Automatic Pension Enrolment – New Payroll Deductions & Compliance

From 1 January 2026, Ireland will introduce a major reform in workplace pensions with the launch of Automatic Pension Enrolment (AE). This new system will require employers to automatically enrol eligible employees into a state-backed retirement savings scheme, bringing significant payroll deductions, reporting, and compliance responsibilities.

This article explains what Automatic Enrolment is, who it affects, and how payroll processes must adapt to remain compliant.

What Is Automatic Pension Enrolment?

Automatic Enrolment is a government-led retirement savings scheme designed to help workers who currently do not have access to an occupational pension plan.

Under this scheme:

• Eligible employees will be automatically enrolled into a pension plan.

• Both employers and employees will contribute.

• The State will also contribute, providing additional retirement benefits.

This initiative aims to improve retirement outcomes and encourage long-term financial security for employees across Ireland.

Who Will Be Affected?

Employees will be automatically enrolled if they:

• Are aged between 23 and 60

• Earn €20,000 or more per year

• Are not currently members of a workplace pension scheme

Employers of all sizes will need to update payroll systems to manage enrolment, contributions, and reporting obligations.

New Payroll Deductions from 01 January 2026

Once Automatic Enrolment begins, payroll departments must process mandatory pension deductions. These contributions will gradually increase over time.

Contribution Rates (Phased Approach)

👉 Important: Payroll systems must calculate and deduct contributions accurately while ensuring employer contributions are matched and reported correctly.

Key Payroll Compliance Changes Employers Must Prepare For

Automatic Enrolment introduces new compliance responsibilities for employers, including:

1. Employee Eligibility Monitoring

Payroll systems must continuously monitor:

• Age

• Salary thresholds

• Existing pension status

Employees who newly meet eligibility criteria must be automatically enrolled without delay.

2. Real-Time Payroll Reporting

Employers will need to:

• Submit accurate contribution data each payroll cycle

• Maintain detailed records

• Provide data to the Central Processing Authority (CPA) overseeing the scheme

3. Employee Communication Requirements

Employers must:

• Inform employees about automatic enrolment

• Explain contribution deductions

• Provide opt-out information and re-enrolment timelines

4. Opt-Out & Re-Enrolment Handling

Employees may opt out after a minimum period, but:

• Payroll must stop deductions correctly

• Employers must re-enrol employees after set intervals

How Automatic Enrolment Will Impact Payroll Operations

Payroll teams will need to:

• Upgrade payroll software

• Implement automated pension calculations

• Ensure accurate statutory reporting

• Maintain audit-ready compliance records

Without automation and expert payroll support, managing these changes manually could significantly increase administrative burden and compliance risk.

How Osservi Can Help with Payroll Compliance

At Osservi, our expert Payroll team helps Irish businesses stay compliant with evolving payroll legislation. We offer:

• Automatic Enrolment payroll setup

• Payroll system configuration

• Statutory deduction processing

• Real-time payroll compliance monitoring

• Ongoing regulatory updates & support

With our payroll outsourcing solutions, businesses can focus on growth while we manage complex payroll compliance.

Final Thoughts

The launch of Automatic Pension Enrolment on 01 January 2026 marks one of the biggest payroll compliance changes in Ireland in recent years. Early preparation is essential to ensure smooth payroll operations, employee satisfaction, and legal compliance.

If your business needs help preparing payroll systems for Automatic Enrolment, our Payroll team is here to help.