I work full-time and earn about €32,000 a year. My employer told me that from January they’ll be taking 1.5% of my wages for this new Auto-enrolment pension and that I don’t have any choice in it.
I’ve never had a private pension before and didn’t sign up for this one, so I’m confused. It feels like yet another deduction from my wages, and I’m already stretched as it is. How exactly does this scheme work, and what will I actually get from it?
ANSWER: You’re not alone in wondering about this new system. From early 2026, Auto-enrolment (AE) will begin rolling out, and thousands of workers will see a deduction appear on their payslips. For many, it looks and feels like yet another tax and the natural reaction is: “Have I any say in this?”
If you’re aged between 23 and 60, earning over €20,000 a year and not already in a pension scheme, then you’ll automatically be signed up. You’ll pay 1.5% of your gross pay into your new retirement account, your employer will pay the same, and the State will add another 0.5%.
So, if you’re on €32,000, that’s about €480 a year from you, €480 from your employer, and €160 from the State – roughly €1,120 going into your pension in year one.
Why it feels like another tax
The first thing most people will notice is the drop in take-home pay. There’s no tax relief to soften the blow, unlike a traditional pension or PRSA, where you get income-tax relief at your marginal rate. That means you’ll feel every cent of that 1.5%.
In that sense, AE deductions will look a lot like PAYE or PRSI. The difference is where the money goes: this isn’t a charge to the Exchequer – it’s your own savings building up in your name. Still, for someone juggling bills or a mortgage, it may not make it any easier to swallow. It’s a forced saving, not a voluntary one.
And because you didn’t opt in, it feels compulsory. But AE exists because too many workers reach retirement with little or no private pension, relying fully on the State Pension. The aim is to change that.
What happens over time
The 1.5% from you and your employer lasts for three years. After that, both rates rise every three years until reaching 6% each by year 10. The State top-up increases in line with that, reaching 2%.
By year 10, the total going into your pension will be 14% of your salary – 6% from you, 6% from your employer, and 2% from the State.
It’s a significant commitment, and as your pay increases, so will the contribution amount.
Employers will also feel the cost rise, but the shared funding model – employee, employer, and State – is designed to make the system sustainable.
The benefits
Despite the initial sting, AE offers real value. You’re getting your employer to match your contribution, effectively a pay rise you wouldn’t otherwise receive. Add the State top-up, and your €1 becomes roughly €2.30 in the fund.
That fund then grows tax-free, compounding year after year. Even modest, regular contributions can build a substantial pension over time.
AE is also portable – if you change jobs, your pension follows you. You don’t lose the benefit of what’s already been built up, and you continue contributing in your new role. Most importantly, it creates a savings habit that happens automatically, rather than relying on you to take the initiative.
Can you opt out?
Yes, but not immediately. You must stay in for at least seven months. After that, you can opt out, but only between month seven and month eight.
The employer and State contributions remain in your fund. If you do opt out, you’ll be automatically re-enrolled after two years unless you opt out again. It’s designed to nudge people back into saving.
Opting out might make sense if you already have a strong pension or if your finances are under real strain. But for most workers, the long-term benefits outweigh the short-term drop in pay.
So the bottom line is, if you earn €32,000, the first-year cost is about €9 a week – less than a takeaway coffee a day – to build a pension that could greatly improve your retirement.
Auto-enrolment at a glance
Workers aged 23-60 earning €20,000+.You contribute 1.5% of gross pay.Your employer matches it.The State adds 0.5%.Rates rise every three years to 6% each (you and employer) and 2% State top-up by year 10.You can opt out after seven months, but will be re-enrolled after two years.Your pension is portable – it follows you if you change jobs.
Martin Glennon is head of financial planning at ifac, the professional services firm for farming, food and agribusiness.
Martin Glennon is head of financial planning at ifac, the professional services firm for farming, food and agribusiness.
I work full-time and earn about €32,000 a year. My employer told me that from January they’ll be taking 1.5% of my wages for this new Auto-enrolment pension and that I don’t have any choice in it.
I’ve never had a private pension before and didn’t sign up for this one, so I’m confused. It feels like yet another deduction from my wages, and I’m already stretched as it is. How exactly does this scheme work, and what will I actually get from it?
ANSWER: You’re not alone in wondering about this new system. From early 2026, Auto-enrolment (AE) will begin rolling out, and thousands of workers will see a deduction appear on their payslips. For many, it looks and feels like yet another tax and the natural reaction is: “Have I any say in this?”
If you’re aged between 23 and 60, earning over €20,000 a year and not already in a pension scheme, then you’ll automatically be signed up. You’ll pay 1.5% of your gross pay into your new retirement account, your employer will pay the same, and the State will add another 0.5%.
So, if you’re on €32,000, that’s about €480 a year from you, €480 from your employer, and €160 from the State – roughly €1,120 going into your pension in year one.
Why it feels like another tax
The first thing most people will notice is the drop in take-home pay. There’s no tax relief to soften the blow, unlike a traditional pension or PRSA, where you get income-tax relief at your marginal rate. That means you’ll feel every cent of that 1.5%.
In that sense, AE deductions will look a lot like PAYE or PRSI. The difference is where the money goes: this isn’t a charge to the Exchequer – it’s your own savings building up in your name. Still, for someone juggling bills or a mortgage, it may not make it any easier to swallow. It’s a forced saving, not a voluntary one.
And because you didn’t opt in, it feels compulsory. But AE exists because too many workers reach retirement with little or no private pension, relying fully on the State Pension. The aim is to change that.
What happens over time
The 1.5% from you and your employer lasts for three years. After that, both rates rise every three years until reaching 6% each by year 10. The State top-up increases in line with that, reaching 2%.
By year 10, the total going into your pension will be 14% of your salary – 6% from you, 6% from your employer, and 2% from the State.
It’s a significant commitment, and as your pay increases, so will the contribution amount.
Employers will also feel the cost rise, but the shared funding model – employee, employer, and State – is designed to make the system sustainable.
The benefits
Despite the initial sting, AE offers real value. You’re getting your employer to match your contribution, effectively a pay rise you wouldn’t otherwise receive. Add the State top-up, and your €1 becomes roughly €2.30 in the fund.
That fund then grows tax-free, compounding year after year. Even modest, regular contributions can build a substantial pension over time.
AE is also portable – if you change jobs, your pension follows you. You don’t lose the benefit of what’s already been built up, and you continue contributing in your new role. Most importantly, it creates a savings habit that happens automatically, rather than relying on you to take the initiative.
Can you opt out?
Yes, but not immediately. You must stay in for at least seven months. After that, you can opt out, but only between month seven and month eight.
The employer and State contributions remain in your fund. If you do opt out, you’ll be automatically re-enrolled after two years unless you opt out again. It’s designed to nudge people back into saving.
Opting out might make sense if you already have a strong pension or if your finances are under real strain. But for most workers, the long-term benefits outweigh the short-term drop in pay.
So the bottom line is, if you earn €32,000, the first-year cost is about €9 a week – less than a takeaway coffee a day – to build a pension that could greatly improve your retirement.
Auto-enrolment at a glance
Workers aged 23-60 earning €20,000+.You contribute 1.5% of gross pay.Your employer matches it.The State adds 0.5%.Rates rise every three years to 6% each (you and employer) and 2% State top-up by year 10.You can opt out after seven months, but will be re-enrolled after two years.Your pension is portable – it follows you if you change jobs.
Martin Glennon is head of financial planning at ifac, the professional services firm for farming, food and agribusiness.
Martin Glennon is head of financial planning at ifac, the professional services firm for farming, food and agribusiness.
SHARING OPTIONS