Ireland’s new auto-enrolment pension scheme officially launches

Ireland’s new pension scheme offically launched on 1 January, with the initiative aiming to ensure that those who currently don’t have a private pension can start building financial security for later life. 

The introduction of MyFutureFund is one of the most significant changes made to the Irish pension sector in decades, and it will bring Ireland in line with other countries, such as the UK, Australia and New Zealand, where similar schemes have improved retirement outcomes. 

Just one in three private sector workers currently has any kind of extra pension, meaning most people depend entirely on the contributory State pension, which is about €15,000 a year.

“MyFutureFund will help hundreds of thousands of people in Ireland put money aside for their life in retirement,” said Minister for Social Protection Dara Calleary. “It’s a truly historic measure that will ensure greater financial comfort in retirement.” 

The new scheme is a three-way partnership between employees, employers and the State. Employees will contribute 1.5% of their gross pay, employers will match it and the State will add another 0.5%. Every three years, these amounts will slowly increase. 

The scheme is designed to minimise the administrative burden for employers, with the National Automatic Enrolment Retirement Savings Authority (NAERSA) being the new body appointed to manage it.

Employers who do not meet their auto enrolment obligations will be subject to penalties. If they don’t make contributions on behalf of their employees, they may be fined and have to make repayments with interest.