From January 2026, Ireland will take a major step forward in how employees save for retirement. The Government’s new auto-enrolment pension system, known as My Future Fund, aims to make retirement saving the norm rather than the exception, a change that will reshape how many businesses across the country support their staff.
While the move promises a way to help employees plan for the future, it also introduces greater financial and administrative requirements on business owners. And for the thousands of small and medium sized businesses (SMEs) who may not have a dedicated HR or finance team, these changes will require careful planning and support.
As part of its Simplified series, AIB recently hosted a webinar with Gráinne Mullins of Grá Chocolates, Roisin Nolan from the Department of Social Protection, David Coldrick from AIB life and Anne Marie Mulpeter from AIB’s financial planning team. Together, the panellists shared valuable insights to help business owners understand what auto-enrolment will mean for them day-to-day.
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The discussion highlighted key points for employers including the importance of budgeting early for employer contributions, ensuring payroll systems can manage the new deductions, continuing to communicate clearly with staff once the system begins and understanding how auto-enrolment will interact with any existing pension schemes or Personal Retirement Savings Accounts (PRSAs). The panel also noted that for employers who already offer a PRSA or occupational pension, it may make sense to review existing arrangements, and, where possible, enrol all staff under that scheme, to avoid the complexity of running two schemes concurrently.
Róisín Nolan from the Department of Social Protection said that this launch marks only the first phase of the initiative. The Government has invested heavily in auto enrolment, and further developments and enhancements are expected as the scheme matures.
Gráinne Mullins, founder of Grá Chocolates and AIB customer, said: “The recent auto enrolment event was really fantastic to be involved in. To hear first-hand from experts on how a business like mine can prepare and to learn more from the Department of Social Protection’s Roisin Nolan on the rationale behind the scheme and how it will work day to day, was really useful. Businesses like Grá Chocolates will likely have to make changes to systems and payroll to get ready for My Future Fund. Having a plan in place for auto-enrolment makes me feel much more confident going into the new year and approaching the deadline.”
A new default for retirement saving
Under My Future Fund, employees aged 23 to 60 earning €20,000 or more a year and not already contributing to a pension through payroll will be automatically enrolled into the new scheme. Employers will be required to match their workers’ contributions, and the State will add a further top-up.
The rates start modestly, 1.5 per cent each from employer and employee, with a 0.5 per cent State contribution, but will rise every three years to reach 6 per cent each from employer and employee and 2 per cent from the State by year ten. Contributions are calculated on gross pay up to a salary cap of €80,000.
The scheme will be managed by a new public body, the National Automatic Enrolment Retirement Savings Authority (NAERSA), which will collect contributions, oversee investments, and maintain online accounts for members. Once an employee is enrolled, the process will be largely automatic: payroll systems will apply the deductions, employers will transfer contributions to NAERSA, and the funds will be invested in diversified portfolios.
Why it matters for business owners
Auto-enrolment is one of the most significant workplace changes since the introduction of PAYE. It is intended to help the estimated 750,000 private-sector workers without a pension to begin saving, but it will also reshape how SME’s plan their finances.
For employees, the benefit is clear, it’s a positive savings habit supported by both the employer and State. For employers, the change requires budgeting and compliance, but it also offers the chance to strengthen relationships with staff.
“We see the scheme as a positive development,” says Ciara Ryan, head of wealth and general insurance, AIB. “Many SME owners want to help their teams save for their future but haven’t had the time or resources to set up a pension scheme. Auto-enrolment takes away much of that complexity, though it’s still important to plan and get advice.”
Employers must budget for their share of contributions, and while the phased approach eases the initial impact, it is still important that businesses budget accordingly. For example, an SME with ten employees earning €40,000 each will contribute €6,000 per year at the initial 1.5 per cent rate, rising to €24,000 annually once the full 6 per cent rate applies.
