With auto-enrolment officially up and running in Ireland, Eimear Byrne, country leader at HR and payroll specialist SD Worx Ireland answers key questions around auto-enrolment and how SME business owners can ensure that they are compliant.
The Irish Government’s new pension auto-enrolment scheme has been making its way onto the agendas of businesses in Ireland since it was voted into law in 2024.
Now officially in effect since 1 January, the initiative, known as MyFutureFund, aims to ensure that all employees have access to a workplace pension contribution scheme.
“Delayed or non-compliance with pension auto-enrolment can bring a world of administrative burden and hefty penalties on businesses”
Under the programme, employees are automatically enrolled in a pension saving scheme by their employers, and continuous contributions are made by both the employer and employee towards their pension.
However, the introduction of the scheme has, naturally, raised questions and queries among employers in Ireland around what it entails, and how it will impact them.
What should SMEs be doing now that the pension auto-enrolment scheme has been rolled out?
If you have not already done so, the first step is to ensure that your business is registered on the MyFutureFund portal and has downloaded Auto Enrolment Payroll Notifications for employees (this is the instruction sent to the employer’s payroll software to enrol an employee and begin contributions).
As part of the registration, the authorised person on the company’s banking mandate is required to authorise the direct debit. Then, run payroll as usual from January. It’s important to make sure that your payroll software is compatible and equipped with the necessary updates to handle the new system. This includes calculating contributions, maintaining records, producing reports and files for financial software, and integrating with NAERSA (the National Automatic Enrolment Retirement Savings Authority). Ensuring that the right systems are in place now will save time and reduce compliance risks down the line.
“Businesses should regularly review their auto-enrolment processes to make sure that everything is running smoothly”
Eligible employees are those aged between 23 and 60, earning more than €20,000 per year across all employments, with no existing workplace pension plan in place. Contribution rates for both employees and employers are set to gradually increase over a phased period, starting at 1.5% in 2026 and rising to 6% over 10 years. Meanwhile, the Government will also contribute to the savings by providing a top-up of €1 for every €3 saved.
While auto-enrolment is mandatory, employees can choose to opt-out if they wish to do so – but only after six months. However, it’s important to note that auto-enrolment is a right and any employers who prevent employees from joining the scheme or penalise them for their participation will face penalties. This employee right applies regardless of whether a company also offers a private pension scheme.
It’s vital for business owners to adopt clear and open communication with employees about the new rules and provide their teams with the necessary information to enable them to make an informed decision about their participation. Talk to your employees about how it works, why it’s beneficial, and what (if anything) they need to do. Clear communication will build trust and reduce confusion.
What are some specific challenges you are seeing among your customers/the wider business landscape when it comes to pension auto-enrolment?
There has undoubtedly been confusion among employers in Ireland when it comes to pension auto-enrolment. For example, some employers incorrectly informed their workers that they were now obliged to join private company pension schemes on the back of the MyFutureFund rollout.
A key obstacle fuelling this confusion was the lack of an official phone or email helpline to ask specific questions before the portal went live, and businesses had been relying on published documentation or the guidance of their payroll providers to get access to the information that they need. This has also caused confusion over who deals with queries as payroll providers (and also the Revenue Commissioners) now seek to redirect companies to NAERSA.
In addition, the technical regulations to compliantly operate the auto-enrolment system – which are fundamental to the development and implementation of the scheme – have yet to be signed off and provided to payroll software developers. Essentially, this is putting the cart before the horse, as the system has been built before the rules have been fully laid out and there are many nuanced scenarios to clarify.
Meanwhile, there is currently no facility to transfer savings from an occupational or private pension to MyFutureFund – or vice-versa. While this may be considered in the future, it will not be part of the day-one scenario. This will make managing retirement funds coherently more difficult and complex for employees, and could discourage people from engaging with the scheme early on.
Another challenge is shadow payroll, whereby employees on assignment in other countries remain on their home country’s payroll. These will be picked up as regular payrolls, so they will need to be disqualified through social insurance classification. In addition, employees with pensions not reported through payroll, or with contributions made in other countries, will be automatically opted in.
What are the risks or implications if employers don’t update their payroll systems/comply with the scheme?
Delayed or non-compliance with pension auto-enrolment can bring a world of administrative burden and hefty penalties on businesses. Companies can expect fines, payroll errors, extra admin tasks, backdated contributions that accumulate interest, and operational disruptions if they don’t comply. Not only this, but it will impact employee trust and could lead to reputational damage for their business.
It’s crucial to get the correct systems in place and, once you have done so, don’t just set them and forget them. Businesses should regularly review their auto-enrolment processes to make sure that everything is running smoothly. Staying proactive will help to remedy small issues before they grow.
Closing the pension gap
Auto-enrolment is part of a broader effort to address a pension gap in the private sector.
Central Statistics Office (CSO) data shows that around one-third of employees in Ireland aged between 20 and 69 have no private pension cover and will depend on a State pension in retirement.
Meanwhile, independent research carried out by SD Worx across 1,000 employees in Ireland recently found that 60% are worried about having enough money to retire at their planned retirement age.
With the MyFutureFund scheme now in effect, businesses should make sure they are up to speed on their responsibilities as an employer. Staying informed and compliant now will mean fewer surprises later.
-
Bank of Ireland is welcoming new customers every day – funding investments, working capital and expansions across multiple sectors. To learn more, click here
-
For support in challenging times, click here
-
Listen to the ThinkBusiness Podcast for business insights and inspiration. All episodes are here. You can also listen to the Podcast on:
-
Spotify
-
SoundCloud
-
Apple
