Dear Reader

Welcome to the August edition of the Money Mentor monthly newsletter, brought to you by Vantage Financial Planning, your trusted partner in navigating the ever-changing landscape of personal finance. I hope you’ve enjoyed a refreshing summer and found time to relax with family and friends.

As the academic calendar year kicks into gear and we head into the final quarter of the year, there are a number of important developments on the financial horizon. The Irish Government is set to announce Budget 2026 on Tuesday, 7th October, with the Summer Economic Statement 2025, published in July, providing an early glimpse of what's in store.

Based on the Funds Sector 2030 review, the Government is expected to introduce significant changes to investment taxation. The key proposals are:

• Reducing Exit Tax on funds from 41% to 33%, in line with the Capital Gains Tax rate.
• Abolishing the eight-year deemed disposal rule, which currently forces investors to pay tax on gains even if they have not sold their investment.
• Introducing loss offset relief, allowing investors to offset investment losses against future gains.

Reforms of this kind are widely expected to appear in Budget 2026, with loss relief set to be introduced on a phased basis. Investment bonds, child savings and investment plan policies stand to benefit most from these measures.

At the same time, auto-enrolment is moving firmly into focus, with implementation scheduled for the 1st of January 2026. This long-anticipated pensions savings scheme will reshape retirement planning in Ireland and is likely to be a central concern for both employers and employees as the start date approaches.

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Why Auto-Enrolment?

Ireland is on the cusp of a major demographic shift. Over the next 25 years, the ratio of people of working age (15–64) to those aged 65 and over will fall from 4:1 to just 2:1.

This “silver tsunami” will place unprecedented pressure on government finances, with rising costs for pensions, healthcare, and long-term care. Unless offset by higher productivity or significant legal immigration, a shrinking base of workers will need to support a growing retired population.

Declining birth rates, an ageing society, and a tightening labour force present major challenges for the Irish government. While policy changes may increase housing supply, and measures such as free fertility treatment and expanded childcare could help address birth rates, the long-term financial strain appears unavoidable.

The Pension Gap

Ireland’s 2.8 million workers currently face uneven pension coverage:

• 67% have some form of pension in place.
• 33% (approximately 924,000 people) have no retirement savings beyond the State Pension.

Auto-enrolment, though late in arriving, is a welcome step. But coverage alone is not enough, the real issue is pension adequacy.

Of the 924,000 workers without private pensions, 52% (around 480,000 people) expect to rely solely on the State Pension. The State Pension is currently just over €15,000 per year, or €1,254 per month, assuming the full entitlement is maintained. For many, this will not be sufficient to provide lasting financial security:

Given the fiscal pressures ahead, it would not be surprising if the government were to:

• Raise the State Pension age beyond 66.
• Link pension amounts to the age at which you draw down benefits.
• Increase employee and employer PRSI contributions.
• Introduce means testing for State Pensions.
• Use returns from the Ireland Strategic Investment Fund to help fund the shortfall.

While these measures may help balance the books, they also underline one truth: depending solely on the State for your financial security is a precarious predicament.

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Ireland’s Auto-Enrolment Retirement Savings Scheme

Background

Ireland is currently the only OECD country without a retirement auto-enrolment system. To address this gap, a new scheme will automatically enrol eligible employees into a workplace retirement savings plan.

Eligibility

Employees (PAYE) will be automatically enrolled if they:

• Earn more than €20,000 per year (across all employments)
• Are aged 23 to 60
• Are not currently making employee pension contributions to a workplace or personal pension via payroll.

This includes those on probation, as well as casual, seasonal, or part-time contracts.

Excluded groups:

• Self-employed individuals (Sole traders & partners in Partnerships)
• Unemployed persons
• Existing active members of occupational pension schemes or Peronsal Retirement Savings Account's (PRSA's)

If you are an existing member of an occupational pension scheme or PRSA but not actively contributing through payroll you will be treated as having no active qualifying scheme and be automatically enrolled in auto-enrolment assuming you meet the eligibility criteria.

A privately arranged PRSA only qualifies as a workplace scheme if your employer contributes. If you pay into it privately, outside payroll, it doesn’t count as an exemption and you’ll still be auto-enrolled in auto-enrolment through payroll.

Administration & Governance

The scheme will be managed by the National Automatic Enrolment Retirement Savings Authority (NAERSA), initially operating within the Department of Social Protection before becoming an independent body and regulated by the Pensions Authority.

