Pension Auto-Enrolment

Pension auto-enrolment will, in all likelihood, be in place by the 01.01.2025, however, it may be subject to delay as some experts believe this timeframe to be too optimistic.

It is without argument yet another cost to the employer that will be particularly felt in the SME sector already reeling from ever increasing costs of doing business, changes to the vat rate for the hospitality sector and of course the introduction of sick pay and increases in the minimum wage.

So, the question is, what impact will pension auto-enrolment have on your business and what will it cost?

What is Auto-enrolment?

A new pension savings scheme for certain employees who are not paying into a pension.

Under the scheme, the employee, employer and Government all pay a certain amount into the employee’s pension fund.

Does the employer have to participate?

If the employer does not meet their auto-enrolment obligations, they will be subject to penalties and possibly to prosecution.

If you already have a workplace pension in place.

Employees will not be enrolled in the new auto enrolment scheme if they are paying into a workplace pension plan.

What is the maximum contribution?

Both an employer’s and the Government’s contributions are capped at €80,000 gross annual salary.

This means in the first three years it will cost the employer €1,200 in pension contributions for an employee earning €80,000.

How much will it cost?

Your employee will pay a set rate of their annual salary. The employer will match the employees contributions and the Government will contribute an additional amount.

Employee cannot pay more or less than the set rate.

You and your employee will pay 1.5% of your annual salary in the first year. This will increase to 6% by year 10.

The table below sets out the rates you, your employer and the Government will pay.

YearEmployee Contribution RateEmployer paysGovernment pays
1 to 31.5%1.5%0.5%
4 to 63%3%1%
7 to 94.5%4.5%1.5%
10 and after 6%6%2%

The table below gives more details based on annual employee earnings of what you the employer will pay.

YearEmployee salary €20,000Employee salary €25,000Employee salary €35,000Employee salary €45,000
1 to 3300375525675
4 to 66007501,0501,350
7 to 99001,1251,5752,025
10 and after1,2001,5002,1002,700