Ireland’s new retirement savings system for employees, My Future Fund, will be introduced on 1st January 2026. It’s a major reform in the pension landscape and employers need to ready themselves for the additional reporting and increased costs to come. The scheme will be managed by a new body, NAERSA, and phased in over the next 10 years. Here’s what we know to date.
Why has My Future Fund been created?
In Ireland, only around a third of employees in the private sector have a private pension. My Future Fund is based on similar schemes in other countries and is geared at lower-income employees who are not already in a workplace pension scheme and would otherwise rely solely on the state pension. Until now, Ireland has been the only OECD country that doesn’t operate an auto-enrolment scheme for employees.
The principle of this scheme is that the employee, their employer, and the government all contribute into the employee’s pension pot. These contributions are phasing in over the next 10 years, starting with contributions of 1.5% of gross salary and reaching 6% by year 10. It’s imperative that employers budget for these increased costs (see the breakdowns in the table below) and explore whether setting up an occupational pension scheme would be more advantageous for employees.
Which employees come under the scope of My Future Fund?
Employees (including directors paying Class A PRSI) aged between 23 and 60 who earn between €20,000 and €80,000 gross but don’t already pay into a supplementary pension scheme will be enrolled. The gross salary amount includes bonuses and commissions (however, the Small Benefit Scheme is not included when calculating the annual salary).
NAERSA will use Revenue payroll data to identify eligible employees, using a lookback period of up to 13 weeks, and notify employers. When this scheme comes into effect from 1st January, all eligible employees will be enrolled (it won’t be optional initially, however I cover subsequent opt-out options below).
Gross earnings across all employments will be used to determine if someone reaches the earnings threshold. So even if they earn less than €20,000 in each employment, they will be enrolled if the total of all salaries is above €20,000 (and less than €80,000) and they will be enrolled for any employment where there is no existing pension coverage.
People earning less than €20,000 can choose to opt in, as long as they aren’t already on a supplementary scheme. Employees who were auto enrolled because they fulfilled the eligibility criteria will stay enrolled even if their earnings subsequently drop below €20,000.
An employee earning over the €80,000 upper limit can choose to enrol, but contributions are only applied to earnings up to that threshold, and they cannot pay more than the fixed employee percentage.
For now, self-employed people cannot be enrolled in My Future Fund. That’s because eligibility and calculations rely on Revenue’s payroll reporting system.
How much will employers pay in pension contributions?
During years 1 to 3, employers and employees will each contribute 1.5% of the salary. This will rise to 3% each in years 4 to 6, 4.5% each in years 7 to 9, and reach 6% each in year 10. For every €6 contributed by the employee and employer, the state contributes an additional €1. In other words, every €3 put aside by an employee becomes €7 in their pension pot. Contributions are fixed, and it won’t be possible to contribute more or less than the set rate.
This is what the breakdown of contributions annually will look like for an employee earning €40,000 a year:
| Employer /employee % | Employee contribution | Employer contribution | State % | State contribution | ANNUAL TOTAL | |
|---|---|---|---|---|---|---|
| Years 1 to 3 | 1.5% | €600 | €600 | 0.5% | €200 | €1,400 |
| Years 4 to 6 | 3% | €1,200 | €1,200 | 1% | €400 | €2,800 |
| Years 7 to 9 | 4.5% | €1,800 | €1,800 | 1.5% | €600 | €4,200 |
| Years 10 and beyond | 6% | €2,400 | €2,400 | 2% | €800 | €5,600 |
Opting in, opting out, and pausing My Future Fund
As this scheme goes live, NAERSA will identify eligible employees and enrol them in the scheme. Someone who has just started working or has an employment gap may find it takes up to 13 weeks for their eligibility to be determined. However, contributions will not be backdated – they only start once the employee is enrolled.
Employees must stay in the scheme for the first six months but will then have a two-month window to opt out and have their contributions refunded. Six months after each contribution rate change (which happens in years 4, 7, and 10), employees will have two months to opt out and the increased amount they paid will be refunded.
If a person misses either of these opt out windows, they will have to wait for next automatic re-enrolment date to opt out.
After the first six months, an employee can choose to pause, rather than opt out of, their enrolment. Their contributions so far stay in the fund rather than being refunded. They must then wait 12 months before they can start contributing again.
If someone leaves the country, their fund stays put until they return or retire at 66.
Employees who have opted out or paused will be auto-enrolled again after two years if they are still eligible. If, for example, they started paying into a pension scheme during those two years, they wouldn’t be auto enrolled.
Your auto-enrolment obligations as an employer
Employers are expected to inform and educate eligible employees about the scheme, so they understand enrolment, contributions, and their rights to opt out or re-enrol. Employers must enrol eligible employees and cannot block their participation or force them to opt out or suspend contributions.
Employers must inform their employees when they are first enrolled and generally maintain accurate records of employee eligibility, enrolment, and contributions. They must ensure payroll systems are set up for auto-enrolment and that any payroll administrators are aware of the additional requirements. They must apply contribution rates correctly and adjust for salary changes, paying contributions promptly and fully.
The Workplace Relations Commission (WRC) will deal with cases where employees are hindered from joining auto-enrolment and/or are penalised for doing so. Employers will be subject to fines, penalties, and possibly prosecution if they do not fulfil their obligations. NAERSA will also publish a list of employers that have been convicted of non-compliance.
How will employers report and pay My Future Fund contributions?
