Auto Enrolment Pension Ireland Simplified [2025 Guide]

Auto Enrolment is Ireland’s new mandatory pension savings scheme, set to launch on 30th September 2025. 

Eligible employees will be automatically enrolled, with contributions from employees, employers, and the government.

How does the Auto Enrolment pension work?

And what steps should your business take to stay compliant?

Keep reading to learn everything you should know about the Auto Enrolment pension in Ireland.

What Is the Auto Enrolment Pension in Ireland?

The Auto Enrolment (AE) pension scheme is a new retirement savings system introduced by Ireland’s Department of Social Protection. 

It aims to boost pension coverage for workers without a pension outside the State Pension. 

Also known as the Automatic Enrolment Retirement Savings System or My Future Fund, this mandatory scheme requires employees, employers, and the government to contribute to each worker’s pension pot. 

We’ll cover how those contributions work in a later section.

The Irish government has set up the National Automatic Enrolment Retirement Savings Authority, an independent body that will administer the Auto Enrolment scheme.

Are You Already Offering an Occupational Pension Scheme?

You’re not required to participate in Auto Enrolment if you already offer an occupational pension and contribute to your employees’ pension pots. 

However, the employer pension plan must be:

• Open to all employees from their day of hire OR

• Open to all employees from their day of hire who are over the age of 23 OR

• Open to all employees from their day of hire who are over the age of 23 with a salary of more than €20,000.

What if your employees don’t contribute to your existing pension scheme?

They’ll still be exempt from the new government pension scheme as long as you continue to make contributions on their behalf.

Why Is the Pension Auto Enrolment Scheme Being Introduced in Ireland?

Roughly 750,000 workers don’t have access to an occupational pension scheme in Ireland.

They rely heavily on their State Pension post-retirement, which may not be enough to sustain their living standards (check out the Average Pension in Ireland in 2025).

Auto Enrolment aims to close this gap by ensuring more workers are actively saving for retirement.

How Does the Auto Enrolment Pension Work in Ireland?

Let’s look at the eligibility criteria, AE pension contributions, and other scheme rules.

A. Who Is Eligible for Auto Enrolment in Ireland?

Employees are eligible for Auto Enrolment if they:

• Are aged 23 to 60

• Earn €20,000 or more per year

• Are not already enrolled in or contributing to an occupational pension

NAERSA will assess employee eligibility, even for casual or probationary employees, and notify you. You can then accept their recommendations or inform them why someone shouldn’t be enrolled. 

Those who don’t meet the criteria can still choose to join the scheme voluntarily — provided they don't already have an occupational pension scheme membership or aren’t contributing to one.

Moreover, employees who previously contributed to a pension but currently don’t will be auto-enrolled if they meet the above Auto Enrolment criteria.

B. What Are the Employee, Employer, and Government Contributions to Auto-Enrolment Pension?

The AE pension scheme will follow a phased implementation. 

In phase 1, which will last from 2025 to 2027 (three years), the yearly Auto Enrolment  contribution levels are:

• Employer pension contributions: 1.5% of earnings

• Employee pension contributions: 1.5% of earnings

• Government’s contribution: 0.5% of earnings

• Total contribution (employer + employee + government): 3.5%

The Auto Enrolment contribution levels will increase over the subsequent years as follows:

• Years 4 to 6 (2028 to 2030): Contributions will be 3% for employees and employers, with a 1% government top-up.

• Years 7 to 9 (2031 to 2033): Contributions will rise to 4.5% for employees and employers and a 1.5% government top-up.

• Year 10 and beyond (2034 onwards): Contributions will increase to 6% for employees and employers, with a 2% government top-up.

Here’s a 2025 example:

If Saoirse earns €20,000 annually, her Auto Enrolment pension contribution is €300 (1.5%). Her employer matches that, and the government adds €100 (0.5%) — totalling €700/year in savings.

But there are a few things to note:

• Employer and State contributions are capped at an income threshold of €80,000. This means the government and employers only match the employee’s pension contribution up to a maximum of €80,000.

