Despite delays, Irish employers are still not ready for the onset of auto-enrolment. Craig Donnelly from Xeinadin on how employers can turn a challenge into an opportunity.
After multiple false starts, it looks like the beginning of 2026 will finally see the introduction of the auto-enrolment scheme. For tens of thousands of workers, this will have a significant impact (for the better) on their financial security in later life.
It is a real game changer for workers but for their employers, our independent research found they were not ready for the scheme. Less than half (41%) said they were prepared for the scheme and 36% said they weren’t prepared.
“The clock is ticking, and while the exact start date has a history of shifting, the direction of travel is clear. Auto-enrolment is coming and with it, new responsibilities for employers”
A recent ACCA Ireland survey also showed two-thirds of finance professions want the government to do more to support businesses to prepare for the auto-enrolment scheme. Will we be even prepared for January 2026?
The new arrival date might be another false dawn, but eventually this scheme will be implemented and preparation for when it does finally arrive will be key. Here is what both employers and workers affected by the changes need to know to prepare.
Who is actually eligible for Auto-Enrolment pensions?
The AE scheme targets employees who are not currently participating in a workplace pension plan and are not paying into a private pension. Employees who meet this criteria will be automatically enrolled if they are between 23 and 60 years old and have an annual income of €20,000 or more.
Other employees – i.e. those aged 18-22 or over 60, 61-66, or those who earn less than €20,000 – are not barred from the scheme completely and can opt into the scheme voluntarily. They just won’t be enrolled automatically.
How much are the contributions?
The AE scheme will operate a phased contribution system over the course of a decade. Contributions from employees, employers and the state will be divided into four phases as follows:
- Years 1-3: Employees contribute 1.5% of gross earnings, matched by their employer; the State adds 0.5%.
- Years 4-6: Contributions increase to 3% each from the employee and employer, with a 1% State top-up.
- Years 7-9: Employer and employee contributions increase further to 4.5% each; State contributes 1.5%.
- Year 10 onwards: Contributions reach 6% from both employee and employer, with a 2% State top-up.
These contributions apply to gross earnings up to a cap of €80,000 annually. The breakdown means that for every €3 an employee contributes, a total of €7 is invested into their pension fund.
Employers will be required to enrol all eligible employees into the scheme and must ensure their payroll systems are updated to handle deductions and contributions efficiently.
Are there any exemptions and can employees opt out?
Employers that already run an occupational pension scheme with deductions taken through payroll may be exempt from the AE scheme, as long as their scheme meets approved standards and covers all workers who would otherwise be eligible for AE. They must also gain the consent of employers to use existing schemes in lieu of AE.
All staff will need to be enrolled even if they have a personal pension, the only way an employee will be exempt is if the contributions are being deducted via the payroll system. Employers don’t have to enrol any staff that have their own private pension scheme, including , Retirement Annuity Contracts (RACs) and Pan-European Personal Pension Products (PEPP). Personal Retirement Savings Accounts (PRSA), Retirement Annuity Contracts (RACs) and Pan-European Personal Pension Products (PEPP).
While initial enrolment is mandatory, long-term participation is not. After six months, employees who have been entered into the scheme can opt out and receive a refund of their contributions. However, this will only be for the employee’s own contributions – employer and state contributions made during this period will remain in the fund.
Employees who opt out will be automatically re-enrolled every two years, providing regular opportunities to start again.
Getting ready for implementation
With the time being extended, we’d advise all employers to take proactive steps now to check compliance with AE and make any necessary changes. Failing to enrol eligible employees could result in fines or even prosecution.
Steps to take now include:
- Assessing your current pension provisions to see if they meet the AE criteria and what (if any) adjustments are necessary.
- Updating payroll systems to make sure they can process the new contribution requirements.
- Engage with your employees to ensure they are fully informed about the AE scheme, its benefits, and their options.
- Budget for the additional employer contributions and any administrative costs associated with the scheme.
By acting early, employers can ensure a smooth transition, avoid last-minute complications, and demonstrate their commitment to supporting their workforce.
Fail to prepare, prepare to fail
The clock is ticking, and while the exact start date has a history of shifting, the direction of travel is clear. Auto-enrolment is coming and with it, new responsibilities for employers.
Those who act now will not only sidestep potential penalties but also build goodwill with their employees and position themselves as forward-thinking and compliant.
The sooner you get your house in order, the better placed you’ll be when the scheme finally takes effect. Our advice: don’t wait for the deadline, lead the way.
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