Questions and Answers
How much do employers need to contribute under auto-enrolment?
I have heard that under the new pension auto-enrolment scheme employers will need to contribute to employees’ pension funds. How much will I need to pay?
Pension Auto-enrolment
Under the new pension auto-enrolment scheme, the employee, the employer and the government will all pay a certain amount into the employee’s pension fund.
Employer Contributions under auto-enrolment
As an employer you will need to match the contributions made by your employees.
The amount an employee pays will be a set rate of their annual salary. Employers will match the contributions (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.
For the first 3 years, the maximum amount an employer will contribute is €1,200 a year i.e., €80,000 x 1.5% is €1,200.
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.
Employer contributions to this scheme will be tax deductible.
Planning for pension auto-enrolment
The first enrolments under the auto-enrolment scheme begin on 30th September 2025 but it is important to prepare early to help your business stay compliant and avoid potential penalties.
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Frequently Asked Questions
Auto-enrolment is a new pension savings scheme for certain employees who are not already paying into a workplace pension. These employees will be automatically enrolled once the scheme commences. Under the scheme, the employee, the employer and the government will all pay a certain amount into the employee’s pension fund.
The first enrolments under the pension auto-enrolment scheme will begin on 30th September 2025.
At a minimum, employer contributions will be at least 1.5% of the employee’s salary (capped at €80,000) to satisfy the minimum contribution requirements under the scheme. That figure will rise to 6% of salary over the next 10 years.
Yes, employer contributions under the pension auto-enrolment scheme will be tax deductible.
For the moment we advise employers to look at your payroll system and ensure that it will be able to take instruction for enrolment and budget for pension contributions they will need to make. Employers that do not have a pension scheme already in place in their business should start to research pension providers. Consideration should also be given to reviewing employment contracts and employee handbooks for future employees.
Date published 30 Jan 2025
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.Choose the right accounting firm for you
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