• Employees earning more than €80,000 can make higher contributions by setting up a separate pension scheme, like a Personal Retirement Savings Account (PRSA). However, the employer and the government won’t have to match their contributions.

• Employees can’t make Additional Voluntary Contributions (AVCs) to their pension pots. Those who want to pay extra must set up a separate pension scheme to accommodate this.

• Employee contributions under Auto Enrolment will be deducted from their net income — that’s after income tax, pay-related social insurance (PRSI), and universal social charge (USC) have already been applied.

• Unlike traditional occupational pension schemes, AE does not offer tax relief on employee contributions. Instead, the State provides a top-up of €1 for every €3 contributed by the employee — this is equivalent to 25% tax relief.

• Employer contributions to an employee's AE pension are not treated as a taxable benefit-in-kind for the employee. Simply put, this won't add to your employees' taxable income, making it a tax-efficient way to enhance their retirement savings.

C. What Are the Opt-In/Out Rules for Ireland’s AE Pension Scheme?

The AE retirement pension saving system will operate on an ‘opt-out’ basis.  

All eligible employees will be auto-enrolled in the pension scheme for the first six months. They can opt-out in the 7th or 8th month and get a refund of their contributions. 

What if your employee doesn’t opt out but wants to pause payments?

They can suspend their contributions at any time after the six-month mark. 

However, they won’t receive a refund — and during the suspension period, you and the State also stop contributing.

Employees who opt out or suspend Auto Enrolment pension contributions will be automatically re-enrolled after two years, as long as they’re still eligible. If they want to leave the scheme again, they’ll need to go through the same opt-out process.

What happens to employer and State contributions when someone opts out?

Even if your employee opts out, any contributions made by you or the State stay in their pension pot and continue to be invested for their retirement.

While steps are being taken to ensure employees have easy access to pension savings schemes, the AE system isn’t without its drawbacks. 

What Are the Limitations of the Auto-Enrolment Pension Scheme Ireland? 

Although the AE scheme may boost the retirement income of employees earning less than €44,000 with the 33% state top-up, there are some drawbacks:

• Employees can’t make Additional Voluntary Contributions (AVCs) to their pension pot. 

• Re-enrollment of employees every two years might not suit everyone’s financial situation.

• Self-employed and unemployed individuals are excluded from the AE pension arrangement.

• Employees can only access their savings upon reaching the State Pension age (currently 66). 

• The withdrawal options are less flexible than private and occupational pension plans.

How Does the Auto-Enrolment Scheme Compare to Occupational Pension Schemes in Ireland?

Auto Enrolment is designed to increase pension participation by automatically enrolling eligible employees — unlike occupational pension schemes, which require employees to opt in.

Both schemes involve contributions from employers and employees. 

However, occupational pensions often offer more flexibility and higher contribution limits, allowing employees to save more if they choose.

Tax benefits also differ. 

Occupational pensions offer tax relief at the employee’s marginal tax rate (20% or 40%), which can be more beneficial for higher earners than AE’s 33% government top-up.

Check out our in-depth Occupational Pension vs Auto Enrolment comparison to explore all the differences.

The bottom line?

Setting up an occupational pension scheme is a great way to help your employees save for retirement. And as mentioned earlier — if your occupational pension scheme meets the exemption criteria, you won’t need to participate in the AE Ireland scheme.

How Should Employers Auto-Enrol Employees in Ireland?

The rollout of the AE retirement saving scheme will ensure that you don’t have to set up an employee pension scheme or invest with a pension provider.

However, this can increase your HR and finance teams' administrative burden as they’ll have to handle budgetary concerns.

Here’s a quick checklist to help you out:

• Facilitate payroll deductions and ensure your payroll process is compatible with the Auto-Enrolment contribution requirements. 

• Update employment contracts to ensure they're up to date with the pension provision for contributions and other legal requirements.

