What are the new minimum standards for a plan to be AE exempt?

• Employers must pay a minimum of 1.5% of an employee’s gross earnings with gross earnings capped at the auto-enrolment (AE) threshold of €80,000 per annum (in the case of higher earners, this reaches its maximum at €1,200, calculated as 1.5% of €80,000)

• Occupational pension arrangements must provide a minimum total (employee plus employer) contribution of 3.5% of an employee’s gross earnings (to the AE threshold of €80,000) to qualify for exemption from MyFutureFund.

It’s important to note that this is based upon total gross earnings whereas most occupational plans are based upon basic salary only.

Note – all active Defined Benefit schemes are deemed exempt where continuing service in that employment entitles the employee to accrue a long service benefit.

Why has this been introduced?

•   The Department of Social Protection (DSP) say the objective is to ensure that all occupational pension arrangements offer employees a meaningful opportunity to build adequate retirement savings.

•   The 3.5% minimum contribution equates to the total contribution structure under MyFutureFund, although this includes an explicit government contribution of 0.5% with the employer contribution at 1.5% and the employee contribution at 1.5%. 

Irish Life continues to seek greater clarity on the proposed approach from the Department of Social Protection. However, based on what is known to date, we understand that the process is likely to be as follows:

• The new standard applies from 1 January 2026, and the National Automatic Enrolment Retirement Savings Authority (NAERSA) will assess contribution levels over a thirteen week look back review period.
• According to the Department of Social Protection, this approach is designed to allow for an accurate average contribution calculation, taking account of variable earnings such as overtime, commission, and seasonal pay.
• Based upon their view of payroll data, NAERSA will contact employers who are not meeting the criteria for exemption with a view to engaging and assisting them to become compliant. This will be an opportunity for employers to engage with NAERSA on this matter.
• NAERSA and the Department have confirmed that it is not intended to penalise any employer for non-compliance. They have confirmed that they will work with employers but that if there is consistent non-engagement then NAERSA will look to enforce compliance powers.

 What should Employers do now?

Employers should review their occupational pension structure to determine if they are meeting the required total minimum contribution rates of 3.5% of gross earnings. This will involve reviewing the headline contribution rates currently in force, as well as assessing any potential gap arising from non-pensionable earnings – for example, bonuses, overtime and shift allowances. While these elements are not typically included in a pension plan's definition of earnings, they are included under the new test definition. 

We recognise that this is far from a straightforward exercise from employers. The assessment can be complex, and outcomes may vary significantly over different time periods and across employee groups.

If you are unsure whether you have a minimum contribution gap, your Broker/Advisor or Irish Life account manager is here to help. They can work with you to review your plan and support you in understanding your current position, as well as the next steps to consider.

Irish Life Financial Services Limited is regulated by the Central Bank of Ireland. Irish Life Financial Services Limited is an insurance intermediary tied to Irish Life Assurance for life and pensions. Irish Life Financial Services Limited is registered in Ireland. Registered Office: Irish Life Centre, Lower Abbey Street, Dublin 1. Registered Number: 489221.

Irish Life Assurance plc, trading as Irish Life, is regulated by the Central Bank of Ireland.
Irish Life Assurance plc is registered in Ireland. Registered Office: Irish Life Centre, Lower Abbey Street, Dublin 1. Registered Number: 152576.

Irish Life is part of the Great-West Lifeco group of companies, one of the world’s leading life assurance organisations. 
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