Employers race against time as the deadline for auto-enrolment looms. As part of our Pension Pot podcast series Bank of Ireland’s Mark O’Connor and Bobby McDonnell offer sage advice.
With just months left before Ireland becomes the final OECD country to introduce mandatory pension savings, employers face a critical window to avoid losing control of their workforce’s retirement planning.
Ireland’s auto-enrolment pension scheme will launch in January 2026, automatically enrolling approximately 800,000 workers who currently have no pension provision.
“With a company pension scheme, it’s your name over the door. With the State scheme, it’s not”
The scheme represents a fundamental shift in how the nation approaches retirement savings, but experts warn that employers who fail to act now may find themselves sidelined from a process that could significantly impact staff retention and recruitment.
“Make a decision, an informed decision, or one will be made for you,” says Bobby McDonnell, corporate pensions and risk manager at Bank of Ireland. “That’s simply what is going to happen.”
The urgency stems from a crucial technical detail: payroll data from September through November will determine which employees are automatically enrolled in January. Workers without existing pension contributions during this period will be swept into the State scheme, regardless of any company pension plans introduced later.
“What happens now is going to determine who gets auto enrolled,” explains Mark O’Connor, head of corporate pensions at Bank of Ireland. “In December, there will be a look back over September, October, November, and the data being produced now is going to determine who gets enrolled in January.”
This creates a narrow window for employers to establish their own schemes and maintain control over their employees’ pension arrangements.
Pension Pot Podcast on Auto Enrolment:
The control question
The stakes extend beyond administrative convenience. Under the State scheme, employers lose significant influence over pension arrangements while still bearing the cost of contributions.
Unlike company schemes, the State system offers no vesting rights, meaning employers cannot recover contributions if employees leave within a short period.
“There’s no circumstance with auto enrolment where the employer ever gets their money back,” O’Connor notes. “A person works for you for six months, 12 months, two years. Doesn’t matter if they go, they take the full pot with them.”
Company schemes also allow employers to tailor contribution levels to different employee groups and use pensions as a strategic tool for talent retention. The state scheme, by contrast, applies uniform contribution rates regardless of age, salary, or career stage.
“With a company pension scheme, it’s your name over the door,” O’Connor adds. “With the State scheme, it’s not.”
The talent war context
The pension changes arrive amid an intensely competitive labour market. With unemployment at historic lows, employers increasingly compete on total compensation packages rather than salary alone.
“People don’t ask what the salary is anymore. They say what’s the overall package,” McDonnell observes. “They want to know about Flexi days and pensions and health benefits, everything else that goes with it.”
The retention challenge is particularly acute in sectors with high staff turnover. “Churn in a company is a nightmare for any company,” McDonnell says. “The cost of hiring is expensive. Training, some people don’t work out. They leave, and you’re placing that skills gap all the time.”
While pensions alone cannot solve recruitment challenges, they represent a tax-efficient way to enhance employee packages. “There’s only so much you can pay someone to do a job as a salary,” McDonnell explains. “So employers are looking to things like pensions and other type of flexible solutions.”
International lessons
Ireland’s late adoption of auto-enrolment allows it to learn from international experiences, particularly Australia’s superannuation system. The average 60-year-old Australian now holds $325,000 in their retirement account, compared to zero for their Irish counterpart without private pension arrangements.
However, international experience also highlights potential pitfalls. When the UK launched its auto-enrolment scheme, 10% of enrolled workers opted out on the first available day. Ireland’s system includes a six-month lock-in period to prevent immediate departures, but the risk of mass opt-outs remains.
“The benefits will not be seen initially,” O’Connor acknowledges. “It’s such a long term play.”
The adequacy question
Beyond control issues, experts question whether the state scheme’s standardised approach will meet individual needs. The system applies identical contribution percentages regardless of personal circumstances, potentially leaving some workers under-provided for retirement.
“Auto enrolment has this massive adequacy question around it,” O’Connor explains. “It doesn’t matter whether you’re 50 or 23 or 35, it doesn’t matter whether you’re on 100 grand a year or 20 grand a year. The contribution levels are the same.”
Company schemes can address this through tiered contribution levels and personalised advice services, elements absent from the state system.
The engagement factor
Successful pension schemes require active employee engagement, something the standardised state system may struggle to achieve. Bank of Ireland has invested heavily in digital tools, including biometric login systems, to increase scheme interaction.
“If you don’t engage with your scheme, you don’t see it as a benefit,” McDonnell explains. “We’ve seen since that was introduced, people engage with the scheme, and they realise their value.”
The broader challenge involves positioning pensions as employee benefits rather than payroll deductions. “A lot of employers want to avoid rolling something out very, very quickly, that employees will just see a deduction on their pay slip, and they won’t see it as a benefit of employment,” McDonnell says.
Time running out
With the implementation date fixed, employers face immediate decisions about their pension strategy. The choice is not simply between state and company schemes, but about maintaining strategic control over employee benefits in an increasingly competitive market.
“If the plan is to avoid auto enrolment and not have your employees in that, action needs to happen now,” O’Connor warns. “We’re kind of running out of time.”
For Ireland’s employers, the pension revolution represents both challenge and opportunity. Those who act decisively may gain competitive advantage in talent markets, while others risk ceding control of a significant employee benefit to the state.
With the clock ticking toward January, the window for strategic action is rapidly closing.
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