For a number of years, Ireland has been slowly moving towards a more flexible retirement landscape. This has been prompted to some degree by the increase in the state pension age to 66, back in 2014, and the growing number of age discrimination claims relating to retirement.
Two new changes are now expected in the short term, namely the introduction of a new national auto-enrolment pension scheme for private-sector workers and draft legislation to facilitate requests by employees to work beyond retirement.
Employers must now prepare to navigate new compliance obligations and support employees in making informed retirement decisions. Here, we outline both expected changes.
Employment (Contractual Retirement Ages) Bill 2025
The Employment (Contractual Retirement Ages) Bill 2025 is a proposed piece of legislation in Ireland that aims to provide employees greater flexibility around retirement, particularly where their contractual retirement age is below the State Pension Age (currently 66). This Bill, which has completed the third stage of the Dáil, would mean that:
- Employees must notify their employer that they do not consent to retire at the contractual retirement age.
- Employers must respond within one month of receiving the notification. If they intend to enforce the retirement age, they must provide a written justification that is objectively and reasonably justified by a legitimate aim, and the means of achieving that aim must be appropriate and necessary.
- Employees cannot be penalised for exercising their right to opt out.
- A criminal offence provision will be introduced for employers, including both corporate bodies and individuals who breach these obligations.
Changes may be made to this draft legislation prior to commencement. We anticipate that this Bill will be enacted in 2026.
The Automatic Enrolment Retirement Savings System Act 2024
The implementation of ‘My Future Fund’ – the automatic enrolment retirement savings system – is due to launch in January 2026. This new state pension scheme will automatically enrol eligible employees who are not already paying into a pension scheme. The scheme will be operated by a new state agency (NAERSA) and will involve mandatory contributions from employers, employees, and the State.
An employee will be enrolled in the PAE scheme if they are:
- Between 23-60
- Earning over €20,000 per year
- Not already participating in a qualifying pension scheme
Under the Act, a wide range of pension arrangements – including occupational pension schemes, PRSAs (Personal Retirement Savings Accounts), Trust RACs (Retirement Annuity Contracts), and PEPPs (Pan-European Personal Pension Products) – are recognised as qualifying schemes, provided either the employer or employee is making contributions.
Contributions to these schemes will be made by the employer, the employee, and the State, based on a percentage of the employee’s total remuneration, up to a cap of €80,000. These contribution rates will increase gradually over time.
Years 1 – 3
- Employer: 5%
- Employee: 5%
- State: 5%
By Year 10, combined contributions will reach up to 14% of the employee’s remuneration.
An employee will be in exempt employment if they (or their employer) contribute to a qualifying pension arrangement which includes occupational pension schemes and personal retirement savings accounts.
There is no service requirement for auto-enrolment, so if an employee joins and is not a member of a qualifying scheme from the outset, they will be subject to auto-enrolment.
Key takeaways for employers
Considering both of these developments, employers should consider taking the following steps:
- Identifying what employees are currently paying into a private pension
- If there is a company pension scheme in place, consider removing any waiting period attached to ensure employees are enrolled in the company scheme and not captured by the auto-enrolment scheme
- Provide information sessions for employees in advance of January 2026 so that they can make informed decisions on their own preference
- Engage with payroll and develop procedures to manage auto-enrolment if required
- Ensuring their retirement policy captures the new obligations under the Employment (Contractual Retirement Ages) Bill 2025 once enacted
If you need advice on how these Acts apply to you, please get in touch with our experts who will be happy to help.
