Automatic Enrolment introduces new mandatory retirement savings requirements into Irish law for the first time. These requirements are due to commence on 30 September 2025. As this is now less than eight months away, employers should familiarise themselves with the new requirements and the steps necessary to ensure compliance. CPAS’s John Geraghty writes about what Auto-Enrolment Compliance for Employers in Ireland entails.
Existing pension arrangements
Employers should decide whether they wish to use their existing pension arrangement to meet the requirements of AE or whether they will operate a dual system, i.e. continue the existing arrangement alongside the AE system. At present membership of a pension scheme or Personal Retirement Savings Account (“PRSA”) with any level of employer/employee contribution means employees will not be automatically enrolled into the AE system. If existing arrangements are to be used alone there are a number of key steps to take:
• Ensure all employees who are not currently members of the scheme, join the scheme.
• An employee communication exercise will be required to inform employees of the changes.
• Amendments will be required to scheme documentation, regarding membership provisions. Employers should consider whether there are cohorts of excluded employees and whether (and how many) employees have opted out of the scheme and why.
No existing pension arrangements
For employers who do not currently operate pension arrangements, now is the time to consider the best option for their employees and their business.
• is it preferable to allow employees to be automatically enrolled into the AE system; or
• would membership of a Master Trust, Multi-Employer scheme, occupational pension scheme or PRSA be a better choice into the future?
We would encourage employers to have completed their considerations and implemented any required actions by the beginning of July of this year. A July implementation date will hopefully avoid any administrative difficulties that might arise as the new Authority implementing the AE system can apply a “look back” period of up to 13 weeks to determine the correct pay reference period for an employee, to assess whether they are in scope for AE.
Eligibility for the scheme encompasses employees aged between 23 and 60 years who earn over €20,000 per year, unless they are already participants in another pension arrangement. Both employers and employees are expected to contribute to the scheme, beginning at a rate of 1.5% each, gradually increasing to 6% over a ten-year period.
Contributions are as follows:
| Years | Employee | Employer | State | Total |
|---|---|---|---|---|
| 1 – 3 | 1.5% | 1.5% | 0.5% | 3.5% |
| 4 – 6 | 3% | 3% | 1% | 7% |
| 7 – 9 | 4.5% | 4.5% | 1.5% | 10.5% |
| 10 + | 6% | 6% | 2.0% | 14% |
*Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s gross salary.
There are noteworthy distinctions between auto-enrolment and existing occupational pension schemes that employers ought to be aware of. For instance, auto-enrolment does not provide tax relief like traditional pension arrangements do. Instead, a State top-up equivalent to 25% tax relief is available. Employers running an auto-enrolment scheme alongside another occupational pension arrangement should familiarise themselves with the two different taxation systems that will be applicable to payroll. Occupational pension schemes are more advantageous for pension scheme members paying 40% tax, while the auto-enrolment scheme may have a greater impact on the take-home pay of taxpayers on the 20% rate.
Additional Voluntary Contributions (AVCs), which allow members to enhance their retirement outcomes by contributing more to their pensions, are not currently possible under auto-enrolment. Moreover, auto-enrolment does not offer additional benefits such as life cover, sick pay, and income protection, which are valuable incentives for employers seeking to attract and retain key personnel.
Employers should seize this opportunity to assess their needs and implement a solution that suits them best.
CPAS provides the administration support for the construction sector’s dedicated pension schemes and is registered to provide the core administration services to the Trustees of the Construction Workers Pension Scheme (CWPS) the Construction Executive Retirement Savings (CERS), and provides additional financial support services through Milestone Advisory DAC.
For further assistance with preparing for auto-enrolment and compliance for employers, you can reach out to John Geraghty, the Business Development Consultant at CPAS, via email at j.geraghty@cpas.ie or phone 01 2234949.
