Ireland: Auto-enrolment Employee Pension Scheme
From January 1st, 2026, the long-awaited Republic of Ireland auto-enrolment employee pension scheme (the “AE Scheme”), will come into effect.
Who does it Apply to?
New and existing employees (including those on probation) between the ages of 23 and 60, who earn more than EUR20,000 per year.
Who will it not Apply to?
It will not apply if the employee, or their employer, is paying pension contributions into a qualifying occupational pension plan, Personal Retirement Savings Account (PRSA), trust retirement annuity contract or Pan European Pension Plan.
Can an Employee Opt Out?
Employees can opt out from between 6 to 8 months of the date of their automatic enrolment. If they opt-out they will get their contributions back. Employer and State contributions remain in the fund.
Who will run the AE Scheme?
The newly created National Automatic Enrolment Retirement Savings Authority (‘NAERSA’) will manage the Scheme. Employers, or their payroll provider, will receive an Auto-enrolment Payroll Notice (‘APN’) for qualifying employees. The APN will state the contribution rate to be deducted from pay.
What is the Contribution Rate?
There is a fixed contribution rate for both employee and employer. Initially, the rate will be 1.5% of gross salary (up to a maximum salary of EUR80,000) to be paid by both. The rate will increase by 1.5% every 3 years, up to 6% in year 10. Employees do not get tax relief on their contributions. Instead, the State adds a top-up of 0.5% of gross earnings.
Penalties for Breaches
Interest will be charged to the employer on contribution amounts an employer has failed to pay to the Scheme.
Fines and terms of imprisonment (up to 3 years) can also be the consequence of certain offences related to Scheme.
Employer Actions
Employers should prepare for the AE Scheme by:
- putting in place the necessary internal management processes for the Scheme;
- analysing which of their employees might qualify, given their current pension/retirement plans; and
- ensuring their payroll provider and any relevant existing pension provider are ready for January 1st 2026.
This is a high-level general update only. Legal advice should be obtained on specific circumstances.