SUSAN O’MARA, Business Development Manager at CIF Pension Administration Services (CPAS), writes about how Irish employers should prepare for the significant changes in pension regulations in 2025 that will increase their responsibilities and contribution requirements.
In 2025, employers in Ireland should be aware of significant changes in pension regulations that will impact their responsibilities and contributions. Key developments include:
INTRODUCTION OF PENSION AUTO-ENROLMENT (AE)
– Implementation Date: The AE system, known as “My Future Fund”, is scheduled to commence on 30 September 2025. This represents a shift from the initially planned start in January 2025 and, in fact, there have been many false starts to this scheme. However, on 30 September 2024, the then Minister for Social Protection, Heather Humphreys, signed a Commencement Order in respect of the Automatic Enrolment Retirement Savings System Act 2024 (the “AE Act”), namely the Automatic Enrolment Retirement Savings System Act 2024 (Commencement) Order 2024.
– Employer Obligations: Employers will be required to automatically enrol eligible employees into the AE pension scheme. Eligible employees are those aged between 23 and 60, earning over €20,000 annually, and who are not already participating in an occupational or private pension scheme. It should be noted that the National Automatic Enrolment Retirement Savings Authority (NAERSA) will determine which employees are eligible for auto-enrolment using Revenue payroll data, and it will enrol them. Employers are advised to review their current pension arrangements to determine how they will interact with the AE system and identify employees who will need to be enrolled. This will be about who is not currently covered for pension and how as a business you wish to address this. If your business would rather opt for a different solution to AE, then planning is essential in advance of the start date.
– Cost Management: For employers with a cohort of employees not previously included for pension contributions, it will likely mean higher mandatory contributions. Budgeting and forecasting for these changes are critical, particularly for construction and related industries that tender work far into the future.
ACTION STEPS FOR EMPLOYERS
– Information: Employers should regularly consult updates from the Department of Social Protection, the Pensions Authority, and relevant regulatory bodies to remain compliant with evolving pension regulations. At CPAS, we continue to provide our clients with meaningful regular updates to ensure they are informed and aware of changes when relevant.
– Planning: An evaluation period is required to review existing pension schemes, existing staff both enrolled in a pension and, more importantly, those not. As an employer, you should be aware of the differences between your occupational pension and AE – such as state top-up versus tax relief and how that can impact your employees.
– Employee Communication: Inform employees about upcoming changes, especially those relating to auto-enrolment and how it affects their retirement planning.
– Administrative Planning: Updates to payroll and administrative systems to handle new contribution calculations, auto-enrolment processes, and reporting obligations may also be required.
PERSONAL RETIREMENT SAVINGS ACCOUNTS
Another update that Employers should be aware of are the changes to Personal Retirement Savings Accounts. Started from January 2025, employer contributions to an employee’s PRSA will be capped at 100% of the employee’s salary. For example, if an employee earns €60,000, the maximum employer contribution to their PRSA for that year is €60,000. Any contributions exceeding the 100% salary cap will be treated as a Benefit in Kind (BIK).
Employers should seize this opportunity to assess their needs and implement a solution that suits them best.
CPAS – HERE TO HELP YOU NAVIGATE YOUR WAY
The CPAS team are qualified pension consultants. We specialise in helping professionals in the construction sector and related industries. Our team can work with you to review your pension plans and ensure you are ready for 30 September 2025.
For more information, contact Susan O’Mara on (01) 223 4942, susan@cpas.ie or visit www.cpas.ie
