Just over three-quarters of businesses expect pension auto-enrolment to negatively impact profitability in 2026, according to new research.
A nationwide survey conducted by FRS Recruitment found that many companies are planning to either raise prices or freeze hiring plans in a bid to mitigate the additional costs.
The average business is facing a €25,000 increase in employee related costs from next year due to the introduction of the auto-enrolment scheme 'My Future Fund', according to the study.
There were 515 respondents to this survey, roughly half from businesses and half from employees.
Of the workers surveyed, 59% said they need more advice from their employer about how the auto-enrolment pension scheme works.
"When the My Future Fund scheme begins in 2026, every eligible worker will start saving automatically toward retirement - strengthening long-term financial security nationwide," said Colin Donnery, CEO of FRS Co-Op.
"Yet as our survey clearly highlights many businesses are concerned about the additional cost pressures the scheme will bring, with over three quarters of employers expecting reduced profitability in 2026 as a result of auto-enrolment."
"It's therefore no surprise to see many companies considering price rises, hiring pauses, or lower investment to mitigate against the additional costs of the scheme," Mr Donnery said.
My Future Fund starts on 1 January and is designed to help over 800,000 workers to begin saving for their retirement.
All employees not already in an occupational pension scheme, aged between 23 and 60 and earning over €20,000 across all of their employments, will be automatically enrolled in the new scheme.
It will be gradually phased in over a decade, with both employer and employee contributions starting at 1.5% and increasing every three years by 1.5% until they eventually reach 6% by year 10.
The State will top up contributions by €1 for every €3 saved by the employee.
According to the Government, Ireland is the last OECD country to have scheme like this.
A new body, the National Automatic Enrolment Retirement Savings Authority (NAERSA), has been establish to run the scheme.
Minister for Social Protection Dara Calleary has insisted that the system has been designed to keep employer administration to a minimum.
"The National Automatic Enrolment Retirement Savings Authority (NAERSA) will handle the bulk of this work," Mr Calleary said.
"That includes identifying and enrolling eligible employees, managing opt-ins, opt-outs and suspensions, calculating contributions, and notifying employers of amounts due through payroll," he added.
