Auto-enrolment pensions for beginners: How does it work?

Zurich has been meeting the financial needs of people in Ireland for over 40 years. Our award-winning¹ investment team, in Dublin, is responsible for funds under management of approximately €40.9 billion, of which pension assets amount to €35.2 billion². 

While pension Auto-Enrolment (AE) systems and models are common in most countries, Ireland has lagged in introducing its own. 

It now looks like January 2026 will be the launch date for Auto-Enrolment (AE). Ireland’s AE scheme has been 20 years in the making and was finally signed into law by the President in 2024. 

But what is AE and what does it mean for the many Irish employers who may be unfamiliar with the concept? 

The objective of the proposed AE scheme is to ensure that every worker will have access to a workplace pension to supplement the basic State pension.

Table of contents

In this article we will cover: 

1. What is auto-enrolment?
2. The scope of auto-enrolment
3. Stages and starting date 
4. Regulatory framework
5. Eligibility criteria
6. Contribution levels
7. Fund management and administration
8. Options at retirement
9. What employees should do  

What is auto-enrolment?

A pension scheme where eligible employees that aren’t already paying into a pension through payroll will be auto enrolled.  

It is in addition to the contributory State pension meaning that all employees will have at least two pension funds: their contributory State pension and the auto-enrolment pension or a supplementary pension such as an occupational pension or personal pension³.  

What is the scope of auto-enrolment?

The objective of the proposed auto-enrolment pension scheme is to ensure that every worker will have access to a workplace pension to supplement the basic State pension.  

The aim is to increase active participation of the private sector workforce in supplementary pension provision from a current level of approximately 35%, as measured by the Central Statistics Office, to the long since stated government policy objective of 70% and beyond³.  

Stages and starting date

The Automatic Enrolment Retirement Saving System Act 2024 was signed into law in July 2024. Auto-enrolment is due to start 30^th September 2025. Once AE is launched, if you are an employee who earns €20,000 or more in a year, you will be automatically enrolled. If you are a new employee who perhaps has no previous employment record or a gap in employment, it may take a few weeks to be enrolled in order for your earnings threshold to be established⁴.

Under the legislation, if you are an employer you will need to inform your employees when they have been enrolled. And if you are self-employed, PRSI classes will be used to exclude you from auto-enrolment.

Regulatory framework

The National Automatic Enrolment Retirement Savings Authority (NAERSA) will administer the auto-enrolment scheme, acting as the custodian of the employee’s interests and savings. They will use Revenue payroll data to determine which employees are eligible for enrolment and will operate an online portal for employees to manage employee opt-outs and opt-ins.

NAERSA will also operate an online portal for employers, to facilitate the payment of contributions.

Eligibility criteria

All employees that satisfy the following eligibility criteria will be automatically enrolled: 

• Aged between 23 and 60.
• Earning over €20,000 per annum.
• Not already paying into a work or private pension through payroll. 

Examples of employees in particular situations that will be automatically enrolled: 

• Employees that contribute to a private pension but not through payroll will be automatically enrolled.
• Employees whose eligible earnings dropped below €20,000 but are already enrolled, will stay enrolled.
• Employees who in the past have contributed to a pension but they aren’t now, will be automatically enrolled.
• Employees who have suspended the contribution or opted out, will be re-enrolled after two years.
• Part-time employees and employees in probatory periods that satisfy the eligibility criteria above, will be automatically enrolled.
• Employees with multiple employments are eligible for auto-enrolment when one or more of their employments meet the above criteria.  

Example of employees who will not be automatically enrolled: 

• Employees who don’t meet the above criteria, for example those who have joined their employer occupational pension scheme.
• Employees who are auto-enrolled and start to contribute to a personal or occupational pension through payroll at a later date, will be considered auto-enrolment exempt for that employment.
• Self-employed and non-earning people. 

Eligible earnings 

Contributions will be calculated on your gross earnings, so anything included in the gross pay field of a payroll file will be assessable. An earnings ceiling of €80,000 will apply.

It is important to note that Revenue payroll data will be used to identify eligible employees by using a lookback period of up to 13 weeks. If the lookback period indicates that you are over the €20,000 threshold on a pro-rata basis, you will be auto-enrolled. You will stay enrolled even if your earnings subsequently drop below €20,000.

For those employees new to the workforce, or if they have not worked for a considerable length of time, then they may not be enrolled for up to 13 weeks as that period is used to assess their earnings to see if they are over the earnings threshold on a pro-rata basis. Contributions will not be backdated.

Contribution levels

When it comes to contributions, below is a breakdown of the limits and levels you might need to know about.

Limits 

The auto-enrolment contributions are set, there is no possibility to decrease the contributions (apart from opting out) or make additional voluntary contributions as of now. 

If you are an employee and you reach the income threshold of €80,000 within the tax year, no further contributions will be paid in that tax year. For example, if an employee earns €80,000 up to October in that year, the auto-enrolment contributions won’t be collected for November and December.

Levels 

Employers must match the employee’s contribution. The State will top up the fund with €1 for every €3 contributed by the employee. 

Increases 

Employees, employers and the Government contributions automatically increase overtime as the number of years of participation in the auto-enrolment scheme increase: 

This table shows the rates you, your employer and the Government will pay⁵:

Fund management and administration

NAERSA will be the independent body that will operate the auto-enrolment system. They will be responsible for the administration, record-keeping, and all queries relating to My Future Fund on behalf of the enrolees. The deadline for setting up NAERSA is the 31^st March 2025.

Options at retirement

Initially, as the AE system produces small retirement pots for enrolees, the options at retirement will be restricted to a lump sum payment. We expect this to evolve as the system matures to allow access to the likes of Annuities and Approved Retirement Funds (ARFs) like what is available to occupational scheme members at retirement.

An auto-enrolment pension can be drawdown at retirement age which currently is 66. 

What employees should do

It's generally considered more beneficial to join your company's existing pension scheme, if they have one in place, rather than relying solely on the auto-enrolment scheme, for a few reasons:

• Company pension schemes usually offer higher employer contributions compared to the minimum contribution requirements of the AE scheme.
• The State top up on auto-enrolment at a rate of €1 for every €3 of the employee contributions is the equivalent of a 25% tax relief. Other pension schemes such as PRSA, private pensions and occupational pensions, will continue to be supported by tax relief, which can be 20% or 40% depending on your tax band/earning levels. 
• Company pension schemes usually offer more flexible investment options.
• Your company pension provider can give you 24/7 access to your pension, along with helpful tools and calculators to help no matter what life stage you are at.
• You will have access to financial advice and resources to ensure you are on track to meet your retirement goals.
• You may retire early from age 50 with the permission of your employer
• You can make additional contributions (within limits) and get tax relief on these contributions

The information contained herein is based on Zurich Life’s understanding of current Revenue practice as at May 2025 and may change in the future.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

Sources:
¹Investment Provider Excellence Award, Brokers Ireland, 2024; Pension Provider Excellence Award, Brokers Ireland, 2024.

²Zurich as at 31st March 2025.

³Gov.ie: Auto-Enrolment questions answered

⁴Oireachtas.ie: Automatic Enrolment Retirement Saving System Act 2024

⁵Citizens Information: Auto Enrolment