Analysis: As Ireland prepares for pension auto-enrolment \u2013 who will it help most and who might it leave behind?<\/p>\n
By Bhavya Shrivastava<\/a>, TCD<\/a><\/p>\n We have all heard whispers of a new financial device arriving soon. Like any big change, Ireland’s move to auto-enrolment will likely spark debate. Before it lands in our pay slips and pub conversations, let\u2019s break down what My Future Fund<\/a> is, why it matters, and who stands to gain or struggle in the short term, from the shift.<\/p>\n What is My Future Fund?<\/p>\n From 1 January 2026<\/a>, most employees without a private pension<\/a> will be automatically signed up to My Future Fund<\/a>. In plain terms, this is a retirement savings pot linked to your payroll<\/a>. Each month, workers will contribute a percentage of their salary, which will be matched by their employer and topped up by the State.<\/p>\n For every \u20ac3 the worker contributes, the employer adds \u20ac3 and the State chips in \u20ac1. Crucially, this is in addition to the State pension \u2013 not a replacement. The goal is to ensure fewer people reach retirement relying solely on the State pension<\/a>.<\/p>\n We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences<\/a><\/p>\n From RT\u00c9 Radio 1’s News At One, University of Galway’s Dr Maureen Maloney on the report that says pension auto-enrolment scheme will not address structural inequalities faced by women<\/p>\n Who will be enrolled?<\/p>\n If you are aged 23\u201360, earning \u20ac20,000+ per year (across one or more jobs) and not already in a pension scheme through payroll, then you\u2019ll be auto-enrolled<\/a>.<\/p>\n Employees must stay in for at least six months, but can opt out in the following months. If they do, their contributions are refunded, but employer and State top-ups stay in the fund<\/a>. Two years later, they\u2019ll be automatically re-enrolled if still eligible.<\/p>\n Why auto-enrolment, and why now?<\/p>\n Currently, about two-thirds of retirees in Ireland have no supplementary pension and rely only on the State pension<\/a>. Ireland has also been the last OECD country<\/a> without auto-enrolment. With a shrinking working-age population that is expected to support a growing retired cohort, policymakers and perhaps politicians see this as a catch-up and a necessary long-term fix.<\/p>\n How does it affect us?<\/p>\n The most visible short-term effect is less take-home pay. Our monthly disposable income will decrease slightly because part of it now diverts into retirement savings. Economists call this the classic “consume now versus save later” trade-off.<\/p>\n \n From the Department of Social Protection, Auto-enrolment: Helping workers save for the future<\/p>\n But behavioural economics explains why this design works. Most of us have status quo bias \u2013 we stick with the default. By making “saving” the default and “opting out” the effortful choice, the State is nudging us towards future security.<\/p>\n Who might struggle?<\/p>\n Not everyone will welcome the deduction. For workers already stretched by high housing costs, childcare, transport or debt, the drop in take-home pay will feel like a burden<\/a>. People with volatile incomes \u2013 casual or seasonal workers \u2013 may also experience the contribution as a pay cut, even with matching and top-ups. Lessons to be learned<\/p>\n In our field research with female micro-entrepreneurs in India<\/a>, we studied voluntary commitment savings products. Take-up was strongest among women who were less present-biased \u2013 those more willing to sacrifice today\u2019s income for tomorrow\u2019s return. Yet, overall participation stayed limited. Why? Because the product still felt like a pay cut in the short term. Unless people saw other parts of their financial life improving, many chose to step away.<\/p>\n Applied to Ireland, this suggests two groups will emerge. First, those most likely to stay enrolled: workers with stable incomes, lower present bias, and the “set-and-forget” mindset who value the employer match and State top-up. Second, those more likely to opt out: workers who are cash-strapped, juggling volatile hours, or for whom the deduction feels like steep a pay cut. Mothers returning from unpaid leave may also fall behind unless catch-up contributions are made simple and attractive. This prediction echoes trends in the UK, where opt-out rates from auto-enrolment schemes have risen over time<\/a>. This rise in opt-out has occurred between 2020-2022, particularly during the pandemic and the cost-of-living crisis, as financially stretched households prioritised immediate spending over long-term saving.<\/p>\n What could make it easier?<\/p>\n To broaden support and fairness, policymakers could adopt the following –<\/p>\n Neutralise the pay-cut feeling – Pair enrolment with modest pay rises or a once-off start bonus. This reduces loss aversion \u2013 our tendency to feel losses more deeply than gains. Will it work in Ireland?<\/p>\n Short answer – yes \u2013 but unevenly. The Irish design is solid, with a State top-up that\u2019s more visible than tax relief systems elsewhere. That should boost take-up, especially among low-to-middle earners. Auto-enrolment is a welcome reform. It shifts Ireland closer to international best practice and helps future-proof retirement security. But it will not land equally for everyone. The default does much of the work, but policy and pay packets need to meet it halfway.<\/p>\n Follow RT\u00c9 Brainstorm on WhatsApp<\/a> and Instagram<\/a> for more stories and updates<\/p>\n Bhavya Shrivastava<\/a> is a PhD candidate in Economics at Trinity College Dublin<\/a><\/p>\n The views expressed here are those of the author and do not represent or reflect the views of RT\u00c9<\/p>\n
Parents on unpaid leave may face another wrinkle. With paused contributions, there will likely be a loss of momentum in saving. And because the scheme excludes the self-employed and unpaid carers, those groups may remain outside the safety net for the near future.<\/p>\n
\nProtect parents on leave. Introduce catch-up contributions for those returning from maternity or other unpaid leave, with matching and State top-ups intact. This would help avoid widening gender pension gaps.
\nAdd flexibility. Allow short pauses (with automatic restart) or saving cessations without opting out for workers facing volatile incomes, so they don\u2019t drop out completely.<\/p>\n
But defaults aren\u2019t magic. Without cushioning the immediate hit to net pay and addressing life events like unpaid leave, the very groups most in need of pension security may be the ones opting out at month seven.<\/p>\n