The long-awaited Auto-Enrolment (AE) pension system is set to launch in Ireland in 2025 (or later, depending on what sources you listen to). While it aims to boost retirement savings for private sector workers, it’s also about to introduce a significant new layer of responsibility for employers.
Update 29th April 2025: The government announced the start January 1st, 2026
If you own or manage a business, it’s time to get ahead of the curve and avoid the administrative headache that could follow. Irish employers need to know how it will impact them and in this post, we’re looking at Australia’s model, and why grasping the pension nettle now might save you time, money and frustration down the line.
What is Auto-Enrolment?
Auto-Enrolment means that employees aged between 23 – 60, who are not already in a pension scheme and earn over €20,000 a year, must be automatically enrolled into a State-backed pension scheme by their employer. Contributions will be made by the employee and the employer, starting at 1.5% from each party, and rising every three years until they reach 6%. The State will contribute €1 for every €3 paid in by the employee.
The model is closely based on Australia’s Superannuation Guarantee, which has been largely successful in improving retirement outcomes. But the devil is in the detail and for Irish employers, the implementation could cause more disruption than benefit unless it’s properly planned for.
The Australian Lesson: Success with Side Effects
Australia’s model has created over €2 trillion in pension assets and successfully nudged millions into saving for retirement. But it’s not without issues. Many workers remained in default funds with high fees, and businesses often struggled with complexity and compliance over time.
The Irish scheme has the advantage of starting fresh, but employers need to be proactive. Leaving it all to the State scheme could mean unnecessary cost, admin, and frustration.
Why AE Might Not Be Right for All Your Staff
Here’s a key point many employers’ overlook: Auto-Enrolment isn’t going to pay off for everyone. Some might even lose out!
For example:
- Higher earners (typically those earning €44,000 or more) may already benefit more from a traditional occupational pension with tax relief and flexible investment choices.
- Older employees in their 30s or 40s who are playing catch-up on retirement savings may find AE contributions too low to meet their goals.
- If these employees opt out, as many well-informed staff may do, your business has to deal with a complex process that goes further than just record keeping.
The Hidden Cost of Opt-Outs
Here’s what happens if an employee opts out of the AE scheme:
- You still have to enrol them and make contributions for 6 months.
- If they choose to leave after that, you must claim back their contributions and repay them.
- However, your employer contributions are not refundable.
- In two years, you must re-enrol them again , and repeat the entire process if they opt out once more.
Now multiply that by several employees across departments, and you’re looking at a growing admin load with no real benefit to your business or staff morale.
Engagement is Key : Not Just Compliance
Here’s the opportunity: Instead of waiting to be told what to do, take control of your pension provision now.
A tailored company pension scheme, set up with a qualified pension advisor, allows you to:
- Make enrolment mandatory, avoiding opt-in/opt-out loops.
- Educate employees on the value of retirement saving.
- Tailor contributions to your workforce’s needs (with or without an employer match).
- Comply with the AE rules without being locked into the State scheme.
Most importantly, if an employee is already contributing to a workplace pension (visible on their payslip), they are exempt from the government scheme.
A Smarter Path for Employers
Most employers are expected to mirror the AE scheme by contributing the same amounts – starting at 1.5% and rising to 6% over 9 years. But there’s no legal requirement to match contributions in a private scheme. Even if you offer no employer match, your staff would still be exempt from the AE programme – and your business could avoid the extra administrative burden entirely.
Final Thoughts: Time to Act
Auto-enrolment is approaching (however slowly), whether you’re ready or not. But with the right guidance, it doesn’t have to be disruptive.
At Lynx Financial Services, we’re already helping employers put robust, efficient pension schemes in place that meet AE requirements while aligning with business goals. We’ll help you:
- Understand your obligations
- Engage and educate your staff
- Set up a plan that works for your business, not against it
Planning for Today, Tomorrow and the Unexpected
At Lynx Financial Services, we believe financial planning shouldn’t be complicated or overwhelming. That’s why we take a personalised, straightforward approach, helping you save for today, tomorrow, and the unexpected
No jargon. No hidden fees. Just clear, honest advice tailored to your goals
Whether you’re looking to grow your investments, plan for retirement, protect your family, or secure the right mortgage, our expert advisors are here to guide you every step of the way. Your financial security is our priority, and as a member of Brokers Ireland, regulated by the Central Bank of Ireland, you can trust that you’re in safe hands
Wherever you are in life, whatever your financial ambitions: We’re here to help. Ready to start the conversation? Get in touch.
