One of Irelands leading pensions experts has warned employers and employees that the Governments auto-enrolment (AE ) scheme for pensions due to begin on January 1st will cost them more than they realise.
He also warned that businesses have a month less time to prepare for AE than they are aware of as they need to be ready by December 1st.
Feargal McKenna, Head of Corporate at Moneycube.ie and co-founder of Pensions Awareness Week, was making his comments ahead of Pensions Awareness Week 2025 which takes place from today (September 29th ) to October 3rd. PAW25 will include a week of company briefings and roadshows across the country.
McKenna also warned it is not widely appreciated by employers and employees that commissions, bonuses and overtime pay will also be subject to the 1.5% levy, and many may not have budgeted for it.
This will lead to higher costs for employers and employees as each must contribute the percentage that rises to 6% each over 10 years as contributions under a traditional pension scheme typically operate off base salary only.
Additionally, he warned that the look-back provision that will allow the scheme to auto enrol anyone who does not have an existing pension is going to catch people unawares.
The look back examines whether or not pension contributions are coming through payroll, but the Department of Social Protection has just revealed that it will happen in mid-December rather than the end of December. As most payroll is run at the end of each month, this means any November payroll that doesnt have pension contributions will be automatically enrolled on January 1st regardless of what they subsequently put in place.
At a presentation hosted by the Department of Social Protection last week, an official stated that a contribution needs to be made in the November payroll to safely avoid being auto enrolled.
McKenna warned that employers are already struggling to take the AE deadline seriously because of previous postponements and were inclined to think the Government was crying wolf. However, they face fines and daily penalties and legal action, even prosecution, is on the table for businesses that fail to comply.
During PAW 2025, McKenna will be engaging with employees at companies across the country on how best to maximise building wealth through pensions through PAWs pop-up National Pensions Test (NPT ) centre. The pop-up NPTs can be booked here.
Pensions Awareness Week recently unveiled a new Auto-Enrolment Calculator developed by Moneycube.ie specifically for employers and hosted on the Pensions Awareness Week website www.pensionsawarenessweek.ie
The calculator which is free to use is designed to give Irish employers instant clarity about the true cost of auto-enrolment on their payroll and the impact on employees take-home pay.
It also allows employers to compare these costs with alternative pension arrangements, so they can make informed decisions before the scheme begins.
Feargal McKenna, Head of Corporate at Moneycube.ie, says:
The upside of auto-enrolment is clear: for the first time, we are on the verge of near-universal pension coverage in Ireland. Getting people talking, thinking, and acting on their long-term financial wellbeing is a huge step forward. The challenge now is making sure businesses implement it in a way that works for both employers and employees.
Realistically, the Government could have enforced the current system where employers must provide access to a PRSA and expanded it with employers having to contribute rather than bringing in a whole new system, but we are where we are. Perversely, even post auto-enrolment, under current employment law, businesses must continue to appoint a PRSA provider and provide access and time for their employees to establish a PRSA. Moneycube.ie set up Pensions Awareness Week in support of getting Ireland saving for retirement. Its a worthy goal, but the Government has not given employers or employees the information they need to make the best decision for their situations. If you want to make informed decisions either go to Pensions Awareness Weeks website and use the calculator or get in touch with us directly to arrange a consultation.
