Pension-scheme decision tree

Auto-Enrolment vs occupational pension - the qualifying-scheme test

Until 1 January 2026, Irish employers could broadly assume that any existing occupational pension or PRSA exempted employees from NAERSA's new Auto-Enrolment scheme. That is no longer true. Section 52 Regulations 2025 now require a qualifying scheme to deliver a minimum employer contribution of 1.5% of gross pay and a combined employer-plus-employee contribution of 3.5% - assessed on a 3-month rolling basis. Schemes below either floor no longer exempt employees, regardless of legacy status. Below: the side-by-side, the qualifying-scheme test, and where Irish SMEs are getting caught.

Last verified May 2026

Auto-Enrolment vs occupational pension - side-by-side

Attribute	Occupational pension scheme	Auto-Enrolment (My Future Fund)
Statutory basis	Pensions Act 1990 (as amended); IORP II for trust-based	Automatic Enrolment Retirement Savings System Act 2024 + Section 52 Regulations 2025
Who decides eligibility	Employer (subject to scheme rules)	NAERSA, centrally - based on Revenue payroll data
Contribution structure	Set by scheme rules. Often 5%-10% employer, 5% employee	Phased: 1.5% / 1.5% / 0.5% State (2026) rising to 6% / 6% / 2% (2035)
Tax relief on employee contribution	Marginal-rate relief (20% or 40%) via payroll	No marginal-rate relief; State adds €1 for every €3 employee contributes
Earnings cap	€115,000 statutory limit on tax-relievable contributions	€80,000 hard cap on contributory earnings
Default investment	Trustee-selected default; member can switch	NAERSA-managed lifestyle fund
Employee opt-out	Employee can decline to join (subject to scheme rules)	Mandatory enrolment; opt-out only in month 7-8 window after enrolment
Charges	Scheme-dependent - typically 0.5%-1.5% AMC	NAERSA charge cap - capped at 0.5% AMC

The qualifying-scheme test (Section 52 Regulations 2025)

Statutory Instrument 668 of 2025, signed on 22 December 2025 and commenced on 1 January 2026, sets the minimum contribution standards an existing scheme must meet to exempt the employee from Auto-Enrolment. Two separate floors apply:

Employer floor: at least 1.5% of gross pay, OR €1,200 per year - whichever is the lesser amount.
Combined floor: employer plus employee at least 3.5% of gross pay, OR €2,800 per year - whichever is lesser.
Assessment window: rolling 3-month period. NAERSA pulls payroll-submitted contribution data and applies the test continuously, not annually.

Defined-benefit (DB) schemes are assessed differently - exemption applies if the scheme confers a long-term benefit linked to continuing employment, with no contribution-rate test. DC schemes, PRSAs, and master trusts are all subject to the contribution test.

These thresholds hold through 2028, then ratchet up alongside the AE rate schedule through 2035 - the qualifying-scheme floor mirrors the AE floor at each phase. Any scheme that meets the floor today still has to keep meeting it as the AE rates step up.

Does your existing scheme actually qualify?

Defined-benefit scheme: Likely qualifying. No contribution-rate test; long-service-benefit test only. Confirm with trustee.
DC trust-based scheme with employer contribution ≥ 1.5% and combined ≥ 3.5%: Qualifying. NAERSA will not issue AEPNs while contribution data is submitted at or above the floor.
DC scheme with employer contribution below 1.5% (e.g. employee-only AVC scheme): NOT qualifying. Affected employees enter Auto-Enrolment. Increase employer contribution or accept AE on top.
PRSA with employer matching at or above 1.5%: Qualifying. Contribution data must reach Revenue via payroll for NAERSA to see it.
PRSA with no employer contribution (employee salary-sacrifice only): NOT qualifying. The 1.5% employer floor is not met. Most common SME failure mode.
Scheme open only to senior staff / over a certain age / after waiting period: Qualifying for those covered. Excluded employees enter Auto-Enrolment if eligible.

Tax-relief comparison: a worked example

The two schemes deliver retirement savings differently. Occupational pensions get marginal-rate income-tax relief on employee contributions. My Future Fund delivers a flat State top-up (€1 for every €3 the employee contributes) instead of marginal-rate relief. For Irish higher-rate taxpayers (40%), occupational pensions are materially better; for standard-rate taxpayers (20%), Auto-Enrolment is roughly equivalent or slightly better.

Scenario	€100 to occupational scheme	€100 to My Future Fund
Standard-rate (20%) employee	Net cost €80; total in pot €100	Net cost €100; total in pot €133 (incl. €33 State)
Higher-rate (40%) employee	Net cost €60; total in pot €100	Net cost €100; total in pot €133 (incl. €33 State)
Effective relief on net	20% / 40%	25% (€33 ÷ €133) on the gross fund

Both schemes also include employer contributions, which are not taxable on the employee in either case. The figures above isolate the tax-relief mechanism only. A complete cost-benefit also needs to factor in NAERSA's 0.5% charge cap (vs typical 0.5%-1.5% AMC on occupational DC funds) and the €80,000 vs €115,000 contribution-eligible earnings cap. For most Irish SME workforces, the practical answer is to keep the occupational scheme open for higher earners and let AE catch standard-rate workers.

