My Future Fund: A Guide to Auto-Enrolment Pensions
The Irish Government has unveiled comprehensive legislation for a new auto-enrolment pension scheme called My Future Fund, due to launch on 1 January 2026.
This initiative addresses a long-standing gap in retirement savings, currently, only around 35% of private sector employees have supplementary pension schemes. The legislation, passed in 2024, aims to make saving for retirement easier for workers while simplifying pension provision for employers.
Understanding Auto-Enrolment
Auto-enrolment is a pension investment scheme in which employers match employee contributions at a set percentage of gross income, with additional State funding providing a top-up.
Approximately 800,000 employees earning over €20,000 per year and aged between 23 and 60 will be automatically enrolled, provided they are not already members of an occupational pension scheme.
The accumulated funds, together with investment returns, will be paid upon retirement in addition to the State pension. Withdrawals will be linked to the State pension age, currently 66.
Eligibility Criteria
The scheme applies to employees aged 23 to 60 earning more than €20,000 per annum across all employments. Those earning below this threshold, or outside the age range, can opt in voluntarily. Employees already enrolled in qualifying occupational pension schemes will not be automatically enrolled for that employment.
Workers on probation, casual contracts, or part-time arrangements will have their eligibility assessed by the newly created National Automatic Enrolment Retirement Savings Authority (NAERSA).
How Contributions Work
The scheme begins modestly, with both employees and employers contributing 1.5% of gross income. These contributions will increase every three years over a decade, reaching 6%. The State will top up contributions at 33%, with employer and State contributions capped at €80,000 of earnings.
The contribution schedule will follow this progression:
| Years | Employee Contribution | Employer Contribution | State Top-Up |
|---|---|---|---|
| 1–3 | 1.5% | 1.5% | 0.5% |
| 4–6 | 3% | 3% | 1% |
| 7–9 | 4.5% | 4.5% | 1.5% |
| 10+ | 6% | 6% | 2% |
This means that for every €1 an employee saves, €2.33 is credited to their account; comprising their €1 contribution, €1 from their employer, and €0.33 from the State.
In practical terms, for every €3 contributed by the employee, they receive an additional €4, totalling €7 invested in their pension pot.
Flexibility and Choice
While enrolment is automatic, participation remains optional. Employees can opt out or suspend participation after six months.
Those who opt out are automatically re-enrolled after two years and can opt out again after another six months. If an employee opts out, they receive a refund of their contributions, but the employer and State contributions remain invested in their pot.
Members can also pause contributions after six months, suspending payments for up to two years without receiving a refund, and can restart at any time.
The scheme offers four retirement savings funds with varying risk profiles — conservative, moderate, higher-risk, and a default life-cycle investment profile for those who do not specify a preference.
Portability Between Jobs
The scheme operates on a “pot follows the member” basis, meaning pensions are not tied to specific employers. Workers will not need to join new schemes when changing jobs, and those with multiple employments will have their savings combined into one account. Participants will have access to an online portal to view balances, contributions, investment returns, and manage their payments.
Employer Responsibilities
The scheme is designed to minimise the administrative burden on employers, who will not need to establish or manage occupational pension schemes themselves. Employers will instead record employee data through simple payroll instructions.
However, businesses must prepare in several key areas:
Payroll systems and software integration
Updates to employment contracts
Employee communication and education
Financial planning and forecasting
Employers failing to meet their obligations, including payroll implementation and remittance of contributions, may face penalties.
Employment contracts must be updated before 2026 to include pension contribution provisions. Employers should use the lead-in period to educate employees about how the scheme works, the available fund options, contribution levels, tax implications, and long-term benefits.
Tax Implications
Employee contributions will be made from net income, after income tax, PRSI, and USC deductions. Traditional tax relief will not apply; instead, the State provides a 33% top-up. Participants will still receive benefit-in-kind tax exemptions for employer contributions. Employer contributions will remain deductible against corporation tax, consistent with existing pension scheme arrangements.
Governance and Oversight
The Pensions Authority will oversee the scheme, supported by a board of directors responsible for governance, while the Financial Services and Pensions Ombudsman will ensure accountability. A Central Processing Authority will manage operations, with annual management charges capped at 0.5% of assets.
Looking Ahead
My Future Fund represents a major step toward strengthening financial security for Irish workers. By combining automatic enrolment with employer and State contributions, the scheme aims to build meaningful retirement savings for hundreds of thousands of employees. The gradual, phased introduction provides time for employers and employees to adapt, while the portable nature of pension pots ensures flexibility in today’s dynamic job market. With clear preparation and communication, this initiative has the potential to transform retirement planning in Ireland’s private sector.
If you would like more information on how auto-enrolment may impact your business please get in touch.