The employer portal will be accessed using ROS credentials and allow employers to see the contributions paid and owed and set up payment arrangements (typically a variable direct debit) so that the contributions can be paid at the same time as the employee is paid.
Once an employee has been identified as eligible for auto-enrolment, NAERSA will send an Automatic Enrolment Payroll Notification (AEPN) through the employer’s payroll software. This contains the contribution amounts the employee and employer need to pay as a percentage of gross earnings
Payroll software will apply the AEPN and the contributions will be visible on the employee’s payslip. If an employee is on unpaid leave (for example, sick leave or maternity leave), contributions will not be deductible for the period of unpaid leave.
Employers that don’t use payroll software can make manual returns through ROS, as is currently possible for other returns.
How is the auto-enrolment scheme managed?
The scheme is supervised by the Pensions Authority through a new public body called the National Automatic Enrolment Retirement Savings Authority (NAERSA). This administrator will be responsible for collecting contributions, distributing them to approved pension providers for investment, and then allocating returns to employee accounts.
Investment will be in a balanced, diversified, low-risk investment fund. Employees will be placed in a default strategy to begin with – where the investment risk is decreased the closer to retirement one gets. People will be able to move to a different strategy if they choose (low-risk, medium-risk, or high-risk).
Each employee will have access to a portal using their MyGovID credentials (due to go live on 1st January 2026). There they will see their savings pot and who paid what into it and the investment returns (including what administrative fees have been deducted). They can also use the portal to make changes – move to a different investment strategy, opt out, opt in, or suspend their contributions.
My Future Fund uses the ‘pot-follows-member’ approach, which means that someone will only ever have a single savings pot that follows them from job to job. NAERSA will allocate any investment returns to the savings pot throughout the person’s working life, paying out once they reach the state pension age of 66.
Is My Future Fund better than a traditional pension?
Traditional pensions, which have been around for a long time and are also available to self-employed people, operate via tax relief on contributions, rather than a direct government top-up like My Future Fund. The tax relief is linked to age, going from 15% (for the under 30s) to 40% (for the over 60s) of earnings. Anyone can put money into a pension. The current annual earnings limit for these contributions is €115,000.
What does this mean in practice? Well, an employee contributing to an auto-enrolment pension also receives contributions from the employer (which are on top of, not part of, their salary) and the government. If they go the traditional pension route, they pay a contribution, their employer pays a contribution, and they also get tax relief depending on income.
On a lower salary, the net benefit to the employee could well be higher through My Future Fund, whereas higher earners might find it more advantageous to contribute to a traditional pension. It’s not just because of the higher tax reliefs available, but also because they can choose to put much higher amounts into their pension pot than the auto-enrolment scheme will (remember, you cannot change your contribution percentage with My Future Fund).
For employers, the advantages of this scheme are that they won’t have to pay to set up or administer a company pension scheme and employer contributions under this scheme will be deductible for corporation tax purposes.
However, if an employer wants more control over how much is paid into pension schemes with a view to using pensions as a recruitment or retention tool and/or targeting higher earners who will want to make more significant contributions than My Future Fund limits, it could be worth setting up an occupational pension scheme. If one already exists, it might make sense to open it up to any employees not currently included, serving as an alternative to enrolling in My Future Fund.
Why are more pension provisions needed in Ireland?
Ireland’s population is ageing. The number of people aged 65 and over will grow from one-fifth to more than one-third of the working population over the next 20 years. This is a problem because only around 35% of the private sector workforce participates in some form of supplementary pension provision. People who retire without a pension scheme will rely on the state pension, which for many people will not be adequate and will result in a drop in living standards.
Despite the serious tax savings available on pensions contributions, take-up of supplementary schemes is not nearly as high as the government’s goal of 70%. This is due to a combination of factors. For employers, managing a scheme is an added cost and responsibility, and many will opt not to have one. For individuals, they can be seen as confusing, unnecessary, or something to put on the long finger. There is also a significant gender gap in pension saving, in part because on average women work less over their lifetimes due to career gaps, but also because of other obstacles such as being more risk-averse when it comes to financial investments.
As life expectancy and the cost of living continue to rise, solutions are needed. That’s why the government is introducing automatic enrolment pensions; a long-term solution that is projected to generate around €21 billion in funds in its first 10 years, sustaining consumer demand and business revenues. No longer the sole concern of the state, pensions provision will become a ‘tripartite social contract’ between employers, employees, and the state.
Final thoughts
Hopefully, an auto-enrolment scheme will help to change the culture here in Ireland and make us all better at saving and planning for our futures. However, the cost of employing people is already very high in Ireland and this just puts another burden on employers already dealing with paid sick leave, recent PRSI increases, and the upcoming increase in the minimum wage (up to €14.15 per hour on 1st January 2026).
It does seem that administering contributions will be straightforward, but for now at least My Future Fund feels somewhat restrictive. For one thing, you can’t contribute more than the set percentage and ANY pension contribution you make elsewhere – however small – will exempt you from the scheme (although we think this will change in time). There is no early retirement option; the fund can only be accessed at the state pension age. People cannot choose where their money is invested (like stocks, property, or international markets), only the risk level, and there is no individual financial advice to accompany the fund.
My Future Fund will suit some employees and employers but is in no way going to replace the pensions industry or become the default savings scheme for all. Whether it makes sense will very much depend on an individual’s unique situation.