The good news is that employer contributions will be deductible for corporation tax, and NAERSA will handle much of the administrative burden, from enrolment to opt-out processing.
Getting ready: Practical steps
Business owners are being urged to use the remaining weeks of 2025 to prepare in three main areas: budgeting, payroll and communication.
1. Budget early. Business owners should project the cost of contributions for 2026 and beyond and include them in wage planning. They should also consider whether maintaining both an existing pension or PRSA and the new auto-enrolment scheme would create unnecessary duplication, in some cases, enrolling all staff into a single PRSA arrangement may be more efficient.
2. Check your payroll system. Most modern software will integrate with NAERSA’s Auto-Enrolment Payroll Notifications (AEPNs). Smaller firms relying on manual systems may need to move to compatible software or register directly through NAERSA’s online portal.
3. Communicate clearly. Staff will have questions, about deductions, opt-out rights and what happens if they change jobs. Open communication will build confidence and reduce confusion as the system rolls out.
“SME business owners are already managing so many moving parts,” says Anne Marie Mulpeter. “Those without a HR or finance team will need to prepare the most, but there’s help available. The key is to get organised now, so you’re not reacting at the last minute.”
Who does auto-enrolment apply to?
Auto-enrolment applies only to employees who do not already have a payroll-linked pension. Staff who are already making contributions through an occupational scheme or a group PRSA will be exempt.
Self-employed people, including sole traders and company directors paying PRSI Class S, will not be included initially. However, as Roisin Nolan noted in the webinar episode, My Future Fund is designed to evolve over time, and future phases are expected to expand eligibility and add new features.
Part-time and fixed-term workers are covered if they meet the age and income thresholds. Once enrolled, employees remain in the system even if their earnings later fall below €20,000.
PRSAs: A complement, not a competitor
Although auto-enrolment will soon be the national default, PRSAs remain a key part of Ireland’s pension landscape, especially for higher earners and the self-employed.
Contributions to a PRSA can attract up to 40 per cent tax relief for higher-rate taxpayers, compared with the flat 25 per cent effective rate under auto-enrolment. PRSAs also allow contributors to vary or pause payments, make lump-sum top-ups and transfer accounts between providers, flexibility that may better suit those with fluctuating income.
“Auto-enrolment is a huge step forward, but it won’t cover everyone,” says Anne Marie Mulpeter from AIB’s financial planning team. “For higher-rate taxpayers, a PRSA will offer more flexibility or tax efficiency, and for self-employed professionals, it remains the main route to retirement saving until the scheme expands. What matters is that businesses and employees understand their choices early.”
A cultural shift that’s here to stay
Beyond the mechanics, auto-enrolment represents a cultural shift. For years, many local employers viewed pensions as a complex or optional benefit. From January, they become a core element of employment practice, on a par with PAYE and PRSI.
“This is here to stay,” says Anne Marie Mulpeter. “The Government has made a significant investment in building this infrastructure, and it’s clear that auto-enrolment will only grow in scope and importance. SME’s that embrace it early will be in the strongest position.”
Offering pension contributions, even mandatory ones, can help businesses attract and retain staff in a competitive labour market, while demonstrating an investment in employees’ long-term wellbeing.
“This isn’t just about compliance,” Anne Marie added. “It’s about futureproofing your workforce. When employees know their employer is contributing to their retirement, it strengthens loyalty and engagement. Auto-enrolment is a chance to build that trust from day one.”
While the spotlight is on employers, employees also have a role to play. Whether you have a legacy occupational pension, a PRSA, or will soon join My Future Fund, it’s healthy to review your pension regularly. A financial adviser can help ensure your contributions, investment choices and long-term goals remain aligned. At AIB we have a Financial Advisor available in each of our branches across the country and a team of advisors available via video call, so help is on hand for business owners and individuals to discuss their pension options and wider financial planning needs.
To set up your chat with an AIB Financial Advisor call 01 771 5867 or visit aib.ie/make-a-plan.
