Minimum Pension Contribution Rates to be Introduced

The Department of Social Protection has signalled significant changes ahead of the launch of the State’s auto-enrolment system, My Future Fund. These include new mandatory minimum contribution levels for occupational pension schemes and stricter rules on how employees can be admitted to existing schemes. Our Employment Law & Benefits team discusses the new change.

What you need to know

• The Department of Social Protection intends to introduce minimum pension contribution Regulations within weeks, taking effect 1 January 2026.
• A 3.5% minimum total contribution will apply, with at least 1.5% funded by the employer and the remaining 2% paid by either the employer or the employee.
• Employee consent is required for enrolment into pension schemes unless enrolment is expressly provided for in the employee’s contract; the Department has flagged concerns about employers enrolling staff without explicit consent, even in non-contributory schemes.
• The Department will prohibit reduced contribution rates for probationary or temporary employees, requiring all employees to receive at least the My Future Fund-equivalent contribution from the start of employment.
• The National Automatic Enrolment Retirement Savings Authority (NAERSA) will oversee compliance, and employers with complex non-contributory DB arrangements may need to apply for an exemption.

A major update to Ireland’s auto-enrolment regime has been announced and is due to begin on 1 January 2026. Employers need to be aware of what the update will mean in practice. Our Employment Law & Benefits team discusses the new change.

The Department of Social Protection recently met with the IAPF. On 24 November, the IAPF released a summary of the key changes that the Department indicated, at the meeting, would be made to auto-enrolment.

In addition, a Department representative speaking at an IAPF conference on 26 November confirmed that the Regulations needed to implement these changes won’t be published until mid-December.

The Department of Social Protection has indicated that new minimum pension contribution requirements will be introduced within the coming weeks and by mid-December at the latest, with an effective date of 1 January 2026. While many employers already meet these contribution levels, the changes will have significant implications for certain arrangements, particularly non-contributory schemes and structures where employees receive reduced pension contributions.

1. Minimum contribution rates

The forthcoming regulations will require a minimum total contribution of 3.5% of gross pay, of which at least 1.5% must be paid by the employer. The remaining 2% may be funded by either the employer or the employee. These levels are designed to ensure parity with the State’s My Future Fund auto-enrolment framework. This change will have a significant impact for employers who have occupational pension schemes into which employers and employees are making no or small contributions. Once implemented, all employers will have to ensure a minimum contribution of 3.5% of gross pay, from day one of employment.

2. Employee consent to admission to pension schemes

The Department has expressed concern about employees being enrolled in occupational pension schemes without explicit consent. Their view is that express consent cannot be assumed unless enrolment is clearly provided for in the employee’s contract of employment.

To date, the view had been taken that, provided employees were not required to contribute to a pension scheme, employee consent to scheme admission was not required. The upcoming Regulations will change this position, and it appears that the express consent of existing employees will be required to admit them to a pension scheme.

It will still be possible for employers to make it a term and condition of employment that new employees join and remain a member of an employer’s pension scheme, subject to the minimum contribution rates referred to above. The position will become clearer when the Regulations are published.

3. Probationary employees

The Department has taken a firm stance against differentiated contribution rates for employees on probation. Employers will no longer be permitted to apply lower contribution rates for temporary or probationary employees. All employees must receive contributions at or above the My Future Fund-equivalent level from the start of employment, even where higher employer rates apply post-probation.

4. Compliance oversight and exemptions

NAERSA will oversee compliance with the new Regulations. The Department also acknowledged the complexity of certain non-contributory defined benefit (DB) schemes and advised that employers operating these structures should consider applying to NAERSA for an exemption where appropriate.

5. Actions For Employers

Employers should take urgent action now to:

• Review existing contribution rates to ensure the minimum contribution of 3.5% is met
• Review employees on probation and temporary employees again to specifically ensure the minimum contribution of 3.5% is met
• Assess employee consent for those who have been joined into occupational schemes in preparation for auto-enrolment, and
• Engage with NAERSA regarding DB schemes.

Taking action promptly will help ensure compliance well in advance of the 1 January 2026 implementation date.

Conclusion

The forthcoming Regulations will significantly narrow employer flexibility around pension scheme design, particularly in relation to minimum contribution levels, probationary practices and employee consent. These changes are likely to require updates to scheme rules, employment contracts, and internal processes.

Employers need to question whether their current pension arrangements can meet the new standards by 1 January 2026 without structural or contractual changes.

For more information or expert advice, contact our Employment Law & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.