Trevor Gardiner from Kota on how Ireland’s auto enrolment works, why private schemes matter, and how employers can choose the right pension solution before January 2026.
Ireland’s auto-enrolment system will officially go live on 1 January 2026 – an important piece of legislation that will transform workplace benefits and bring approximately 800,000 people into retirement savings for the first time.
While awareness and readiness remain mixed, the surge in employers now looking to set up private schemes should be seen as a hallmark of success, not failure. Employers are acting because the legislation sets a strong national baseline while giving organisations autonomy to choose the pension structure that suits their workforce.
“As Ireland moves into this new era of retirement saving, it’s important to welcome auto-enrolment as a long-awaited reform while also recognising that private occupational schemes continue to offer a legitimate, practical and often preferable route for many employers”
A perception has surfaced in recent weeks that employers considering private occupational schemes are somehow diverting from the intent of auto-enrolment.
In practice, the reverse is true: establishing an occupational scheme sits squarely within the framework AE was designed to encourage. Choosing to establish an occupational scheme fully aligns with the design of auto Enrolment. In fact, for many employers and employees, a one-size-fits-all approach simply won’t meet real needs. For example, a large proportion of earners will want the ability to contribute above the 1.5% statutory minimum, a level of flexibility the State Scheme cannot yet offer but occupational schemes can.
Far from undermining auto-enrolment, employer-led action is a strong vote of confidence in the system. It reflects a workforce eager for choice, employers committed to doing right by their teams and legislation that encourages both.
The myth around a fully automatic State scheme
It’s sometimes assumed that engaging with the State’s My Future Fund will be largely automated. In fact, employers will still have several important and time-bound responsibilities to manage from.
The operational guidance already spans 80+ pages, outlining reconciliation steps, strict payroll timings, and a 18:30 cut-off for corrections on pay day, a level of operational intensity some smaller businesses are not prepared for. Employers will need to configure payroll systems and interact with the Auto Enrolment platform every pay cycle.
For SMEs, which already spend 57% of their time on administration, this additional burden risks compliance pressure, payroll delays and employee frustration.
Despite this, many employers believe that defaulting into My Future Fund is the only viable option left. However, employers still have time to choose an occupational pension that meets the exemption criteria- often a simpler and more manageable route.
Private participation strengthens auto-enrolment
Auto-enrolment is a positive reform, but it isn’t the only solution. Many assume the State pathway is the only option, even though employers can still choose an occupational pension that meets exemption rules. Ireland also has a mature pensions ecosystem- fund managers, brokers, HR advisers and payroll specialists who work with employers every day and understand the operational realities they face. Their involvement helps employers minimise administrative burden and engage employees.
This practical, on-the-ground expertise strengthens auto-enrolment because it helps employers choose a solution that genuinely fits their needs rather than defaulting into a system they do not fully understand. Private-sector providers have stepped in to fill the information gap, guiding employers through the differences between the State route and occupational schemes at a time when official guidance has been limited.
We also recognise that private providers are not the right fit for every organisation. That’s why, at Kota, we ran a 21-venue roadshow across Ireland to support employers and employees, provide pension education, and answer practical questions.
Why employers are hesitant about My Future Fund
Part of the uncertainty reflects how recent government communications have been interpreted. Some employers tell us they are unsure about exploring alternatives to My Future Fund, even when an occupational scheme may better match their workforce needs. The system is still being finalised, and naturally, details continue to emerge, which is contributing to employers’ desire for clarity.
Recent updates from the Department further emphasise this ongoing change, with new regulations expected to take effect from 1 January 2026 introducing a minimum 3.5% contribution rate. Employers must fund at least 1.5%, while the remaining 2% can be covered by either side. Non-contributory schemes remain unaffected if the employer contributes at least 3.5%.
The stated objective of these regulations is to prevent employers from ‘gaming the system’. In our experience, this is not what employers who opt for private schemes are trying to do. Indeed, the average pension contribution through our platform is 6%, well above the 3.5% employees would receive through the Government Scheme. The more common employer concerns are around their employee experience and flexibility.
Cost considerations are also part of employers’ planning. Surveys show that 75% of businesses expect auto-enrolment to have some impact on profitability, and our discussions with ISME members suggest that many SMEs are preparing for the combined financial and administrative commitments that accompany any major system change. Employers are also looking closely at how My Future Fund will work for their staff.
The State scheme follows a defined structure: higher-rate earners, for instance, will save at a different proportional rate than under some existing occupational arrangements (33% compared with up to 40%), and features such as AVCs or employer contributions above 1.5% are expected to develop over time. Savings are accessed at age 66, reflecting the scheme’s long-term purpose.
For this reason, many employers are also exploring private occupational schemes, which can offer additional flexibility around contributions, benefit design and day-to-day administration, features that can be especially valuable for companies seeking efficient, easily managed solutions tailored to their workforce.
Ensuring employees understand these parameters is another area where employers anticipate an active role as workplaces adapt to this national reform.
Next steps for employers and employees
With implementation only weeks away, the most important action employers can take now is to make an informed decision that is right for them and their employees.
Before choosing a route, employers should understand who in their workforce meets the eligibility thresholds and how each option will interact with their payroll and HR processes. Reviewing contribution structures, assessing long-term costs and confirming how staff will be informed about their pension arrangements are essential steps.
Employees should review their eligibility, understand projected contributions, and use available workplace and government resources to plan for long-term savings.
As Ireland moves into this new era of retirement saving, it’s important to welcome auto-enrolment as a long-awaited reform while also recognising that private occupational schemes continue to offer a legitimate, practical and often preferable route for many employers.
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