What is Auto-Enrolment and why was it Introduced?
My Future Fund, also known as Auto-Enrolment is a new retirement pension savings scheme due to commence January 1st, 2026. It is a pension scheme for employees who are at the moment not paying into a pension. This scheme has been introduced to address the retirement savings gap in Ireland. The aim is to overhaul the current system to tackle the lack of pension coverage other than the State Pension in Ireland. It has been reported that that nearly one third of employees in Ireland have no pension other than the State Pension. It is expected that almost 750,000 workers will be automatically enrolled to enable them to save for retirement.
Who does the Scheme apply to?
An employee will automatically be enrolled in the pension scheme if the following conditions are met:
Aged between 23 and 60 years old.
Currently not contributing to a pension plan.
Currently earning €20,000 or greater per year over a total of all the employee’s jobs.
Note that if an employee has previously contributed to a pension but does not now, if the employee meets the conditions required, they may also be auto-enrolled. If an employee earns less than €20k gross annually or is outside the age range they will not be automatically enrolled, however, they can still choose to opt in if they are are not already contributing to a pension.
Does my employer have to contribute?
An employer will be subject to penalties and possible prosecution if they fail to make contributions on the employee's behalf. A fine will be issued along with interest if the employer fails to make payments. However, at the moment there are no plans to force employees to contribute to personal pensions.
Who is in charge of My Future Fund?
A new public body called the National Automatic Enrolment Retirement Savings Authority or NAERSA has been set up by the government in order to administer the Auto Enrolment Scheme. The scheme is then supervised by the Pensions Authority.
I currently have a Workplace Pension. What happens?
If you are paying into a workplace pension you will not be enrolled in the auto-enrolment scheme.
I was enrolled but have now changed jobs – Do I need to do anything?
You remain in the auto-enrolment scheme if you change your job. You don’t need to do change your pension or join another scheme. The National Automatic Enrolment Retirement Savings Authority will manage your change to a new position.
I don’t want to enrol – What can I do?
The auto-enrolment scheme works on an Opt-Out basis rather than an Opt-In basis. However, you can opt out after six months but before you have been in the scheme for eight months. Also, when you have a change in contribution rate, you can opt out six months later up to eight months later. You also have the option of suspending your contributions any time after the first six months of pension contributions. If you chose this option, all contributions from you, your employer and the State will also be suspended. This does not affect any previous contributions and they will be kept until you resume contributing.
If you opt out, all contributions made by you, your employer and the State stay in your pension pot and will continue to be invested. While the Government encourages participation, it is not mandatory.
If you leave the plan or suspend your contributions, you will be automatically re-enrolled after two years if you are still eligible for the scheme. However, if you are in a situation where you are contributing through your employer’s pension scheme you will not be auto-enrolled for that employment.
How Much do I Pay?
The amount you will pay is a set percentage of your salary. Your employer will match your contributions and the Government will top up by another 0.5%. You do not have the option to pay less or pay more than the set rate. For years 1 – 3 your contribution rate will be 1.5% along with your employer’s contribution of the same amount of 1.5%. The Government will top this up with 0.5%. For years 4 – 6 your contribution rate increases to 3% along with your employer matching this 3%. The Government will then increase it’s contribution to 1%, giving a total of 7%. For years 7 – 9 your contribution rate increases to 4.5%, employer 4.5% and the Government increases it’s rate to 1.5% giving a total of 10.5%.
For example, for every €3 that you contribute to your pension scheme, your employer will contribute €3 and the Government will contribute €1. This means that for every €3 you put in, €7 will be added to your account.
Also to note, contribution amounts will vary if your salary increases or decreases. The pension amount you end up with will also include any final returns generated from the invested contributions.
Is there a Maximum Contribution?
Both the Government and employer’s contributions are capped at a salary of €80,000 gross annual salary. If an employee earns greater than €80k they can still contribute but the employer and the Government will not make any further contributions on any income greater than €80k.
What if I stop working or move abroad?
If you move abroad or stop working prior to retirement, you continue to be enrolled even though you do not make further contributions. Your previous contributions will be invested and you can access this pension pot at retirement.
Final Thoughts
Auto-enrolment is a great starting point to plan for retirement savings, and if you are one of the approximately 800,000 employees of Ireland who does not have a pension plan, you will in 2026! However, it is important to do the research on the best plan available which may possibly be the employer’s pension plan as opposed to auto-enrolment. If your employer cannot offer a plan, then your best option is to embrace auto-enrolment as a kickstart for your retirement fund.
