1. What is pension auto‑enrolment?
Pension auto‑enrolment is a new State‑sponsored savings framework due to be administered by the Department of Social Protection. Under the Automatic Enrolment Retirement Savings System Act 2024 , employees aged 23–60 who earn ≥ €20,000 a year and are not already in a workplace pension will be automatically enrolled in a nationally run retirement savings scheme.
Key structural features include:
- Phased contributions: Employee and employer contributions start at 1.5 % of gross pay in year 1 and rise to 6 % by year 10.
- State top‑up: The Exchequer adds €1 for every €3 contributed by the employee (i.e. 33 % top‑up).
- Opt‑out window: Members can choose to leave the scheme after month 7 and be automatically re‑enrolled every three years.
- Central Processing Authority (CPA): A new statutory body will oversee fund administration, provider tendering, and compliance.
The policy objective is to close Ireland’s coverage gap: according to the Central Statistics Office, only 56 % of private‑sector workers currently contribute to any occupational pension.
2. Confirmed delay: timeline at a glance
The Government originally targeted a go‑live date of **30 September 2025**. In April 2025, Minister for Social Protection Heather Humphreys confirmed a revised launch date of **1 January 2026** in a written Dáil reply ( Parliamentary Question No. 1237/25 April 2025 ).
| Milestone | Original target | Updated target | Current status |
|---|---|---|---|
| Primary legislation enacted | July 2024 | — | ✔ Complete |
| Establish Central Processing Authority | Q1 2025 | Q3 2025 | Recruitment open ( publicjobs.ie ) |
| Publish secondary regulations | Q2 2025 | Q4 2025 | Drafting phase |
| Auto‑enrolment onboarding begins | 30 Sep 2025 | 1 Jan 2026 | Delayed |
| First mandatory payroll return | Oct 2025 | Apr 2026 | Adjusted |
3. Why has the Government postponed the launch?
The Department of Social Protection cited several interlocking factors in its press release of 24 April 2025 :
- Technical build: The CPA’s core IT platform must integrate with PAYE Modernisation real‑time payroll feeds and MyGovID authentication. The vendor procurement has run six weeks behind schedule.
- Regulatory sequencing: Secondary regulations (investment default, charge cap, opt‑out process) cannot be finalised until the CPA CEO is in situ; appointment was delayed by vetting backlogs.
- Stakeholder feedback: In consultations, business groups such as ISME and Ibec warned that the original autumn launch clashed with the introduction of the National Living Wage and statutory sick‑pay increases.
- Election timing: A general election is constitutionally due by March 2026; officials wish to avoid launching a major payroll programme in pre‑election purdah.
4. Implications for employers
Although the start date has shifted by three months, the statutory obligation on employers remains unchanged. Practical steps to take before January 2026:
- Payroll readiness: Confirm your software provider’s auto‑enrolment update roadmap. The Revenue Commissioners will shortly publish an XML schema for employer submissions.
- Budgeting: Factor in employer contributions beginning at 1.5 % of gross pay per eligible employee, rising to 3 % in 2028 and 6 % by 2035.
- Policy updates: Amend contracts and employee handbooks to reference auto‑enrolment enrolment and opt‑out rights.
- Communications: Prepare FAQ sheets and slide decks using the Department’s forthcoming employer toolkit.
Under section 54 of the Act, an employer who fails to submit contributions will be liable for a surcharge plus interest, enforced by the CPA via the Revenue Commissioners.
5. Implications for workers
The delay gives employees extra preparation time. Key considerations:
- Contribution impact: A worker earning €35,000 will have €525 deducted in year 1 ( 1.5 % ), matched by the employer and topped up by €175 from the State.
- Existing coverage: Employees in defined‑benefit, defined‑contribution, PRSA or public‑sector schemes will not be enrolled.
- Opt‑out and refund: After six months’ participation, a one‑month opt‑out window allows a refund of employee contributions (employer and State amounts stay invested).
- Portability: Accounts follow the worker between jobs and periods of unemployment, reducing “small pot” leakage.
- Investment choice: Members will initially default to a lifestyle strategy but can switch to other risk profiles via the member portal.
6. Industry response
Reactions have been mixed:
- Ibec: Welcomed the revised timeline, calling it “more realistic”.
- Irish Congress of Trade Unions: Expressed disappointment at further delay but emphasised the importance of a robust infrastructure.
- Pensions Authority: Confirmed ongoing supervisory work to ensure regulated providers meet the fee cap ( ≤ 0.5 % p.a. ) once tenders are awarded.
7. Frequently asked questions
Will the contribution schedule change again?
The phased contribution schedule is embedded in primary legislation. Any change would require an amending Act passed by the Oireachtas, so alterations are considered unlikely before launch.
What happens if an employee opts out?
Employee contributions are refunded via payroll. Employer and Exchequer credits remain invested until the member is re‑enrolled or reaches retirement age.
Can small employers apply for relief?
There is currently no employer rebate, but the Department has signalled potential grants for micro‑enterprises in a forthcoming consultation on SME supports.
Is there a charge cap?
Yes – annual management charges will be capped at 0.5 % of assets under management, aligning with the UK’s default fund cap.
How will retirement benefits be drawn down?
At retirement (currently age 66), members may transfer funds to an Approved Retirement Fund, purchase an annuity, or take a taxable lump‑sum subject to Revenue limits. Detailed drawdown rules will appear in secondary regulations.
