BY JOHN ELLIS, FINANCIAL ADVISOR
As two-thirds of retirees currently rely solely on the State pension, Ireland is gearing up for the launch of the ‘My Future Fund’ auto-enrolment scheme on January 1, 2026. This push towards compulsory pension enrolment will help many but it’s not a one-size-fits all.
Many of you are wondering how it will affect your pay packets and retirement plans. So here are some of the most frequent questions I have been asked in the past months.
What exactly is auto-enrolment, and why is it happening now?
Bluntly you are being forced to save for your retirement. Auto-enrolment, branded as My Future Fund is a new retirement savings system where eligible employees without an existing private or work pension are automatically signed up. Each month a percentage of your salary goes into a personal “pot” matched by your employer and topped up by the State. Initially for every €3 you contribute your employer adds €3 and the Government give €1 making €7 in total.
Will it eventually replace the State pension?
No. It’s designed to supplement the State pension not replace it. It’s intended to help you avoid a drop in your living standards in retirement. Ireland is the last OECD country without this and with an ageing population, i.e. fewer workers supporting more retirees. It’s “a timely fix to encourage saving”.
Who gets automatically enrolled, and can I opt out?
If you’re aged 23-60, earn more than €20,000 a year (across jobs), and are not contributing to a pension via payroll, you will be enrolled starting on January 1. But the self-employed, unpaid carers and certain scheme participants (like Community Employment) will be excluded.
You must stay in for six months but can opt out after this period getting your contributions refunded while the employer and State contributions stay invested for you until age 66. There are no penalties for opting out, but you will be re-enrolling every two years if eligible.
As an employer how will I be affected?
As an employer it’s mandatory, even for small firms and/or family businesses.
What happens if as an employer I refuse to add my employees or skimp?
Fines will apply!
What if I change jobs, emigrate, or stop working?
Your pot stays yours. It will continue to be invested safely (low-risk options, regulated by the Pensions Authority). No contributions are made during unemployment, but they restart on new jobs if eligible. Emigrating? Access at 66 no matter where you live.
What are the tax implications and the fees?
Growth in the fund is tax-free, with a 25% lump sum tax-free on drawdown at 65. Fees are minimal (under 0.5% target).
Who runs the scheme and is my money safe?
The National Automatic Enrolment Retirement Savings Authority (NAERSA), set up by the Department of Social Protection manages the scheme. Funds are not State guaranteed but protected via regulated investments and reputable firms. It’s your property, not the government’s.
Will this really work for everyone, and what could make it better?
It’s solid for stable earners potentially boosting take-up among low-to-middle earners. But the “cash-strapped” or those with irregular incomes might opt out as seen in the UK during crises. It should be paired to pay rises to soften the hit and add a catch-up method for leave-takers or flexible pauses.
Auto-enrolment’s a welcome step towards secure retirements but as with all things in life it will not be uniform.
T: 086 8362633
