New Mandatory Minimum Contribution Levels for Employer Pension Schemes

Our Employment & Benefits team discusses the new minimum contribution levels occupational benefit schemes must meet to qualify for exemption from the MyFutureFund scheme. Read on to learn employers' new obligations and the consequences of non-compliance.

What you need to know

• New regulations were signed on 22 December 2025 and came into force on 1 January 2026 which change the requirements for exemption from participation in MyFutureFund.
• A 3.5% minimum total contribution will apply in the case of defined contribution occupational schemes and Personal Retirement Savings Accounts (PRSAs). At least 1.5% funded by the employer, with the remaining 2% paid by either the employer or the employee, subject to explicit maximum limits.
• Existing schemes will be monitored and reviewed by National Automatic Enrolment Retirement Savings Authority (NAERSA) over the next three months.

New mandatory minimum contribution levels for defined contribution occupational pension schemes and PRSAs have come into effect as of 1 January 2026. If minimum contribution levels are not met, the arrangements will not warrant exemption from MyFutureFund. Employers must ensure that both the minimum total contribution and the minimum employer contribution are met. Otherwise, they may be required to make contributions to MyFutureFund in addition to their existing occupational pension schemes or PRSAs.

New regulations

The Automatic Enrolment Retirement Savings System Regulations (Amendment) (Section 52) Regulations 2025 (the Regulations) were signed by Dara Calleary, Minister for Social Protection , on 22 December 2025 and came into operation on 1 January 2026. We signposted the intended introduction of these Regulations in early December, and employers were advised to consider whether their current arrangements would meet the proposed standards. Now that the Regulations have come into force, it is imperative that employers take action to ensure compliance at the earliest opportunity.

If an employee is participating in an existing defined contribution occupational pension scheme or PRSA which meets the mandatory minimum contribution levels, then the employee can be exempt from participation in MyFutureFund. However, if contributions under the existing defined contribution occupational scheme or PRSA fall below the new minimum thresholds, then the employee will not be exempt from participation in MyFutureFund.

New minimum contribution levels

The Regulations mandate that in order to qualify for exemption from MyFutureFund, defined contribution occupational benefit schemes or PRSAs, as the case may be, must provide for:

• A minimum total contribution of 3.5% of the employee’s gross pay, or €2,800 per year, whichever is lesser, and
• At least 1.5% of the contribution being made by the employer, up to a maximum annual contribution of €1,200, and
• The remaining 2% of the contribution being funded by either the employer or the employee

These rates will stay in place until 2028, after which they will rise gradually in stages, reaching their full level by 2035.

For defined benefit schemes, the Regulations provide that schemes conferring a long-term benefit based on continuing employment may be exempt.

In a recent press release, the Minister has said:

“the vast majority, if not all, pre-existing pension schemes will easily satisfy these standards”.

However employers who have occupational schemes into which employers or employees are making no or reduced contributions will need to act fast to ensure compliance.

Enforcement

According to the MyFutureFund website, an exemption from participation in the scheme is not automatically applied. It states that: “Employers must demonstrate that the scheme meets the prescribed standards.” This may include “providing evidence of contribution levels or scheme rules to NAERSA or the employer’s payroll provider”.

Existing schemes will be monitored and reviewed by NAERSA. In the press release, it was stressed that NAERSA will focus on ensuring compliance rather than imposing penalties. Contribution levels will be assessed over a three-month period and should they fall below the minimum level of 3.5%, NAERSA will engage with employers to assist them in becoming compliant.

If there is continued non-compliance, NAERSA has the power to demand the recovery of unpaid contributions and employers will ultimately be guilty of an offence under the Automatic Enrolment Retirement Savings System Act 2024, which is liable to a fine of up to €50,000 on conviction.

Other changes of note

Separately, the Automatic Enrolment Retirement Savings System Regulations 2025 S.I. No. 637/2025 were also introduced before Christmas. They established new requirements regarding:

• The repayment of contributions
• The provision of information by employers, including where technology systems fail
• Contributions
• Application for early payment on grounds of incapacity or exceptional ill health
• Communication and services
• Information sharing
• Fixed payment notices, and
• Contribution-related offences

Employers should be aware of these changes and seek legal advice to ensure compliance with them.

Comment

The new mandatory minimum contribution levels impose strict standards on employers and the design of pension schemes. Employers with non-contributory schemes or PRSAs and structures where employees receive reduced pension contributions will be most affected, and the new Regulations leave no room for exceptions.

Employers should take fast action to review any schemes or PRSAs they have in place and determine whether structural or contractual changes are necessary to meet the new standards. While it has been suggested that NAERSA will take a soft touch approach in the early days of the Auto-Enrolment scheme coming into effect, ensuring compliance now will avoid future headaches.

For more information and expert advice on ensuring compliance, contact a member of our Employment Law & Benefits team.

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