Auto-enrolment in Ireland: planning for employer costs in 2025
With auto-enrolment (AE) launching in September 2025, employers across Ireland will need to plan for new pension contributions for eligible employees. The aim of AE is to help more workers save for retirement, but it also means additional payroll costs that businesses will need to incorporate into their financial planning.
While this change may seem like a big adjustment, starting early and understanding the costs will help ensure a smooth transition.
To give an idea of what this means in practice, here’s an example:
| Employee Salary | Year 1 Cost (1.5%) | Year 10 Cost (6%) |
|---|---|---|
€25,000 | €375 per year | €1,500 per year |
€40,000 | €600 per year | €2,400 per year |
€60,000 | €900 per year | €3,600 per year |
For businesses with several employees, these contributions will become a key part of annual budgeting and payroll planning. |
How employers can prepare
Factoring costs into payroll budgets
The initial 1.5% contribution in 2025 may feel manageable, but since rates will increase over time, it’s worth considering the long-term impact on payroll expenses. Setting aside funds in advance can help businesses adapt gradually to these changes.
Reviewing existing pension schemes
Many employers already provide pension schemes for their teams. If your business has one in place, it’s worth reviewing whether it meets or exceeds AE requirements. Some employers may choose to adjust existing contributions, while others may keep separate pension options alongside AE.
Managing payroll changes over time
Since AE involves automatic payroll deductions, businesses will need to update their payroll systems to accommodate the new scheme. If you outsource payroll, speaking with your provider in advance can help ensure a seamless transition.
How ifac Payroll can help
If your payroll is managed by the ifac Payroll team, we will ensure that all AE contributions are processed correctly, making compliance simple and stress-free. If you have any questions about how AE might impact your payroll costs, we’re here to help.
By planning ahead, businesses can integrate AE smoothly, ensuring compliance while also supporting employees in saving for their future.