• Communicate with your employees. Advise them on how the scheme will work and explain how contributions will be managed.

• Report to NAERSA — while calculations are done through existing payroll software, you must submit a separate report directly to the central body overseeing the scheme. More details on this reporting process will be available closer to AE’s launch.

That’s a lot to handle, right? 

All these additional responsibilities could bog down your HR and finance teams. 

To keep things simple and avoid the extra responsibilities, we think you should explore all options available to you — like setting up an occupational pension scheme that exempts you from Auto Enrolment altogether. 

Fortunately, Kota can help you with that. 

Easily Set Up a Compliant Occupational Pension Scheme with Kota

Kota is a digital retirement benefits platform that helps businesses easily set up a compliant occupational pension scheme in Ireland. 

We partner with Irish Life to offer comprehensive and affordable pension plans for teams of all sizes. 

That’s not all; Kota also provides a centralised digital hub and other smart features to simplify benefits management.

Here’s how we can help you start a company pension scheme:

• Easy Enrolment: With Kota, enrolling employees in an occupational pension scheme is a breeze. Just create an account, set up your benefits package and enrol your team. The platform also makes it easy to track your matching contributions to each employee’s pension plan.

• User-friendly Digital Benefits App: We’ve designed our benefits app to promote transparency and accessibility. Employers and employees can monitor benefits information anytime, anywhere, directly from their smartphones.

• Payroll Sync: Kota seamlessly connects to your existing HR and payroll systems, automating data flow and minimising administrative burden.

Want to see how it works?

Book a free demo to see Kota in action! 

12 FAQs on Auto-Enrolment Pension Scheme Ireland

Here are answers to the most common employer questions about the pensions Auto Enrolment Ireland scheme:

1. How Will Auto-Enrolment Affect Casual/Temporary/Zero-Hour Workers in Ireland?

All new and existing employees will be assessed for Auto Enrolment pension eligibility — even if they’re on probation, working part-time, or on casual/zero-hour contracts.

If NAERSA determines that an employee meets the Auto Enrolment criteria, contributions from employers, employees, and the State will begin on the first paycheck following enrollment.

2. Are Self-Employed People Included in Auto Enrolment? 

Not at the moment.

Due to the challenges of integrating them into a payroll-based system, self-employed people won't be part of the Auto-Enrolment scheme for now. However, this might be revisited later. 

In the meantime, if you're self-employed, you can still set up an Irish private pension such as a PRSA (Personal Retirement Savings Account) or RAC (Retirement Annuity Contract), and take advantage of the available tax reliefs.

3. Will Auto Enrolment Replace the Irish State Pension?

Auto Enrolment won’t change or replace the existing pension scheme; it’s only meant to supplement the State Pension. 

AE is designed to help workers build an additional retirement fund alongside their State Pension, especially those without access to an occupational pension.

4. How Will Contributions Be Invested Under Ireland’s Auto Enrolment Scheme?

Under the Auto Enrolment scheme, your employees won’t have to worry about choosing an investment strategy unless they want to (similar to an occupational pension scheme). 

Here’s why: 

The scheme includes a default 'lifecycle' fund, which starts with higher-risk investments that gradually become more conservative as your employee nears retirement.

For those interested in tailoring their investment management approach, there are usually four fund options available:

• Conservative: Primarily focused on government bonds and cash equivalents.

• Moderate Risk: Includes government bonds, blue-chip equities, and stock exchange indices.

• Higher Risk: Targets equities and property for potentially greater returns.

• Default: Automatically adjusts based on a lifecycle approach, reducing risk as you near retirement.

5. Is the Auto Enrolment Pension Fund Secure?

Like all investment-based pensions, returns are not guaranteed. Value can fluctuate based on market performance.

That said:

• Ireland’s Pensions Authority will regularly monitor the functioning of the AE scheme to ensure all rules are followed.

• The government will also collaborate with reputed investment management companies to provide regulated financial services and pension advice to ensure fund safety. 

