How auto-enrolment pensions can simplify your retirement planning in Ireland
Planning for retirement can be overwhelming, but Ireland’s new auto-enrolment pension scheme aims to make it simpler for everyone. Starting in 2025, eligible employees will automatically be enrolled in a pension plan, giving you the opportunity to save for the future without all the hassle.
In this post, we will answer all your questions about auto-enrolment pensions, explaining how the system works, the benefits it offers, and how you can make the most of it.
- What is an auto-enrolment pension?
- What are the benefits of auto-enrolment?
- Is auto-enrolment better than personal pension options?
- When does auto-enrolment start?
- Who will automatically be enrolled?
- Can I opt-out of enrolment?
- What happens if my employer opts out of this scheme?
- What happens if I already have a workplace pension?
- What happens if I change jobs after being enrolled?
- How much do I contribute?
- Is there a cap on pension contributions?
What is an auto-enrolment pension?
An auto-enrolment pension is a retirement savings scheme where employees are automatically signed up to a pension plan by their employer. There is no need to opt in or complete any paperwork. The money you receive from auto-enrolment will be in addition to the State Pension. The goal is to make saving for retirement simple and straightforward.
What are the benefits of auto-enrolment?
Here are five key benefits:
- Automatic: You don’t need to do anything to get started. If you’re eligible, you’ll be enrolled through your employer and begin saving for retirement right away.
- Employer and government contributions: For every €3 you save, your employer will match it, and the government will add €1. This helps your pension grow faster.
- Easy and hassle-free: Once enrolled, your contributions are automatically deducted from your salary, so saving for retirement is simple.
- Portable pension savings: Your pension pot stays with you, even if you change jobs.
- Flexibility: If you want, you can opt out or take a break from contributing. You can also rejoin the scheme later, so it’s flexible based on your needs.
Is auto-enrolment better than personal pension options?
Auto-enrolment is a great option, but whether it’s better than a personal pension plan depends on your individual needs. The main benefit of auto-enrolment is that it’s automatic and easy. Personal pensions, on the other hand, give you more control over how much you contribute and where your money is invested.
When does auto-enrolment start?
The new auto-enrolment pension scheme is set to launch on 30th of September 2025 but recent comments by Government ministers suggest it may be pushed out until January 2026.
Who will automatically be enrolled?
You will be automatically enrolled if you meet the following criteria:
- You are aged between 23 and 60 years old.
- You are earning €20,000 or more per year.
- You are not currently part of a pension plan that operates through your salary.
If you do not meet the age or earnings requirement you can choose to opt-in.
Can I opt-out of enrolment?
After you’re enrolled, you’ll need to stay in the pension scheme for at least six months. After that, you have two months to decide if you want to opt out. If you choose to opt out during this time, you’ll get back the money you’ve contributed. But the money your employer and the government put into your pension will stay there and keep growing until you retire. It’s important to remember that opted out workers will be re-enrolled after two years if they remain eligible.
There is also an option to suspend contributions for a period of one to two years but if you choose to do so you cannot recommence before a minimum of one year.
What happens if my employer opts out of this scheme?
If your employer doesn’t follow the auto-enrolment rules, they could face penalties or even legal action. If they don’t make the required contributions to your pension, they may be fined and must repay the money with interest.
What happens if I already have a workplace pension?
If you already have a workplace pension, you won’t be automatically enrolled in the new auto-enrolment pension scheme.
What happens if I change jobs after being enrolled?
If you change jobs after being enrolled in the auto-enrolment scheme, you won’t lose your pension savings. Your new employer will automatically enrol you in the scheme if you’re eligible, and the contributions from both your employer and the government will continue to go into your pension pot.
How much do I contribute?
Under the auto-enrolment scheme, you’ll start by contributing a small percentage of your gross salary, and this amount will gradually increase over time.
You won’t get any tax relief on your own contributions, but the government will still contribute to your auto-enrolled pension. You and your employer can’t change how much is paid in, as the contribution amounts are fixed as a percentage of salary. But, with company pensions or private pensions, you can get tax relief on your contributions.
| Year | Employee Contribution | Employer Contribution | Government Contribution |
|---|---|---|---|
| 0-3 | 1.5% | 1.5% | 0.5% |
| 4-6 | 3% | 3% | 1% |
| 7-9 | 4.5% | 4.5% | 1.5% |
| 10+ | 6% | 6% | 2% |
The best part?
That government will add €1 for every €3 you contribute, meaning you’ll get a 25% benefit. This is better for people who were previously only getting 20% tax relief, but it’s a reduction for those who currently could avail of tax relief on contributions at the higher rate of 40%.
Is there a cap on pension contributions?
Yes, there are limits. Both your employer’s and the Government’s contributions are capped at €80,000 gross annual salary. You can still contribute a percentage of your full salary if you want to, even if you earn more than €80,000. But your employer and the government won’t match it.
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