What is Auto-Enrolment/ My Future Fund?
Auto-enrolment is a government-led program that will automatically enrol eligible employees into a workplace pension scheme, ensuring they save for retirement. Contributions will be made by the employee, matched by their employer, with additional top-ups provided by the government.
The new scheme, which employees will be enrolled onto, is to be known as the MyFuture Fund. MyFuture Fund is set to launch in September of 2025.
The aim is to simplify the process of saving for retirement and increase participation rates, particularly among those who might not otherwise take the initiative to join a pension plan.
The Government wish to run the collection of the funds for auto-enrolment directly from payroll in the same manner that taxes are collected.
Auto-enrolment will be managed by a new independent body set up by the Department of Social Protection, called the National Automatic Enrolment Retirement Savings Authority (NAERSA).
In October 2024 the government signed a contract with Indian company Tata Consultancy Services (TCS) to provide administration services for the new pension auto-enrolment (AE) system. TCS has operations in Ireland in Letterkenny and Dublin and it provides similar service in other countries including the UK.
The auto-enrolment scheme will be supervised by the Pensions Authority. It will have statutory independence and will be governed by a Board of Directors.
Timeline for Auto-Enrolment / My Future Fund
Tata Consultancy Services (TCS) are working on creating a test environment that can be used by payroll software providers. No time line has been received by the Payroll Software Developers Association (PSDA) on when this will be available. Once the test environment has been received each software provider will be required to update their system accordingly and test same. Generally this process would take 6 months to a year.
The National Automatic Enrolment Retirement Savings Authority (NAERSA) is due to be established from March 2025.
The minister has signed the commencement order which should result in the first enrolments under the My Future Fund scheme beginning on September 30 2025. It is unclear if this is the date from which employees can be signed up to the scheme or if it is the date contributions are made from.
How Will It Work?
Eligibility
Auto-enrolment applies to:
- Employees aged 23 to 60
- Those earning €20,000 or more annually
- Workers not already enrolled in an occupational pension scheme
Contributions
Contributions are to be phased in over a 10-year period.
- Employee Contribution: Starts at 1.5% of gross earnings and increases incrementally to 6% by year 10.
- Employer Contribution: Matches the employee’s contribution at the same rates.
- Government Contribution: Adds €1 for every €3 contributed by the employee.
Opt-Out Option
Employees will have the option to opt out after a mandatory six-month participation period, with re-enrolment scheduled biennially unless an alternative pension arrangement is chosen.
Potential Challenges
While the benefits are clear, auto-enrolment is not without its challenges:
- Affordability for Employers: Especially for small businesses, matching employee contributions may strain resources.
- Employee Engagement: Ensuring workers understand the value of auto-enrolment and resist opting out is crucial.
- Implementation Complexity: Rolling out the system nationwide requires significant administrative effort and investment.
A Positive Step Forward
Auto-enrolment represents a significant policy shift, designed to ensure that everyone has the opportunity to save for a secure and dignified retirement. By introducing the process and providing financial incentives, Ireland is aligning with other countries like the UK and New Zealand, where auto-enrolment has successfully increased pension coverage.
While there will undoubtedly be challenges during implementation, the long-term benefits for individuals and society as a whole far outweigh the hurdles.