From 1 January 2026, Ireland’s Auto-Enrolment pension system became a practical reality. MyFutureFund is now live, and for many employees pension saving has shifted from being a conscious decision to a default feature of working life. For some, this will be the first time a pension contribution appears on their payslip without them having actively arranged it.

The objective is straightforward. Auto-Enrolment is designed to make retirement saving easier, more consistent and more inclusive, particularly for workers who currently rely almost entirely on the State Pension. While the State Pension remains an important foundation, it is widely accepted that on its own it is unlikely to deliver the level of income most people expect in retirement. Auto-Enrolment seeks to narrow that gap by embedding pension saving into employment and sharing the cost between employees, employers and the State.

Beyond the mechanics, Auto-Enrolment also marks a cultural shift. Retirement planning and long-term investing have not always been prominent features of financial decision-making in Ireland, particularly among younger workers and those without access to workplace schemes. By making pension saving automatic, visible on payslips and supported by employers and the State, Auto-Enrolment helps raise awareness and encourages earlier engagement with the idea of investing for retirement.

At its core, the system works on a simple principle. If you are eligible and take no action, you will still be saving for retirement.

Why Auto-Enrolment matters

Ireland has long faced a participation gap in private pensions. An estimated 760,000 workers have no supplementary retirement provision in place. Auto-Enrolment addresses this by changing the default outcome. Instead of relying on individuals to opt in, it brings eligible employees into the system automatically and supports saving through matched employer contributions and additional State top-ups.

Over time, this approach has the potential not only to improve retirement outcomes, but also to build greater financial literacy and confidence around long-term investing. For many people, Auto-Enrolment will be their first practical exposure to how pensions work and how contributions accumulate over time.

Who is covered

Auto-Enrolment applies to employees aged 23 to 60 who earn €20,000 or more per year across all employments and who are not already contributing to a pension or PRSA through payroll. For those who meet these criteria, contributions now begin automatically. Employees earning below the income threshold or aged outside of the parameters will be able to opt in to the system if they wish. For many, particularly those at an early stage in their careers, the greatest benefit lies in starting sooner rather than contributing more initially.

How contributions build over time

Auto-Enrolment is funded jointly by employees, employers and the State. Contributions start at a relatively modest level and increase gradually over time to allow people to adjust without a sudden impact on take-home pay.

For every euro an employee contributes, their employer matches it, with additional support from the State. For workers who previously had no pension provision, this represents a meaningful improvement in long-term retirement prospects.

Staying in or opting out

Participation is not compulsory, but the system is designed to encourage people to give saving a genuine opportunity. Employees must remain enrolled for the first six months, after which they may opt out during a defined window in months seven and eight. If they do so, their own contributions are refunded, while employer contributions and State top-ups remain invested on their behalf.

Employees who opt out may be automatically re-enrolled in future years if they continue to meet the eligibility criteria. Evidence from similar systems suggests that once people remain enrolled for an initial period, most choose to stay in the scheme.

What happens to your money

Employees will have a choice of four retirement savings funds, depending on the level of risk they prefer, including conservative, moderate, higher-risk, and a lifestyle (life-cycle) investment option, which will apply by default where no selection is made. The accumulated funds, together with any investment returns, will be paid to employees upon their retirement in addition to the State Pension, with drawdown linked to the State Pension Age, which is currently 66 (subject to future changes). At retirement, up to 25% of the fund may be taken as a tax-free lump sum, subject to the lifetime tax-free limit of €200,000 across all pension arrangements, with the balance subject to income tax when drawn.

What employers need to consider

Auto-Enrolment introduces new operational responsibilities for employers, including identifying eligible employees, operating payroll deductions, ensuring contributions are accurate and paid on time, and communicating clearly with staff. Employers with existing pension schemes should also review whether current arrangements meet exemption thresholds and remain appropriate for their workforce.

A strong foundation, but not a complete solution

Auto-Enrolment represents a meaningful step forward in how retirement saving works in Ireland. It reduces inertia, broadens participation and helps normalise long-term investing as part of everyday financial life. For many people, it will be the first time retirement planning feels accessible rather than abstract.

However, Auto-Enrolment will not be the optimal solution for everyone. Contribution limits, investment flexibility and tax planning opportunities may be more constrained than those available through other pension structures. Higher earners, business owners and individuals with more complex financial circumstances may benefit from arrangements that allow greater control, higher contributions and more tailored investment strategies.

For many, Auto-Enrolment should be seen as a starting point rather than an end point.

How we can help

Auto-Enrolment simplifies the mechanics of saving, but strong retirement outcomes still depend on informed decisions. Questions around whether to remain in Auto-Enrolment, how it interacts with existing pensions, and whether alternative arrangements could deliver better long-term outcomes are best considered in the context of an individual’s wider financial position.

We work with both individuals and employers to review pension arrangements, explore options beyond Auto-Enrolment where appropriate, and build retirement strategies aligned with long-term objectives. Auto-Enrolment is an important step forward, but thoughtful planning and professional advice can help ensure it delivers its full potential.

WRITTEN BY Laura Reidy, Director,  Wealth Management