The introduction of Auto Enrolment (AE) pensions in Ireland in 2025 marks a major shift in workplace pensions, requiring employers to enrol eligible employees into a government-backed pension scheme. If you are an employer, understanding your obligations is essential to ensure compliance and support your workforce’s financial future.
What Is Auto Enrolment?
Auto Enrolment is a mandatory workplace pension scheme designed to help employees save for retirement. Workers will be automatically enrolled into a pension plan, with contributions made by the employee, employer, and the government. This initiative aims to close the pension gap in Ireland, where a considerable number of private-sector workers have no pension savings.
Who Is Eligible?
From September 30, 2025, employees will be automatically enrolled if they:
- Are aged 23 to 60.
- Earn €20,000 or more per year.
- Do not have an existing workplace pension.
Employees can opt-out after six months, but they will be re-enrolled every two years.
What Employers Need to Know
1. Employer Responsibilities
Employers will be legally required to:
- Automatically enrol eligible employees in the AE scheme
- Match employee contributions (starting at 1.5% of salary, rising to 6% over ten years)
- Facilitate payroll deductions and ensure payments are done on time.
The National Automatic Enrolment Retirement Savings Authority (NAERSA) decides eligibility — the government body responsible for overseeing Ireland’s Auto Enrolment scheme. They will notify employers which employees must be enrolled.
Failure to comply may result in penalties, so it is crucial to stay informed and prepare in advance. Talk to your financial advisor.
2. Contribution Structure
- Employees start by contributing 1.5% of their salary, increasing to 6% over ten years.
- Employers must match this contribution.
- The government will add €1 for every €3 saved by the employee.
These contributions are designed to build long-term retirement savings with shared responsibility among all parties.
3. Payroll & Administration Adjustments
Employers should review and update their payroll systems to manage deductions, employer contributions, and compliance reporting.
4. Budgeting for Additional Costs
Auto Enrolment introduces added costs for businesses. Employers should: Assess the financial impact of matching contributions and plan to ensure contributions do not affect cash flow.Seek financial advice, contact Donnelly Financial Planning to book a consultation.
Tips for Employers to Prepare
- Educate your employees: Inform staff about the benefits of AE and how it works.
- Update payroll systems: Ensure software is set up for automatic deductions.
- Budget accordingly: Prepare for increasing employer contributions over time.
- Seek professional guidance: Consult a financial advisor for compliance and best practices.
Final Thoughts
Is Auto-Enrolment Right for You? Some options may be more beneficial than being auto-enrolled.
For expert advice on Auto-Enrolment and how it affects your business, contact Donnelly Financial Planning for a consultation.
Auto Enrolment will transform pension savings in Ireland, ensuring more workers are financially prepared for retirement. Employers must act now to understand their responsibilities, plan for financial impacts, and educate their workforce. Preparing early will ensure a smooth transition and compliance with this landmark pension reform.
Warning
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