Ten facts about auto enrolment workers should know

With the first pay cheque of the year marking the first time that the 760,000 employees eligible for Auto Enrolment (AE) will see the impact on their take-home pay, workers are being advised to avoid knee-jerk reactions that might see them lose out on the benefits of the scheme.

For most of these 760,000 workers, their first pension contributions for AE – known as ‘My Future Fund’ - will be deducted from their January pay.

This has prompted insurance broker and financial services specialist Gallagher to remind workers who feel they cannot afford the contributions to AE that they can still opt out of the scheme if they wish – but that any decision to do so should not be taken lightly.

Employees are also being reminded that they still have alternative pension options even if they have been signed up to AE – such as supplementing AE with a personally owned pension or signing up to a company pension scheme that became available after AE.

For many of the 760,000 workers signed up to AE this month, this could be the first time they have ever saved into a pension. The initial employee contributions – at 1.5% of gross salary – are relatively small. At that rate, a worker on the average wage of €52,198 will see about €783 deducted from their annual pay – or about €15 a week.

All the same, some workers, particularly those on a low wage, may feel they simply cannot afford to pay into AE. However, for those workers, AE could be their only opportunity to save into a pension scheme and to build up a pension pot for their retirement years – and indeed, it is for these workers that AE is likely to prove most valuable.

Furthermore, they will get the benefit of matching employer contributions and a top-up contribution from the state at a rate of €1 for every €3 paid in.

For part-time workers, AE could prove invaluable – and those who are not already paying into a company pension scheme and don’t earn enough to be automatically enrolled should know that they can voluntarily opt-in to the scheme.

We are urging workers signed up to AE to get up to speed on exactly how the scheme works, and have put together a 10 point guide to AE.

1. Employees will be able to opt-out of the AE scheme during the opt-out window, which is between six months and eight months of the date they were automatically enrolled (or re-enrolled).

In availing of the opt-out window, employees will be refunded their own contributions since enrolment but the employer or state contributions will remain for their benefit in the fund.

2. If employees leave the plan or suspend contributions, they will be automatically re-enrolled after two years if still eligible for the scheme. However, if they make contributions to another pension plan through their employer’s payroll, they will not be re-enrolled for that time.

3. If workers change jobs, AE pension savings will remain with the individual. The scheme is designed so that retirement savings are not lost or frozen when people move between employers; instead, accumulated contributions will continue to grow in a retirement account, which moves from job to job.

4. 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.

5. It is possible to remain a participant in the AE scheme and pay contributions to another pension scheme outside of the payroll system. For example, if a worker has a Personal Retirement Savings Account (PRSA) which they fund through their savings account rather than payroll, they can continue to contribute into this after signing up to AE and to claim tax relief as normal on the contributions to the PRSA.

6. If an employee joins a company pension scheme subsequent to AE, contributions to AE will automatically cease once contributions are made to the occupational scheme.

7. Employees who are under 23 or over 60 and/or earning less than €20,000 (across all employments) or less than €5,000 over a 13-week period will not be automatically signed up to AE as they are outside the age and salary criteria for the scheme. However, they can voluntarily opt into the scheme if they wish. The self-employed cannot opt into the scheme.

8. If an employee or their employer already pays a pension contribution into a company pension or PRSA through payroll, that employment is exempt from the AE scheme and the employee will not be automatically enrolled for that employment and will not be able to opt in to AE based on that employment.

The Government recently introduced new minimum employer/employee contribution standards for occupational pension schemes and PRSAs which must be met before an employee is exempt from AE. These new rules, which apply since January 1, 2026, were introduced to avoid a scenario where an employee would be exempt from AE because their employer offered a company pension scheme which paid no employer contributions to that scheme, or a lower level of employer contributions than is available under AE.

9. The AE scheme will be implemented on a phased basis: employees will be required to make initial contributions of 1.5% of gross earnings, rising by 1.5 percentage points every three years until it reaches a maximum contribution rate of 6% in Year 10.

10. Enrolment may take up to 13 weeks for workers who have just started work in an employment for the first time or have a gap between their prior and current employment(s).