New Workplace Pension Scheme for Ireland

posted in: HABIC

On March 29th, the government announced details of the Final Design principles for the Automatic Enrolment Retirement Savings System for Ireland

Under the system, employees will have access to a workplace pension savings scheme which is co-funded by their employer and the State. While the system is voluntary – meaning employees do not have to participate – it will operate on an opt-out basis.

Those choosing to remain in the system will have their pension savings matched one-for-one by their employer, with the State providing a top up of €1 for every €3 saved. This will mean that for every €3 saved by the employee, a total of €4 will be invested by their employer and the State.

The new system is designed to simplify the pensions decision for workers and make it easier for employers to offer a workplace pension. Ireland is currently the only OECD country that does not yet offer an auto-enrolment system to promote pension savings.

The new system will have a financial impact on employers not currently operating an occupational pension scheme as they will have the additional financial cost of contributing towards their employee’s pension scheme. Employers are thus advised to monitor developments to make sure they are adequately prepared.

Minister for Social Protection, Heather Humphries explained:

“We all know that people are living longer. While this is very positive, we also want people to be able to enjoy their retirement years with some financial security.

“However, for many people retirement seems a long way away and they think they have a lot of time before they need to think about a pension.

“Some people may be of the view that the process of putting aside a little each week to provide for their retirement years is something to be considered next year, or maybe even the year after next.

“However, that is not the case. If people want to retain a reasonable standard of living in retirement, they need to start saving as soon as possible.

“This major reform in the Irish pensions landscape is intended not just to get people saving earlier but to support them in that saving process by simplifying the pension choices and importantly by providing for significant employer and State contributions as well.”

Key features of the scheme:

Phased Implementation

  • All employees aged 23-60 and earning more than €20,000 p.a. but not already in an occupational pension scheme will be automatically enrolled.
  • Auto Enrolment will be gradually phased in over a decade- employer and employee contributions will start at 1.5%, increasing every three years by 1.5% until they eventually reach 6% by 2034.

Saving Supports

  • Matching contributions will be made by employers to those contributions made by employees (up to a max of €80,000 of earnings).
  • The State will also top up contributions by €1 for every €3 saved by the employee(up to a max of €80,000 of earnings).
  • For every €3 saved by an employee, a further €4 will be contributed to their pension pot by their employer and the State


  • The system will be voluntary, but will operate on an ‘opt-out’ rather than an ‘opt-in’ basis.
  • Eligible employees will be automatically enrolled but can opt-out after six months
  • Employees will have a choice of four retirement savings funds


  • Administrative costs and burdens will be kept to a minimum – employers will not have to invest in the establishment of an occupational scheme for their own business, they will simply be required to facilitate payroll deductions.
  • People moving between jobs will not have to change pension scheme/join a new scheme.
  • Services will be provided and supported through an easy-to-use online channel.

Full details of the announcement:

The Design Principles for Ireland’s Automatic Enrolment Retirement Savings System:

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