NAERSA’s responsibilities include:

• Collecting contributions
• Allocating investment returns
• Operating online portals for employees and employers
• Ensuring each worker has one retirement pot throughout their career
• Monitoring compliance and legislation
• Communicating and providing information

Payroll & Contributions

Revenue payroll data will determine eligibility. Once eligible:

• Employees are automatically enrolled
• Payroll software calculates both employee and employer contributions
• Employers remit contributions to NAERSA
• The State’s top-up is collected separately

Contribution Rates (Phased-In Over 10 Years)

Based on percentage of employees before tax salary:

Contribution cap: Calculated on salaries up to €80,000 (before tax).

Opt-Out & Suspension Options

Employees may:

• Opt out in months 7–8 (after the first 6 months), receiving a refund of employee contributions only
• Opt out in months 7–8 after any future rate increase
• Suspend contributions for 1–2 years

Those who opt out or suspend will be automatically re-enrolled after 2 years and may opt out again after 6 months.

Investment Options

Contributions will be managed by approved investment managers:

• Amundi
• BlackRock
• Irish Life Investment Managers

Key features:

• Annual management fee capped at 0.10%
• Fund/investment options: low, medium, high risk, or default lifecycle strategy
• Default fund applies initially, with flexibility to switch later

What we don't know yet:

• Fund asset allocations
• Investment philosophy (index &/or active)
• Rebalancing
• Underlying benchmark indices

Retirement & Access

• Retirement age is aligned with the State Pension age (currently 66)
• Lump sum in early years, additional retirement products developed later
• Early access is only permitted for ill-health retirement
• On death, funds form part of the deceased’s estate

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Auto-Enrolment: Key Steps for Employers

Employers must start preparing now to manage the financial, legal, and practical implications. Here are the key steps employers should take:

Identify Eligible Employees

Employers need to assess their workforce to determine which employees fall within AE’s eligibility criteria. This “in-scope” analysis is vital to estimate the likely enrolment numbers and to budget for AE costs well in advance.

Assess Costs and Administrative Impact

Employers should weigh the financial and operational implications of adopting either:

• a single-scheme approach (using an existing Workplace Pension, adapted to comply with AE), or
• a dual-scheme approach (running both AE and an existing Workplace Pension in parallel).

While the dual-scheme option may offer flexibility, it can also create additional administrative burdens and complexity in payroll and HR systems.

Consider Employment Law Implications

The AE legislation does not give employers statutory authority to enrol staff directly into an existing Workplace Pension. Where a single-scheme approach is chosen, careful legal review will be required to ensure that employment contracts and enrolment practices remain compliant.

Manage Employee Relations Risks

A dual-scheme setup could create the perception of a “two-tier” pension system, with AE viewed as a lower-value option. To avoid disengagement or resentment, employers should develop a clear communication strategy, explaining employee choices and addressing concerns early.

Review and Amend Existing Pension Arrangements

For those intending to use their current Workplace Pension for AE compliance, scheme design may need updates. For example:

• removing waiting periods for eligibility,
• ensuring new employees are automatically enrolled from day one, and
• aligning contribution structures with AE requirements.

Prepare for the NAERSA Employer Portal

The Department of Social Protection (DSP) has confirmed that the NAERSA employer portal will launch by the end of 2025. All employers, regardless of their chosen approach, will need to register through the portal and maintain ongoing compliance.

✅ Next Steps for Employers

• Begin workforce and cost analysis now.
• Review current pension arrangements for potential amendments.
• Seek professional advice on employment law and scheme design.
• Plan a communication strategy to engage staff.
• Monitor updates on the NAERSA portal rollout.

By acting early, employers will ensure a smoother transition, minimise risks, and position themselves to meet their obligations well ahead of January 2026. It is also an opportune time to re-engage your employees by highlighting value of their pre-existing employment benefits.

Employer Non-Compliance

Inspections: The Authority can inspect records, enter premises, and require information, obstruction or false information is an offence.

Corrective Measures: Employers may receive Compliance Notices to fix breaches, Fixed Payment Notices (fines up to €5,000), and can be publicly named.

Penalties: Courts may impose fines up to €5,000 (summary) or €50,000 and 3 years’ prison (indictment), and order payment of arrears with daily interest plus missed employee deductions.

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Auto-Enrolment: Key Steps for Employees

The introduction of auto-enrolment is a valuable opportunity to pause and reflect on your financial future. By engaging now with your personal finances, your employment benefits, and your long-term goals, you can minimise the risk of future financial regret. Here are the key steps employees should take:

Check Your Eligibility

You’ll be automatically enrolled if:

• You’re aged between 23 and 60;
• You earn over €20,000 per year (across all employments);
• You’re not curently making employee pension contributions to a qualifying pension scheme via payroll.

