Pension Auto-enrolment: What we know so far

Pension Auto-enrolment has been a discussed in Ireland for many years and it finally looks set to be introduced later this year. Here is what we know about the scheme so far ...

 

What is Auto-enrolment?

Auto-enrolment is a new pension savings scheme for certain employees who are not already paying into a pension. These employees will be automatically included in the scheme once the scheme commences.

A new Central Processing Authority will be set up to administer the Auto-enrolment scheme.

Under the scheme, the employee, the employer and Government will all pay a certain amount into the employee’s pension fund.

 

What does Auto-enrolment scheme mean for employers?

If you do not already have a workplace pension scheme established, all your employees that meet the scheme’s requirements will be enrolled into the auto-enrolment pension.

Employer Contributions

You will need to match the contributions made by employees. The amount an employee pays will be a set rate of their annual salary. Employers will match the contributions and the Government will contribute an additional amount. Employees cannot pay more or less than the set rate.

The employer and employee will pay 1.5% of the employee’s annual salary into the pension in the first year. This will increase to 6% by year 10.

The table below sets out the rates you, your employee and the Government will pay:

Year

Employee Contribution Rate

Employer Pays

Government Pays
1 to 3 1.5% 1.5% 0.5%
4 to 6 3% 3% 1%
7 to 9 4.5% 4.5% 1.5%
10 and after 6% 6% 2%

 

Both an employer’s and the Government’s contributions are capped at €80,000 gross annual salary. This means for the first 3 years, the maximum amount an employer will contribute is €1,200 a year. This is because 1.5% of €80,000 is €1,200. The maximum amount the Government can contribute is €400 a year, which is 0.5% of €80,000. If an employee’s salary is greater than €80,000, an employee can still contribute but the employer or the Government won't match the contributions on any income over €80,000.
 

Tax

It is important to note that employer contributions to this scheme will be tax deductible. 
 

Penalties

If as an employer you do not meet your auto-enrolment obligations, there is provision for penalties and/ or prosecution. 
 
 

Who will be enrolled in the scheme?

 
Employees will be automatically enrolled in the new pension plan if they are:
 
 
If someone earns less than €20,000 per year, or are not aged between 23 and 60, they can choose to join the pension plan if they are not already part of a pension scheme.
 
After someone is enrolled, they must stay in the plan for at least 6 months. They can choose to leave the plan in month 7 or 8 if they wish.
 
They can also stop or pause contributions, in certain circumstances. However, employees will be re-enrolled (added back to the plan) after 2 years if they are still eligible for the scheme.
 
 

When is Auto-enrolment being introduced in Ireland?

 
Official government publications tell us that the long awaited Pension Auto-enrolment scheme is set to be introduced in Ireland in the second half of 2024.
 

What should employers do now to get ready for Auto-enrolment?

 
We do not have too much information yet on how this new pension Auto-enrolment scheme will operate. However, for the moment we advise that you look at your payroll system and ensure that it will be able to take instruction for enrolment, calculate and pay employee and employer contributions to the Central Processing Authority.
 
We will continue to update our Auto-enrolment Knowledge Hub on our website as new information becomes available. 

 

Last updated: 8th May 2024