Large companies employing thousands of people plotted a scheme with financial advisers to push staff into pension schemes that would yield very little in return, a Government paper said.
The cynical plan was introduced late last year as the Department of Social Protection finalised plans for an auto-enrolment system for workers.
An internal note said some employees were “being compelled” to join schemes that had only just been put in place by their bosses.
It said this included staff whose contracts did not provide for membership of a pension scheme and that forcing them to sign up might be a breach of employment law.
The note said the only contribution to the scheme would be 1 per cent from the employer “with no suggestions of any increase over time”.
“Such a low contribution level can be described as a nominal one that is unlikely to yield any material pension benefit in terms of adequacy,” the document explained.
It said the State’s MyFutureFund under auto-enrolment would feature a 1.5 per cent contribution of a worker’s gross pay from the employer, 1.5 per cent from the employee and a 0.5 per cent top-up from the State.
That was an introductory rate, which would increase over time to combined contributions of 7 per cent in 2029, 10.5 per cent in 2032, and 14 per cent in 2035.
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The note said the companies involved in trying to circumvent the plan were “large companies employing many thousands of people”.
“The companies concerned seem to have planned this, in conjunction with professional advice, to occur at the last minute as [auto-enrolment] is being launched.”
The document said this was intended to deny the opportunity for any consultation or earlier action.
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It also detailed how the Department made direct contact with one of the largest companies involved which had quickly “reversed [its] plan”.
“The companies involved intend to pay 1 per cent of their employees’ pay; it isn’t really believable that increasing that to 1.5 per cent is a significant budgetary burden that can’t be addressed.”
The arrival of MyFutureFund and the contribution rates involved had been well-known for years – “so all of these companies are well versed in the budgetary implications”, the internal communication said.
It noted that companies had also benefited from the delay in commencing the scheme from September 2025 to January 2026.
This had been done to accommodate employers, and it was “disappointing that this opportunity was used to develop avoidance measures instead”.
A Department spokesperson said that before the introduction of MyFutureFund, it had received evidence about employer plans for compulsory enrolment in inferior schemes.
“These rates were lower than those provided for in the Automatic Enrolment Retirement Savings Act (2024) and would have excluded those employees from being automatically enrolled into the MyFutureFund scheme.”
To address concerns, the Minister prescribed standards through a statutory instrument in December that ensured pension arrangements outside of MyFutureFund are at least as favourable for the participating employee as they would be under the current contribution rates in MyFutureFund.”