Workplace pensions in Ireland are set for a significant transformation with the introduction of auto-enrolment in September 2025. This policy aims to ensure that employees, employers, and the government contribute collectively to retirement savings. However, businesses also have the option to explore Personal Retirement Savings Accounts (PRSAs) as an alternative. Let’s take a closer look at both options to help you understand the key differences and benefits.
Understanding Auto-Enrolment
Auto-enrolment is a government-led initiative that mandates phased contributions to workplace pensions. Coming into effect in September 2025, it will change the pension landscape for the workplace pensions and could place a significant burden on Employers with contributions outlined below.
| Year of Auto Enrolment Scheme | Employee Contribution Rate | Employer Contribution Rate | Government Contribution Rate |
| 1 to 3 | 1.5% | 1.5% | 0.5% |
| 4 to 6 | 3% | 3% | 1% |
| 7 to 9 | 4.5% | 4.5% | 1.5% |
| 10+ | 6% | 6% | 2% |
While this phased approach ensures a gradual introduction of costs, the system has its limitations, including fixed contribution increments and benefits tied to the state pension age (currently 66).
Why Employers Should Consider PRSAs?
Employers have a unique opportunity to use PRSAs to create a pension scheme tailored to their workforce. Highlighting the flexibility and tax benefits of PRSAs in employee communications can help attract and retain top talent. Moreover, PRSAs offer businesses a level of control over contribution structures that auto-enrolment does not. For employers and employees seeking greater flexibility, Personal Retirement Savings Accounts (PRSAs) offer a compelling alternative to auto-enrolment. Here are the key benefits:
1. Flexibility in Contributions
Unlike auto-enrolment which specifies the level of contributions payable, PRSAs allow employers to set contribution rates that align with their financial capacity.
2. Tax Efficiency
PRSAs offer significant tax benefits:
- Employees earning over €44,000 can avail of up to 40% tax relief.
- In the event of a member’s death, PRSA funds are transferred tax-free to their estate, providing financial security for beneficiaries.
3. Early Fund Accessibility
PRSAs allow members to access their full funds from the age of 60, offering earlier financial freedom compared to auto-enrolment, which ties benefits to the state pension age.
4. Broader Investment Choices
Auto-enrolment offers a limited fund range whereas most PRSAs offer a wide range of investment fund options. PRSAs offer greater flexibility for employees to align their savings with their financial goals and risk appetite.
5. Individualised Financial Planning
PRSAs include tailored financial reviews, helping employees optimise their retirement planning—an option unavailable with auto-enrolment.
Auto Enrolment & PRSA Comparison Summary
| PRSA | Auto Enrolment | |
| Tax Relief | Salaries over €44,000 get 40% Tax Relief | State Contribution equivalent to 25% Tax Relief |
| Fund Choice | Wide Fund Choice | “My Future Fund” only |
| Pension Access | Access to Fund at 60 years of age | Access to Fund at 66 years of age |
| Employer Contribution | Full Flexibility on level of Employer Contribution | No Flexibility. 1.5% to 6 % over 10 years |
| Financial Reviews | Individual & Regular Reviews | None |
| Employee Contributions | Full Flexibility to choose level of Employee Contributions | No. Flexibility. Employee Contributions set at % of earnings. Employee cannot save extra if they wish. |
| On Death Outcome | On Death the Fund paid to estate Tax free | On Death Fund seen as BIK/Income. Taxed at 20% or 40% |
Compliance Requirements
Whether choosing auto-enrolment or PRSAs, employers must ensure their schemes meet regulatory standards. PRSAs must comply with:
- Irish Pension Regulations
- The Consumer Protection Code
- The Pensions Act
Partnering with experienced financial advisors can help businesses navigate these requirements effectively.
Making the Choice
Both auto-enrolment and PRSAs offer unique advantages. Auto-enrolment provides a standardised structure, while PRSAs allow for more flexibility, tax efficiency, and customisation. The right choice depends on the specific needs of your business and employees.
Need Help?
If you’re an employer looking to set up a PRSA scheme or need guidance on auto-enrolment compliance, we’re here to help. Reach out today to explore tailored solutions for your workplace pension needs. Speak with a financial advisor.
Plan better for tomorrow—start today!
Sources
- https://www.citizensinformation.ie/en/money-and-tax/personal-finance/pensions/auto-enrolment
- https://www.gov.ie/en/publication/c6d6a-auto-enrolment-your-questions-answered/
- https://www.mercer.com/en-ie/insights/pensions/retirement-benefits-ireland/an-employers-guide-to-auto-enrolment
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