The introduction of the State’s automatic retirement savings system called “MyFutureFund” has gained a lot of media coverage over the last week. One reason for this is the fact AE commences in a few weeks time but the main reason is that the Department of Social Protection (the Department) recently issued letters to various organisations warning of the risks of employers “hindering” employees joining MyFutureFund. Specifically, the Department warned that compulsory enrolment into a company pension scheme, without it being an explicit contractual term and where only modest employer contributions (e.g. 1%) are payable, would be considered by the Department as a hindering offence. This letter triggered engagement with the Department by employer representative groups and stakeholders in the Irish pension sector, such as the Irish Association of Pension Funds (the IAPF).
It is clear from this engagement that employers who have devised a strategy predicated on all their employees being in exempt employment, and therefore not subject to the auto-enrolment regime, will need to reassess the viability (and lawfulness) of this strategy as a priority in the coming weeks.
Key points for employers
The key points for employers to be aware of in light of recent developments are as follows.
- Under current legislation, an employee will be ineligible to join MyFutureFund if they are already a member of a qualifying pension arrangement. A qualifying pension arrangement is a company pension scheme or PRSA that the employee or employer (or both) are paying any contribution into. However, the legislation requires the National Automatic Enrolment Retirement Savings Authority (NAERSA) to publish minimum standards that company pension schemes and PRSAs must meet in order to continue to be qualifying pension arrangements into the future. The legislation requires the minimum standards to be published before 1 January 2032.
- The minimum standards, which will include a minimum level of contributions payable to a company pension scheme/PRSA in order for an employee to be taken outside the scope of MyFutureFund, are however now expected to be published by mid-December 2025 and be effective from 1 January 2026. This is a material development that all employers need to be aware of, albeit it is expected there will be intense lobbying undertaken over the next few weeks with a view to pushing out the effective date to afford more time to employers and pension scheme providers to cater for the introduction of minimum standards much earlier than anticipated.
- These minimum standards will be set out in regulations and according to the Department, if a company pension scheme or PRSA is to continue to be a qualifying pension arrangement, it must provide for an aggregate combined minimum contribution rate of 3.5% of gross pay (possibly capped at €80,000 per annum, but this is not clear), with at least 1.5% of gross pay paid by the employer. The remaining 2% may be paid by either the employer or the employee. This will mean if an employer has a non-contributory scheme the employer will need to pay 3.5% of gross pay. It is important that employers bear in mind that “gross pay” is not necessarily the same thing as “base pay” and this will need to be considered on an organisation-by-organisation basis once there is greater clarity on the content of the anticipated regulations.
- The Department is concerned about employers enrolling employees in pension schemes without consent, even for non-contributory schemes, citing potential data protection issues and hindering offences. Their position is that employees should not be enrolled without consent unless this is explicitly stated in their terms of employment. The Department’s letter does not address the fact that employee consent can be obtained through means other than express written consent (e.g. implied consent).
- Most well-drafted employer data privacy notices/transparency notices cover an employer sharing employee personal data with third parties for pension administration purposes (and outline the legal basis for doing so), so we do not expect that many employers who have lawfully admitted employees to their pension scheme would have a data privacy-related issue in this regard but, if in doubt, further data protection specific advice should be sought.
- The Department is strongly opposed to any practice that differentiates temporary or probationary employees. All employees must receive at least the MyFutureFund contribution rate, regardless of whether higher rates apply after probation.
Key takeaways for employers
- This is still a developing situation, and further updates may be issued by the Department. It will be important employers stay abreast of all AE developments in advance of 1 January 2026.
- Employers should consider their approach to any categories of employees where the contributions to be paid from 1 January 2026 are less than 3.5% of gross pay in total (and categories that require less than 1.5% employer contributions) and consider cost implications associated with increasing contribution rates. Aside from cost, employers will need to consider the practical issues (and challenges) that might be encountered in making changes now to the plan they had developed earlier this year and have been implementing in recent months.
- Before making any further changes to comply with the anticipated minimum standards, employers should conduct diligence on employees who might be adversely impacted by the taking of any further steps (e.g. because they have already reached the standard fund threshold and, therefore, might have no desire to benefit from AE given the potential adverse tax consequences for them as a result of their participation).
- Employers should engage with their brokers/scheme administrators and seek guidance on whether their proposed approached remains in order in light of the Department’s communicated concerns and the expected minimum standards.
- Employers may need to consider engaging with employees and unions on this matter, particularly if any specific actions are envisaged on foot of the Department’s comments or if IR issues might be likely to arise.
- Employers should carefully consider any employee requests to be enrolled into MyFutureFund instead of its own company pension scheme in light of the Department’s comments on hindering. They should also be aware that any actions by an employer that penalise an employee for participating or proposing to participate in MyFutureFund are prohibited and could result in legal action by employees.
As a final note, no change to legislation has yet been made and it remains to be seen exactly what changes will be made (and when). For that reason, in our experience, while many employers are assessing the impact of the latest developments for them, they are holding off on actually taking any steps to respond to these developments pending greater clarity on the minimum standard requirements and publication of the regulations.
How we can help
Our pensions and employment law specialists have been advising employers on preparing for AE all year and are currently actively advising employers on their individual response to the latest developments.
If you would like to find out more about how we can help you prepare for the commencement of auto-enrolment on 1 January 2026, please contact Chris Comerford, Pensions Partner, Michael Doyle, Employment Partner or your usual contact on the Employment or Pensions teams.
Date published: 1 December 2025
