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Auto-enrolment is a system where employees are automatically signed up for a workplace pension scheme by their employer. The goal is to encourage individuals to save for retirement by making participation the default option, though employees can opt out. Employers also contribute to the pension, making it a joint effort to build long-term financial security. It’s a key step in addressing
gaps in retirement savings, and many countries, including Ireland, are introducing or enhancing such schemes to ensure better future outcomes for workers.
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Auto-enrolment is a new retirement savings system set to launch in Ireland on 30 September 2025. It is designed to help employees save for their future by automatically enrolling eligible workers into a pension scheme. Employees aged 23 to 60, earning €20,000 or more annually, and not already part of a workplace pension plan will be included.
Under this arrangement, contributions are shared among the employee, employer, and State. For every €3 contributed by the employee, their employer matches an additional €3, while the State supplements it with €1. This means that each €3 invested by the employee results in a total savings of €7.
The scheme seeks to bridge gaps in retirement savings and provide workers with greater financial stability, serving as a complement to the State Pension rather than a replacement. It will be administered by the National Automatic Enrolment Retirement Savings Authority (NAERSA) under the supervision of the Pensions Authority.
Employer responsibilities and penalties for non-compliance.
Under Ireland’s upcoming auto-enrolment pension system, employers have specific responsibilities to ensure compliance. Here’s an overview:
Employer Responsibilities
- Automatic Enrolment: Employers must automatically enrol eligible employees (aged 23-60, earning €20,000 or more annually) into the auto-enrolment scheme if they are not already part of a workplace pension plan.
- Contributions: Employers are required to match employee contributions, starting at 1.5% of gross salary and gradually increasing to 6% over ten years. Contributions are capped at a maximum salary of €80,000.
- Communication: Employers must inform employees about the scheme, their rights, and the benefits of participation. This includes providing details on opting out, re-enrolment, and contribution rates.
- Administrative Duties: Employers must facilitate the collection and transfer of contributions to the National Automatic Enrolment Retirement Savings Authority (NAERSA) through an online portal.
- Record-Keeping: Employers are expected to maintain accurate records of employee contributions and compliance with the scheme.
Penalties for Non-Compliance
Failure to comply with auto-enrolment obligations may result in penalties, including:
- Fines: Employers may face financial penalties for failing to enrol eligible employees or for not making the required contributions.
- Legal Action: Persistent non-compliance could lead to legal proceedings.
- Reputational Damage: Non-compliance may harm an employer’s reputation, affecting employee trust and public perception.
- The system is designed to minimize administrative burdens for employers, with NAERSA handling much of the operational aspects. However, staying informed and proactive is crucial to avoid penalties.
Benefits to employers and employees.
Auto-enrolment offers significant advantages for both employers and employees in Ireland:
Benefits for Employers
- Attract and Retain Talent: Offering a pension scheme makes employers more attractive to potential hires and helps retain existing employees.
- Shared Responsibility: Employers contribute to employee, pensions, fostering goodwill and demonstrating commitment to their workforce’s financial well-being.
- Compliance with Legislation: Participating in auto-enrolment ensures employers meet legal requirements, avoiding penalties and reputational risks.
- Streamlined Administration: The system is designed to minimize administrative burdens, with the National Automatic Enrolment Retirement Savings Authority (NAERSA) handling much of the operational work.
Benefits for Employees
- Financial Security: Employees build a retirement fund, supplementing the State Pension and ensuring a more comfortable future.
- Employer and State Contributions: For every €3 an employee contributes, the employer matches it with €3, and the State adds €1, significantly boosting savings.
- Ease of Saving: Automatic enrolment removes the need for employees to actively sign up, making it easier to start saving.
- Portability: Employees can carry their pension savings with them when changing jobs, ensuring continuity in their retirement planning.
Key statistics
- Enhanced Savings: For every €3 an employee contributes, the employer matches it with €3, and the State adds €1. This means a total of €7 is invested for every €3 contributed by the employee.
- Eligibility Criteria: Employees aged 23 to 60, earning €20,000 or more annually, and not already part of a workplace pension scheme, will be automatically enrolled.
- Gradual Contribution Increase: Contributions will start at 1.5% of gross salary and gradually rise to 6% over ten years, ensuring affordability for both employees and employers.
- Transferability: Pension savings are portable, allowing employees to carry their funds when
changing jobs. - Augmenting the State Pension: The scheme is designed to complement the State Pension, providing additional financial security in retirement. This framework is designed to fill gaps in retirement savings and promote a more secure financialfuture for individuals.
Setting up a compliant pension scheme
Getting your pension sorted might feel overwhelming, but it doesn’t have to be. With just a few simple steps, you can take control of your financial future. We’re here to guide you every step of the way. This page will help you kick-start the process and get your pension plan up and running. Let’s get started!
Where do I start
Good advice
Quality advice is priceless, which is why consulting a financial advisor is highly recommended. Our expert advisors can walk you through the process and help you choose the pension plan that best fits your needs. Alternatively, our Financial Planning Team is available to provide detailed information from Ireland’s leading pension providers (Zurich, Aviva, New Ireland, Irish Life, Standard Life, Royal London & others) and options to support your decision-making.
Is the State Pension enough to depend on for retirement?
A significant number of workers view the State Pension as their primary source of income, increasing the strain on an already overburdened system. Auto enrolment presents a practical solution to this challenge, promoting financial independence and encouraging individuals to recognize the importance of saving for their future.
What aligns most with my needs?
It’s often more advantageous to participate in your company’s existing pension scheme, if available, rather than depending solely on the auto-enrolment scheme.
Here’s why:
- Higher Employer Contributions: Company pension schemes typically offer more generous employer contributions compared to the minimum requirements of auto-enrolment.
- Greater Investment Flexibility: These schemes often provide a broader range of investment options, allowing you to tailor your pension to your financial goals.
- Comprehensive Access: Many company pension providers offer 24/7 access to your account, along with tools and calculators to help you plan at every stage of life.
- Personalized Support: You&’ll benefit from access to financial advice and resources, ensuring you’re on track to achieve your retirement objectives. Choosing a company pension scheme can provide enhanced support and flexibility for a secure financial future.
Securing your financial future begins with one of the wisest decisions you can make: starting a pension. To make the best choice, it's essential to be fully informed and understand all your options.
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Calculators can help you determine the amount of tax relief you might qualify for on your contributions.
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