Should I wait for auto-enrolment or not?

On the 1^st January 2026, employees will be automatically enrolled into the new pension system called auto-enrolment (AE) and are now wondering if they should set up a pension themselves or wait for AE to be fully introduced and be automatically enrolled.  

In this article we will explain the options you have and why we think you shouldn’t wait for AE but rather start a pension today. 

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.  

Table of contents: 

Should I start a pension now or wait for AE?

Auto-enrolment vs Personal Retirement Savings Account (PRSA)

Auto-enrolment vs occupational pensions

Should I start a pension now or wait for AE?

It's generally considered more beneficial to join your company's existing pension plan, if they have one in place, rather than relying solely on the auto-enrolment plan. However, deciding whether you should start a pension now or wait for AE will depend on your own individual circumstances.  

Here are a few examples: 

• If you don’t want to start a pension, you can wait for AE and then opt out or suspend your contributions.
• If as an employee you are on a low income and want to keep pension contributions to a minimum initially as you get started, then maybe AE is a viable option for you.
• For any other employee, you may benefit more from an occupational pension, Personal Retirement Savings Account (PRSA) or other pension arrangements. This is because if you are in the 40% income tax bracket, your pension contribution is already more beneficial than the State’s contribution to an AE pension, which when converted to a tax benefit would equal 25%. 

Saving for retirement is a long-term investment. History has shown that the longer you keep your money invested, the greater the chances of a positive outcome. Staying fully invested through a market cycle has, in the past, ensured investors reap greater rewards over the long-term as rebounds after large losses are often significant³.  

AE has been postponed before and if it is pushed out again, this means that the ‘time in the market’ for employees shortens. 

In addition, investing in a pension fund with a company like Zurich gives you access to more fund diversification options compared to AE. 

Keeping your money in cash is not beneficial either. If you consider that for every month that you don’t make a pension contribution you lose 40% or 20% (depending on your tax band) of that contribution to income tax. For example, if you take €100 gross in cash from payroll you receive €60 or €80 net. If you put €100 in a pension fund, the €100 goes directly to the pension fund, because of the income tax benefit on pension contributions. 

AE vs PRSA

Some of the advantages of having a PRSA compared to AE are:

• Flexible pension contributions. With AE, the contributions are set, with a PRSA it’s up to the individual to decide how much they want to contribute.
• PRSA is a tax efficient way to save because of the 40% or 20% tax benefit on contributions made by the individual – in AE you are restricted to the pre-determined contributions of the system.
• In some cases, PRSA funds can be accessed before the retirement age. The AE fund can only be accessed at State pension age – currently 66.
• There are more investment options available with a PRSA to suit every risk tolerance level.
• Personalised financial planning is an advantage as PRSAs give access to financial planners. 

Employees who are undecided between PRSAs and AE should also consider that employers will have to match the employees set AE contributions while they don’t have to when contributing to a PRSA.  

This means that the amount the employee is willing to contribute monthly can dictate whether AE or PRSA is a better option.  

Auto-enrolment vs occupational pensions

Going with an occupational pension (when possible) is probably the most favorable option. There is often an employer contribution, and employees can take advantage of the pension contribution tax benefits too. 

The introduction of AE could see more employers start to contribute (if they don’t already) to their employees’ occupational pension or increase their contributions. Because employers will have to contribute to AE, it could become more convenient for them to focus more on the company or occupational pension, which could in addition ensure their pension plan offering is more attractive to employees. 

Occupational pensions also offer more flexibility in terms of contribution levels and investment options. The table below compares AE and an occupational pension scheme:

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. 

³Zurich Ireland: Principles of Long-term investment