Where to go next

Auto-Enrolment vs occupational pension - frequently asked questions

For Irish employers, finance leads, and HR managers running both schemes.

Does a PRSA with no employer contribution exempt my employees from My Future Fund?

No. From 1 January 2026 the Section 52 Regulations 2025 require a qualifying scheme to deliver an employer contribution of at least 1.5% of gross pay (capped at €1,200/year, lesser of) AND a combined employer-plus-employee contribution of at least 3.5% (capped at €2,800/year, lesser of). A standalone PRSA with no employer contribution fails the 1.5% employer minimum, so it is NOT a qualifying scheme - the employee enters Auto-Enrolment regardless. This trips up many SMEs who set up a PRSA for tax purposes only and never contributed as employer. Audit before your 3-month NAERSA assessment hits.

Our occupational scheme has a 2-year waiting period for new hires. What happens during those 2 years?

The new hire is automatically enrolled in My Future Fund during the waiting period (assuming they meet the eligibility criteria - aged 23 to 60, gross over €20,000). NAERSA does not honour your scheme's waiting period. When the employee subsequently joins your occupational scheme, NAERSA receives the qualifying-scheme flag via the AEPN, contributions to AE stop, and the AE pot remains under NAERSA management as a small accrued benefit. There is no transfer-out to the occupational scheme. The employer cost during the waiting period is the AE employer contribution (1.5% in year one, rising), so reducing or removing the waiting period may be cheaper than the duplicated cost.

An employee declined to join our occupational pension scheme. Will they end up in My Future Fund instead?

Yes. If the employee is not actively contributing to a qualifying scheme, NAERSA assesses them as eligible and issues an AEPN. The employer cannot deduct contributions to an occupational scheme without the employee's consent, and cannot use AE as a stick to coerce participation in the occupational scheme. The Pensions Authority can fine employers who block enrolment, force opt-out, or run a sub-threshold scheme - up to €50,000 per offence under the AE Act 2024.

Our DC scheme contribution is below 3.5% combined. What should we do?

You have three options before your 3-month NAERSA rolling assessment first triggers (typically end of March 2026 for January starters). Option 1: increase the employer contribution to push the combined contribution over 3.5%. Option 2: do nothing and let affected employees fall into Auto-Enrolment - they will get AE on top of (not instead of) their occupational scheme contributions, which gets expensive for the employee. Option 3: close the occupational scheme to new contributions and route everyone through AE - simpler but locks you into the AE rate trajectory. Most Irish employers in this position are choosing Option 1 because the cost gap is small in early years.

Can we close our occupational scheme and put everyone into My Future Fund?

Yes, subject to your scheme's trust deed and rules and any contractual obligations to existing members. You cannot retroactively reduce accrued benefits. New contributions can be redirected to AE with proper notice (typically 60 days, but check your scheme rules). Trustees must be informed. If your existing scheme employer contribution is more than 3% of gross, switching to AE is a real-terms reduction in employee compensation - factor this into employee communications and budget for retention risk among higher earners. Many SMEs are leaving existing schemes open for higher earners and using AE for new joiners only.

Do I still register with NAERSA if every eligible employee is in our existing qualifying scheme?

Yes. gov.ie guidance treats employer registration as a once-off task that applies to every business with PAYE employees - not just those with non-exempt staff. The MyFutureFund employer portal needs to receive your qualifying-scheme assertion via payroll, which means your payroll software has to be on a 2026 release with AEPN integration even if no AEPNs ever instruct contributions. The Variable Direct Debit mandate is set up but inactive until an AEPN actually requires a contribution. See our employer-registration walkthrough.

Will higher-rate taxpayers be worse off in My Future Fund vs our occupational scheme?

Yes, on tax-relief alone. A 40% marginal-rate employee contributing €100 to an occupational pension gets €40 back in tax relief - net cost €60. The same €100 contributed to My Future Fund gets €33 added by the State (€1 for every €3 contributed) - net cost €100, total fund value €133. Occupational beats AE for higher earners on relief alone. The break-even is at the standard rate (20%): €100 contributed gets €20 relief in occupational vs €33 from the State in AE - AE wins. Most Irish employers running occupational schemes for higher earners are leaving them open and routing standard-rate workers through AE.

Our scheme only covers senior staff. Does AE catch the rest?

Yes. Auto-Enrolment is employee-by-employee, not scheme-by-scheme. Employees not enrolled in a qualifying occupational scheme are assessed by NAERSA against the AE eligibility criteria (age 23-60, gross over €20,000). If eligible, they enter AE. So a typical Irish SME with a senior-staff DC scheme will end up running BOTH schemes in parallel: the occupational for senior staff, AE for everyone else. Your payroll software handles the split via the AEPN's qualifying-scheme flag - retrieved per employee, per pay run.