees – Why This Matters
If you’ve never had a pension before, AE is a chance to:
- Build up long-term savings for retirement
- Benefit from free money from your employer and the State
- Grow your money tax-free while invested
If you’re already in a good pension, you won’t be enrolled in AE — but it’s still worth reviewing your plan to make sure it’s working for you.