Should I Wait For Auto-Enrolment Or Start A Pension Myself?

Auto-enrolment (AE) is a new pension savings scheme set to start in Ireland on 1^st January 2026 for certain employees who are not currently paying into a pension plan. People will be automatically included in the scheme but can opt out after 6 months. Many are now wondering if they should set up a pension plan themselves or wait for AE to be fully introduced and be automatically enrolled.  

In this blog we will explain the options you have available and why we think that you shouldn’t wait for AE but instead start a pension today. 

Should I start a pension plan now or wait for AE?

It is considered more beneficial to join your company's existing pension plan, if they currently have one in place, rather than solely relying on auto-enrolment. However, the decision as to whether you should start a pension plan now or wait for Auto Enrolment will depend on your own circumstances.  

For example

·        If you don’t want to start a pension, you can wait for AE and then opt out of it or suspend any contributions.

·        If you are on a low income and want to keep  contributions to a minimum initially as you get started and build up your income, then Auto Enrolment is a good option for you.

·        For other employees, you may benefit more from an occupational pension scheme, Personal Retirement Savings Account (PRSA) or another pension arrangement. This is due to the fact that if you are in the 40%  tax bracket, your pension contribution is more beneficial than the State’s contribution to your Auto Enrolment pension.

Saving for retirement is a long game. The longer you keep your money invested for, the greater the chance of a positive outcome. Staying fully invested through the ups and the downs in the past, ensured investors reap greater rewards over the long term as market rebounds after negative performance are often significant^.

Auto Enrolment has already been postponed from the start of 2025 and if it is postponed again for whatever reason, this means that the time invested in the market shortens. Every month that you don’t make a pension contribution you lose 40% or 20% (depending on your tax bracket) of that contribution to income tax.

Auto Enrolment v A PRSA

·        The pension contributions with a PRSA are flexible and it’s up to the individual to decide how much to contribute. With AE, the contributions are set.

·        A PRSA is a tax efficient way to save because of the 40% or 20% tax benefit on contributions made by the individual – Auto enrolment is a pre determined contribution.

·        There are more investment options available with a PRSA to suit differing appetites to risk

·        Personalised financial advice to suit your individual needs is an advantage to having a PRSA

Auto Enrolment v An Occupational Pension Scheme

Opting for an occupational pension scheme (when possible) is probably the most favourable option. There is often an employer contribution, and employees can take advantage of the pension contribution tax benefits too. 

Occupational pensions also offer more flexibility in terms of contribution amounts and fund options.

The financial advisors at Citywide Financial would be delighted to help you on your pension journey. Get in touch to arrange a free consultation

www.citywidefinancial.ie

(01) 5138710