FROM January 2026, Ireland will roll out a nationwide auto enrolment pension scheme, the My Future Fund.

This reform aims to tackle low retirement savings, with only around 35% of private sector workers currently contributing to a pension.

The government’s target is to raise coverage to 70% or more.

While auto enrolment is a welcome safety net for many employees, it comes with serious drawbacks for high earners, 40% taxpayers, business owners, and high-networth individuals.

The flat-rate state top-up, capped contributions, and limited flexibility mean it is often far less attractive than private or company pension schemes.

This article explains how auto enrolment works, why it disadvantages high earners, and why tailored company pensions remain the most effective route to long-term retirement planning.

How Auto Enrolment Works From 2026, employees will be automatically enrolled if they:

• Are aged 23–60

• Earn €20,000+ annually

• Do not already have a qualifying pension

Key features:

• Contributions: Made by employee, employer, and the state (phased in over 10 years).

• Contribution Cap: Capped at earnings of €80,000.

• Access: Funds locked until retirement age (currently 66).

• Opt-Outs: Allowed, but employees will be re-enrolled every 2 years.

Why Auto Enrolment Doesn’t Suit High Earners

1. Tax Relief Disadvantage • Private/Company Pension: A higher-rate taxpayer (40%) contributes €60, with €40 tax relief added, creating a €100 pension.

• Auto Enrolment: State top-up is fixed at 33%, reducing effective relief to 25%, not 40%.

Over decades, this gap creates a large shortfall in accumulated wealth.

High earners above €80,000 face further inefficiency, since contributions are capped.

2. Limited Investment Choice Auto enrolment offers only four fund options, mostly defaulting into a lifecycle fund.

By contrast, private/company pensions provide far wider investment flexibility—from passive funds to bespoke strategies aligned with wealth and estate planning.

3. Lack of Flexibility

• Company pensions: Allow benefits from age 50 in some cases.

• Auto enrolment: Funds locked until age 66.

For business owners and high earners, pensions often form part of succession planning, liquidity, and diversification strategies. Auto enrolment removes this flexibility.

Why Company Pension Schemes Are Superior For business owners and high-income professionals, company pensions deliver advantages far beyond auto enrolment:

• Full 40% tax relief for higher-rate taxpayers

• Early access to funds (age 50+)

• Flexible contribution rates above auto enrolment limits

• Additional Voluntary Contributions (AVCs) to accelerate savings

• Broader investment choice for tailored strategies

• Better death-in-service protection

These features make company pensions the most tax-efficient and flexible vehicle for retirement planning.

Preparing for 2026: What High Earners & Business Owners Should Do

1. Audit existing pensions – check if your scheme qualifies as an exemption.

2. Calculate the tax gap – compare auto enrolment’s 25% relief with 40% relief under private schemes.

3. Consider establishing a company pension – to optimise contributions and retain flexibility.

4. Seek expert advice – align your pension with personal, business, and succession goals.

5. Educate your employees – helping staff understand their options can boost retention.

Final Thoughts Ireland’s auto enrolment scheme is a much-needed step forward for workers with no pension.

But for high earners, business owners, and 40% taxpayers, it falls short.

• Reduced tax relief • Contribution caps • Limited investments • Inflexible access …make it unsuitable for long-term wealth building compared to a tailored private or company pension scheme.

At ODM Financial Advisers, we specialise in helping high earners and business owners maximise pension efficiency, protect wealth, and plan for retirement on their terms.

Book your no-obligation retirement consultation today and secure a pension strategy that reflects your income, goals, and ambitions.

Call 023 8842700 | Email: [email protected] | [email protected]