When AB Ireland covered the introduction of pension auto-enrolment (PAE) in 2024 (see this AB article), the prediction was of tough questions and hard choices for employers. With PAE finally launching on 1 January 2026, under the name My Future Fund, those questions have not gone away.
Ireland is the last country in the OECD to introduce auto-enrolment, with proposals kicked around by various governments for almost two decades. The basics of My Future Fund were set out in legislation in 2022 and the ‘pension timebomb’ it promises to defuse is no lightweight concern. The 750,000 people who meet the criteria for enrolment in January represent two-thirds of private sector workers.
However, recent research highlighted the scale of misgivings among business owners about the proposed solutions. A survey by FRS Recruitment found that over three-quarters of Irish businesses believe PAE will negatively impact profitability in the year ahead. On average, employers predict an additional €25,000 spend on employee-related charges annually.
‘Ireland is tailoring its system to fit its unique economic landscape’
The Q4 Bibby SME Confidence Tracker also finds pervasively negative sentiment: 90% of surveyed businesses say PAE will impact payroll costs and administration, with implications for the wider economy. Half said their business response will include higher prices and a quarter expect to reduce working hours or headcount.
Learning from others
Structurally, My Future Fund involves two main bodies. The National Automatic Enrolment Retirement Savings Authority (NAERSA), newly set up and headquartered in Letterkenny, Co Donegal, will oversee general management of the scheme, including the online portal for employers and employees. Tata Consultancy Services, a global IT services company, is the fund administrator, managing participant accounts and facilitating the savings process.
‘Employers and accountants would have hoped for a longer lead time’
Government enthusiasm for My Future Fund is palpable, with minister for social protection Dara Calleary hailing it a ‘a transformative scheme for this country’. Resources provided by the department to employers include a dedicated help centre for payroll processes.
Rav Vithaldas, assurance partner at EY Ireland, says Ireland’s delay in introducing PAE has allowed it to sidestep issues that bedevilled schemes elsewhere. The centralised, simplified approach to employer contributions compares with the administrative complexities employers in the UK initially faced; the ‘pot-follows-member’ approach is designed to avoid the proliferation of multiple small accounts experienced by workers in Australia; while automatic enrolment counters the low participation rates among younger workers found in Sweden.
‘By learning from these countries, Ireland is tailoring its system to fit its unique economic landscape,’ Vithaldas says.
Minimal employer input
Despite evident business concerns, minimising bureaucracy appears to be a key design feature of My Future Fund. The Department of Social Protection points out that employers are not required to ‘set up a scheme on their own account, to engage pension advisors, appoint trustees, enrol their employees or pay any employer administration fee’.
NAERSA’s willingness to take on the administrative heavy lifting extends to establishing which employees are eligible and deducting contributions automatically. Inputs required from employers in the portal, which opened on 1 December, are minimal and should take no more than a few minutes to provide, it says.
‘Staff may not understand why their wages have gone down’
This still leaves the thorny issue of cost. News reports in November suggested some employers were looking to bypass PAE by requiring employees to join less favourable schemes in advance of 1 January. The government said it has seen little evidence of this and, in any case, will have legislation in place to prevent it.
Conversely, there was a warning from the Society of Actuaries in Ireland that up to 100,000 workers risked losing out by enrolling in My Future Fund because their employer may have a better scheme in place. Spokesperson Roz Briggs said: ‘We are not encouraging anyone to join a pensions scheme that is worse, but you might have a better alternative.’
Information needed
Among accountants, a lack of information and practical guidance has proved concerning. Aidan Clifford, advisory services manager, ACCA Ireland, highlights the timing of the portal’s opening on 1 December, just as many businesses and employees prepare to wrap up for the year. ‘Employers and accountants offering payroll services for their clients would have hoped for a longer lead time to test and get familiar with the system,’ he says.
Another issue is ongoing employee confusion about the scheme. FRS Recruitment’s survey found 59% of employees saying they need more advice on how My Future Fund works. ‘Notwithstanding the wide advertising by government, the new scheme will trigger a lot of queries from staff who may not understand why their wages have gone down,’ Clifford says. There is also the reality that ‘employees will need to register online and not everybody will have the capacity to do this.’
Technical issues likely to raise concerns include ‘the difficulty in making corrections to the scheme where an employer incorrectly enters a worker’s wages’, he adds.
Watched closely
With the new regime representing a cost that can’t be avoided, employers may find upsides in embracing their responsibilities. ‘Getting ready for auto-enrolment isn’t just about preparing payroll,’ says Alison Hodgson, market director at the Chartered Institute of Personnel and Development in Ireland. ‘It’s about showing what genuine care for employees’ financial futures looks like.’
‘My Future Fund should be seen as the beginning of retirement planning, not the end’
The ability of employees to opt out of My Future Fund after six months (albeit with automatic re-enrolment after two years) is likely to be watched closely in light of the ongoing cost-of-living crisis. Research conducted by the University of Michigan found that following the introduction of an auto-enrolment scheme in Oregon, a survey of those opting out stated ‘can’t afford to save’ as the chief reason. A survey here by Ask Acorn found 37% of 18- to 24-year-olds saying they were likely to avail of the opt-out function.
In response, My Future Fund may have to evolve further. A recent change in Australia that allowed first-time homebuyers to access some of their pension pot to help get on the property ladder could certainly have resonance here. Keith Butler, CEO at Acorn Life Group, described My Future Fund as ‘a positive step and long overdue. But it should be seen as the beginning of retirement planning, not the end.’
Employers may not relish their anchor role in the nation’s future financial stability, but lessons from the past suggest PAE is here to stay.
