The landscape of retirement savings in Ireland is undergoing its most significant shift in decades. After years of discussion, the government’s Auto-Enrolment (AE) Retirement Savings System is officially launching. If you employ staff in Ireland who do not currently have a pension plan, this legislation will directly impact your payroll, your administration, and your bottom line.
At IFC Finance, we’ve been working closely with corporate clients to prepare for this transition. Here is everything you need to know to ensure your business remains compliant and cost-efficient.
Who is Eligible for Auto-Enrolment?
The scheme is designed to capture the estimated 750,000 workers in Ireland who currently do not have supplementary retirement savings. Employees will be automatically enrolled if they meet the following criteria:
- They are aged between 23 and 60.
- They earn over €20,000 across all employments.
- They are not already a member of an occupational pension scheme or PRSA via payroll.
Employees outside of these age and income brackets can choose to opt-in voluntarily.
The Phased Cost Structure for Employers
The government has designed a phased rollout to soften the financial impact on employers and employees. The contribution rates, calculated on gross salary (capped at €80,000), are as follows:
- Years 1–3: Employer 1.5%, Employee 1.5%, State 0.5%
- Years 4–6: Employer 3.0%, Employee 3.0%, State 1.0%
- Years 7–9: Employer 4.5%, Employee 4.5%, State 1.5%
- Year 10 onwards: Employer 6.0%, Employee 6.0%, State 2.0%
Tip: You can use our interactive Auto-Enrolment Cost Calculator on our Tools page to forecast exactly what these phases will cost your business.
How to Prepare Your Business
Preparation is key to avoiding administrative chaos. We recommend a three-step approach:
- Audit Your Workforce: Identify exactly which employees will fall under the AE criteria and which are already covered by an existing scheme.
- Review Existing Schemes: If you currently offer a PRSA or Executive Pension, you must ensure it meets or exceeds the minimum AE requirements to exempt those employees from the state scheme.
- Update Payroll Systems: Ensure your payroll software provider is updating their systems to handle the automated deductions and communication requirements.
If you need assistance navigating this transition, our corporate planning team at Fitzwilliam Square can handle the entire setup and compliance process for you.