October 2025 Update
Pension auto-enrolment is on the way in Ireland, and it will have a significant impact on payroll processing. Here’s a clear overview of how the new system will operate, who will be eligible, and how it will be handled in Parolla.
Key Features and Eligibility
- Automatic enrolment: Eligible employees will be enrolled into a pension scheme without needing to take any action themselves.
- Who is eligible?
- Employees aged 23 to 60
- Employees earning more than €20,000 per year across all jobs
- Contributions: Employees, employers, and the State will all contribute to the pension. These contributions are collected through payroll.
- Opt-out option: Employees may choose to opt out or suspend contributions after a minimum participation period, but employers cannot opt them out.
- Portability: The MyFuture fund follows the employee if they change jobs, ensuring continuous savings.
How Auto-Enrolment Will Work
The National Automatic Enrolment Retirement Savings Authority (NAERSA) will manage the system. Using Revenue payroll data, NAERSA will check if employees meet the eligibility criteria. This assessment is based on:
- The previous 13 weeks of payroll submissions
- The employee’s date of birth
If an employee qualifies, NAERSA will enrol them automatically.
Once enrolled, NAERSA will issue an Automatic Enrolment Payroll Notification (AEPN) to payroll software providers. This AEPN acts as the official instruction to set up contributions for the employee’s new pension.
Full information is available on the gov.ie with a playlist of video’s explaining the scheme for both employers and employees.
What Will Happen in Parolla
When Parolla receives an AEPN, we will automatically:
- Create a MyFuture fund pension for the employee.
- Deduct the employee contribution from gross pay, which will appear as a deduction on the payslip.
- Show the employer and State contributions as benefits on the payslip, so employees can clearly see the full value being added to their retirement savings.
This integration ensures payroll stays seamless and compliant with the new requirements.
Key Items to Consider
- Existing pensions:
If your employees already have a pension through payroll, it will continue to appear on payslips. This reduces take-home pay but ensures the employee receives immediate tax relief rather than having to apply separately. Employees with an existing pension will also be excluded from auto-enrolment. - Not all companies will receive AEPNs:
- Companies with directors only are not automatically included.
- Companies where all employees already have pensions will not receive AEPNs either.
- Opt-out rules:
Employers cannot opt employees out of auto-enrolment. Only employees can do this, and it must be managed directly through their NAERSA login.
What Employers Should Do Now
Employers should prepare for:
- Payroll changes once AEPNs start arriving.
- Communicating clearly with staff about how contributions will affect their payslips and take-home pay.
- Ensuring any existing pension arrangements are recorded correctly in payroll.
FAQ
Q: What if an employee has more than one job?
A: NAERSA will look at combined earnings across all jobs. If total earnings exceed €20,000, the employee may still be eligible.
Q: Can an employee opt out immediately?
A: No. Employees must remain enrolled for a minimum period of 6 months before they can opt out or suspend contributions. If they opt out within the window (after the 6th month but before the 8th month), their own contributions will be refunded. However, employer and State contributions will not be refunded – those stay in the fund.
Q: Will employees be automatically re-enrolled?
A: Yes. Employees who opt out will be automatically re-enrolled after two years if still eligible
Q: What happens if an employee changes employer?
A: The MyFuture fund is portable — it follows the employee, so contributions continue seamlessly with the new employer.
Q: Does auto-enrolment apply to directors?
A: No, companies with only directors are not automatically included in the system.
Q: What if an employee already has a pension?
A: They will not be enrolled into MyFuture fund, as their existing pension is recognised. Contributions will continue via payroll as usual with Income tax relief. Income Tax relief does not apply to MyFuture fund contributions.
Q: Is it more beneficial for employees to partake in MyFuture fund or to have a private/ occupational pension?
A: In many cases, for someone in the 40 % income tax bracket in Ireland, a private / occupational pension arrangement is likely to be more financially advantageous than relying solely on the new auto-enrolment scheme (My Future Fund). Additional Voluntary Contributions which are allowed on private/ occupational pensions are not currently allowed into MyFuture fund.