Assess Affordability & Explore Your Options

If you’re eligible, you’ll need to budget for employee contributions and consider where your retirement savings are best placed:

Join Your Employer’s Occupational Pension Scheme

• Often comes with higher employer contributions (needs to match or exceed auto-enrolment employer contribution)
• May provide broader investment choices and additional perks.
• Could be the most beneficial option if available.

Stay with Auto-Enrolment

• Contributions are shared between you, your employer, and the State.
• Designed as a simple, low-maintenance solution.
• Contributions will increase gradually over time, helping build your pension steadily.

Consider a Personal Retirement Savings Account (PRSA)

• Useful if your employer doesn’t offer a qualifying scheme.
• Provides flexibility and portability if you move jobs.
• Employer contributions may be lower or vary.

Take Action, Don’t Delay

The earlier you begin saving, the more time your money has to grow. Even modest contributions can significantly impact your retirement income over time.

💡 Tip: Speak with a financial planner to review your personal circumstances and ensure your pension choice aligns with your circumstances and goals.

Key Takeaway

Auto-enrolment will make retirement saving accessible for thousands more employees in Ireland. The right option for you, however, will depend on your income, age, and employer pension offering. Taking the time to evaluate now can set you up for a more secure financial future.

Comparison Calculators

Start exploring your pension options with these two online tools:

Workplace Pension vs My Future Fund (Auto-Enrolment)

This Zurich tool lets you compare your existing employer pension scheme with the new auto-enrolment option from a current pension contributions perspective (auto-enrolment initial pension contributions will increase on a phased basis outlined in the table above): https://www.zurich.ie/corporate/auto-enrolment-calculator/​

Auto-Enrolment (My Future Fund) Calculator

Select this tool if you’d like to focus solely on auto-enrolment. It assesses your eligibility and estimates your projected contributions and eventual retirement fund size under the auto-enrolment scheme: https://nationalpensionhelpline.ie/pension-calculators/auto-enrolment-calculator/​

Important Disclaimer

These are illustration tools only. Each calculator is designed to frame one of the two options in the most favourable light and results are unlikely to perfectly reflect your circumstances. I cannot independently verify the accuracy of the calculators outputs. Please use these tools as a starting point and discuss your findings with a financial planner for a tailored assessment.

Remember, auto-enrolment contributions begin modestly at 3.5%, but will rise significantly to 14% over ten years. The gradual phasing of contributions makes it harder to draw a like-for-like comparison with other occupational pension schemes. Access to auto enrolment is capped at a 0.10% charge, though it does not include personal finance education, coaching, advice, or technology.

Employer Non Compliance, Employee Options

WRC Complaints: Employees can complain if penalised or blocked from participating. The WRC may order enrolment, payment of contributions, and/or up to 4 weeks’ pay in compensation.

Court Enforcement: The Authority can recover unpaid employer and employee contributions (with daily interest) through the courts.

Protection from Penalisation: Employers cannot dismiss, demote, reduce hours, or disadvantage staff for participating, breaches can be challenged via the WRC.

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Financial Literacy for Dummies with Hasan Minhaj & JL Collins

What happens when a comedian and a seasoned financial author share the stage? This financial literacy video captures a lively exchange between two generations originally starting out with very different perspectives on money, offering both insight and humor as they learn from each other:

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Wealth is as rare as the discipline required to build and maintain it. Simple does not mean easy.

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📚 Recommended resources 💡

JP Morgan Guide To The Markets (EMEA Monthly):

​​​JP Morgan Guide to the Markets EMEA 31st July 2025.pdf​​​​​​​​​

Podcast episode recommendations:

The Illusion of Knowledge - The Memo by Howard Marks

Spotify

The Calculus of Value - The Memo by Howard Marks

Spotify

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I’m pleased to let you know that September’s newsletter will unveil our refreshed Vantage brand and website. After five years of growth, it became clear that the original self-designed/built brand, logo, and website no longer captured the maturity of the business or the ambition of its future direction.

If you are interested in personal finance education, coaching, advice or technology, please reach out to me on my contact details below.

If you found this month's newsletter useful, feel free to share it with family, friends, colleagues and peers. Constructive feedback is always welcome! If there's any personal finance topic you'd like covered please let me know.

Until next month.

Kind regards,

Ken Mason CFP®

Certified Financial Planner™

Tel: (01) 539 2670

Mobile: 083 803 2008

Email: ken.mason@vantagefp.ie

www.linkedin.com

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