Auto-Enrolment Ireland vs Private Pension: Which Is Better for You?

Retirement planning in Ireland is changing. From January 2026, the Government is launching My Future Fund, a new auto-enrolment scheme that will automatically sign up hundreds of thousands of workers to a pension for the first time.

For some, this is the push they need to start saving. For others - particularly higher earners or those already in private schemes - it raises an important question:

👉 Is My Future Fund really the best way to save for retirement, or is a private pension still the smarter choice?

The difference comes down to how contributions are taxed, how much control you want, and what return you get for every euro you put in. This article breaks it down in plain English, with interactive calculators so you can see the impact for yourself.

What Exactly Is My Future Fund (Auto-Enrolment)?

The Irish State is introducing auto-enrolment to address one big issue: too many workers have no private pension at all and may be relying solely on the State Pension in retirement.

Here’s how it works:

• Who’s included? Employees aged 23–60 earning €20,000+ per year, and not already in a pension.
• Contributions: Start small (1.5% employee and 1.5% employer in 2026), rising every 3 years until both contribute 6% by 2034.
• State top-up: For every €3 you contribute, the Government chips in €1.
• Deductions: Taken after tax, meaning you don’t get income tax relief at source.
• Administration: Managed centrally by the State, and your pension fund follows you if you switch jobs.
• Cap: Contributions (and employer/State matching) only apply to earnings up to €80,000.

Pros of Auto-Enrolment

• Makes sure you’re saving something.
• Employer is required to match your contribution.
• State top-up gives you an instant uplift.
• Simpler and less admin than setting up your own private pension.

💡 Key insight: The State top-up is often described as “€1 for every €3.” In practice, this is equivalent to about 25% extra value on your contributions.

Cons of Auto-Enrolment

• No upfront income tax relief.
• Limited investment fund choices.
• Locked-in structure—less room to optimise or tailor.

Try it for yourself:

Use our Future Fund Calculator below to see exactly how much will be deducted from your salary each year, how much your employer contributes, and how the State top-up boosts your pension savings.

What Is a Private Pension?

A private pension could be an occupational pension set up by your employer or a Personal Retirement Savings Account (PRSA) that you set up yourself.

The key feature of private pensions is tax relief at your marginal rate:

• If you pay 20% tax, you get 20% relief.
• If you pay 40% tax, you get 40% relief.

That means your contributions come straight out of gross pay, lowering your taxable income and reducing the tax you pay that year.

Pros of Private Pensions

• Immediate and generous tax relief.
• Flexibility to contribute more (within Revenue limits).
• More control over investment choices.
• Often higher employer contributions in occupational schemes.

Cons of Private Pensions

• Can feel more complex to set up if self-employed.
• Tax relief depends on your current marginal rate.
• Portability between jobs isn’t always seamless (unless using a PRSA).

Boosting Savings with AVCs

Private pensions also allow Additional Voluntary Contributions (AVCs) - extra payments you make into your pension to increase retirement savings. The big advantage is tax relief at your marginal rate (20% or 40%), which often makes AVCs more attractive than the flat 33% State top-up under auto-enrolment.

👉 Example: Contributing €1,000 as an AVC costs only €600 if you pay tax at 40%, because you get €400 back in tax relief.

Try it for yourself:

Try our Additional Voluntary Contribution (AVC) Calculator to discover how boosting your private pension can grow your savings and maximise your tax relief.

The Core Difference: Tax Relief vs State Top-Up

This is where things really diverge.

• Auto-Enrolment:
• You contribute from after-tax pay.
• The State adds €1 for every €3 you contribute.
• In practice, this feels like a 25–33% uplift, depending on your situation.
• Private Pension:
• You contribute from gross pay.
• You immediately reduce your taxable income.
• At 40% tax, this is far more generous than the State top-up.

Example: €100 Contribution

• With Auto-Enrolment, you pay €100 after tax → Employer adds €100 → State adds €33 → Funded with €233.
• With a Private Pension (40% tax rate), you pay €60 net (after relief) → Employer adds €100 (if matched) → No State top-up → Funded with €160.

At first glance, Auto-Enrolment looks stronger. But remember:

• The net cost to you is lower with private pensions at higher tax rates.
• Over time, flexibility in AVCs and fund choices can significantly boost returns.

💡 This is why the calculators are crucial. They let you put in your numbers—your tax rate, your salary, your employer contributions—and see which one gives you more bang for your buck.

Which One Is Better for You?

If You’re on a Low or Middle Income

Auto-enrolment may be surprisingly good value. The State top-up could outweigh the benefit of limited 20% tax relief. Plus, you don’t have to do anything—your employer and the State handle it for you.

If You’re a Higher-Rate Taxpayer (40%)

A private pension almost always works out better. The 40% relief beats the 33% State top-up, and you gain extra flexibility to contribute more, choose your funds, and plan around your retirement goals.

If You’re Self-Employed

You won’t be in auto-enrolment anyway, so a PRSA or personal pension is your only route. But you also get the full benefit of tax relief - so you’re not losing out.

Once you know how much you would be contributing to a private pension, you can use our Pension Value calculator to see what this will look like at retirement.

Bottom Line

• Auto-Enrolment is better than nothing - and a great entry point for those without pensions.
• Private pensions are generally more tax-efficient and flexible, especially for higher earners.
• The real answer is personal - and that’s why running your own figures is essential.

And if you’d like an expert to walk you through the numbers, contact us today and ask abour our Pension & Tax Review Service can show you exactly which route (or combination) maximises your long-term wealth.