6. Is There Any Fee or Charge Associated with the Irish AE Pension Scheme?

The government has indicated that the annual investment management charge for the Irish Auto Enrolment pension scheme will be kept low. 

However, the exact amount has not yet been decided. 

7. When Can Employees Drawdown Their Pension Benefit?

Unlike an occupational pension scheme, where funds are accessible from 50, your employees must wait until they reach the State Pension age (66 in 2024) to access their funds. 

There is no provision for early drawdown. However, exceptions may be allowed for those retiring early due to ill health.

8. What Happens to Employees’ Auto Enrolment Savings if They Stop Working, Emigrate or Pass Away?

• If an employee stops working, they remain enrolled, but their contributions stop.

• Upon emigration, their savings remain invested and will be accessible at retirement.

• If they pass away without claiming their pension, their savings are incorporated into their estate, valued at notification, and distributed like other investments.

9. Can Employers Claim Tax Relief on Their AE Pension Contributions?

As an employer, you can claim income tax relief on contributions to the Auto Enrolment pension scheme against corporate tax, just like in an occupational pension scheme.

This means the employer pension contributions to the scheme are reduced by 12.5%.

10. What Tax Matters Related to the Irish AE Pension Scheme Remain Unclear?

There are many unanswered questions about how certain tax issues related to the Irish Auto Enrolment pension scheme will be handled. 

These include:

• Accrued AE benefits: It's unclear if the benefits accumulated in the AE scheme will be considered when calculating tax benefits, like the Standard Capital Superannuation Benefit (SCSB) or the Increased Exemption for employees who leave their jobs.

• Lump sum payments: There’s no update on how lump sum payments taken from the AE scheme at retirement will be taxed.

• Non-resident individuals: The tax rules for non-residents participating in the AE Ireland scheme, especially those working in Ireland for foreign companies, are still uncertain.

11. How Does the Auto Enrolment Scheme Compare to Private Pensions in Ireland?

Employees in a private pension plan, like a Personal Retirement Savings Account (PRSA), get tax relief based on their income:

• Over €44,000: 40% tax relief 

• €44,000 or less: 20% tax relief 

Additionally, as employees age, the maximum percentage of their income that qualifies for tax relief also increases. This is 15% for employees under 30 and rises to 40% for employees over 60, with the maximum income eligible for relief being capped at €115,000. 

In contrast, the Auto Enrolment scheme doesn’t provide tax relief. Instead, the government adds a 33% top-up to employee contributions — which is equivalent to a 25% tax relief. 

So, while the AE scheme can benefit lower earners (taxed at 20%), a private pension is usually more beneficial for most people — especially higher earners (taxed at 40%). 

Why?

Private pensions offer higher tax relief (up to 40%) and allow larger contributions based on age, making them a more flexible and tax-efficient option overall.

12. Do Other Countries Offer Auto Enrolment? 

Ireland is the only OECD country (Organization for Economic Cooperation and Development) that doesn’t yet offer an automatic enrolment retirement saving system. 

Other OECD countries that have introduced the automatic enrolment retirement savings system at a national level to help their employees save for retirement include: 

• The UK 

• New Zealand

• Poland

• Italy

• Turkey

• Lithuania

Still have more questions about Ireland’s Auto-Enrolment?

Check out our downloadable guide for HR & Finance leaders. 

Help Your Employees Save More with the Right Pension Scheme

Auto Enrolment is a great step forward for retirement savings in Ireland. 

If you already offer an occupational pension scheme, your team doesn’t have to be enrolled — and you won’t need to manage AE administration.

The fact is:

Occupational pensions often provide better benefits and more flexibility. Due to the tax relief provision, it’s also a better option for employees in the higher tax bracket.

Want to make pensions easier for your team and your business?

Kota can help.

We make it simple to set up and manage a compliant occupational pension scheme — one that supports your employees’ future while reducing your HR and finance workload.

Join Kota to give your employees the financial security they deserve without the admin you despise.