Ireland’s auto-enrolment pension scheme, My Future Fund, launched on 1 January. Most of the public discussion so far has centered on contribution rates and what the scheme means for employers. But there’s another question that deserves attention. Who decides how your pension is invested? Under the current structure, the answer is largely your age. Reporting in the Business Post at the end of 2025 outlined how the Government intends to invest contributions within My Future Fund. The approach is straightforward and widely used internationally, but it raises a reasonable question: is age really the best guide for how someone’s retirement savings should be invested?
How the My Future Fund investment strategy works
When workers are automatically enrolled into My Future Fund, their contributions are placed into a default investment strategy. This strategy gradually reduces investment risk as participants approach retirement. According to the Department of Social Protection, the structure broadly works as follows:
- Ages <50 (15+ years from retirement) — higher-risk strategy
- Your money works harder in the High-risk Strategy, offering greater potential returns in line with the higher level of risk.
- The aim is to maximise long-term growth while retirement is still some distance away.
- Ages 51–60 (15 to 5 years from retirement) — medium-risk strategy
- Your savings move into the Medium-risk Strategy for steady growth and stability.
- Ages 61–66 (5 years or less to retirement) — lower-risk strategy
- our investments shift to the Low-risk Strategy to help protect what you’ve built.
As reported by the Business Post, this lifecycle approach is designed to mirror pension systems used in many other countries. The definitions of low, medium and high risk follow the European Securities and Markets Authority (ESMA) risk classification framework, which categorises investment products across Europe on a seven-level risk scale
Age is only one piece of the puzzle
The logic behind this model is understandable. Younger savers have more time to recover from market swings. Older savers have less time before retirement. But age alone doesn’t capture someone’s financial reality.
Take two people who are both 45 years old. One may already have a substantial pension built up.
Another might only be starting to save. One may intend to retire early. Another may plan to work into their late sixties. Yet under the default system, both are placed on exactly the same investment path.
For a national scheme expected to enrol around 750,000 workers, simplicity is inevitable. But that simplicity also means the system cannot fully reflect individual circumstances.
Why the default strategy matters
Participants are not locked into the default investment option. The Department of Social Protection says workers will be able to review and change their investment strategy through the My Future Fund online portal. However, international evidence suggests most people remain in the default option once they are enrolled. In practice, the initial design of the default strategy ends up shaping the long-term investment outcome for the majority of participants.
Auto-enrolment is a starting point, not a full pension plan
Auto-enrolment is an important step forward for pension coverage in Ireland. The scheme is expected to bring hundreds of thousands of workers into pension saving for the first time. But it was never designed to provide a complete retirement solution on its own. Contribution rates start at 1.5% of salary from employees, matched by 1.5% from employers, with an additional 0.5% State contribution, according to the Department of Social Protection. These rates increase gradually over the first ten years of the scheme. That structure helps people start saving. But whether it will produce the retirement income someone expects depends on a range of factors — including contributions, investment choices, and time in the market.
At Ask Acorn, we’re already seeing employers and employees looking beyond the default settings and asking how My Future Fund fits alongside their wider pension plans. Auto-enrolment is a good first step. But it shouldn’t be the last conversation you have about your retirement savings.
Sources
- Business Post — Megan O’Brien, “Auto-enrolment explainer: How will My Future Fund invest your money”
- Department of Social Protection — My Future Fund (Auto-Enrolment Pension Scheme)
- https://www.gov.ie/en/campaigns/0ab04-auto-enrolment/
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