Services

Finance Bill 2025 - Pensions

The Finance Bill 2025 continues Ireland’s pension reform programme. Its main focus is to put in place the final tax and administrative rules needed for the new Automatic Enrolment (AE) Retirement Savings System.

Rather than changing existing pensions, the Bill provides the legal framework to make AE work smoothly alongside the current pension system. Overall, the goal is to encourage more people to save for retirement, keep rules clear and consistent, and make it easier for employers to comply.

Employer and Employee Contributions

The Bill explains how contributions to the AE system will be taxed:

  • Employer contributions will be tax deductible for the company and not treated as a benefit in kind for employees.
    (This is the same tax treatment as ordinary workplace pension schemes.)
  • State contributions, being the Government’s “top up” payments that boost workers’ savings will be free from income tax and USC, so employees keep the full amount.
  • Employee contributions will not receive tax relief up front. However, because the State and employer also contribute, the overall benefit will be roughly the same as the tax reliefs available under current pension schemes.

Money invested in AE funds will grow tax free until retirement. When it’s taken out, it will be taxed in the same way as existing pensions (like PRSAs or occupational schemes).

These rules aim to make AE simple, fair, and easy for both employers and workers to understand. They also give payroll providers the clarity they need to get ready before AE starts.

Automatic Enrolment Retirement Savings System

The AE system was legally created under the Automatic Enrolment Retirement Savings System Act 2024, and Finance Bill 2025 provides the tax rules to support it.

  • When it starts: Enrolments are expected to begin in late 2025, with contribution rates increasing gradually over several years.
  • Who is included: Employers must automatically enrol workers aged 23 to 60 who are not already in a workplace pension.
  • Opt out options: Employees can opt out if they wish but will be automatically re-enrolled after a period.

The Bill also confirms that:

  • A new National Automatic Enrolment Retirement Savings Authority will run the system.
  • AE funds will be exempt from DIRT, Stamp Duty, and Capital Acquisitions Tax on certain transfers.
  • Any withdrawals or lump sums will count toward a person’s Standard Fund Threshold (SFT). This is the lifetime limit on tax advantaged pension savings.

AE is one of the biggest pension changes in decades. It’s expected to bring around 750,000 new savers into the pension system for the first time.

Reporting and Oversight

To improve transparency, the Bill introduces a new annual reporting duty for Qualifying Fund Managers (QFMs). QFM’s are the firms that manage Approved Retirement Funds (ARFs).

  • From 2027, QFMs must submit yearly reports to Revenue about the funds they manage.
  • This is mainly an administrative step that won’t affect individual savers, but it will help Revenue improve oversight and data quality across the pensions sector.

Standard Fund Threshold (SFT)

The Bill keeps the current SFT rules but confirms that the threshold will increase by €200,000 each year from 2026 to 2029. From 2030 onwards, it will rise automatically in line with inflation and wage growth.

If you’ve already reached your SFT or have a Personal Fund Threshold (PFT), the increase won’t apply to you. However, anyone with room left under their limit will benefit from the higher cap.

The Bill also clarifies some small technical details about how previous pension withdrawals (crystallisations) are treated under the new indexation rules.

Overall Summary

The pension measures in Finance Bill 2025 are about implementation and stability. They ensure that Automatic Enrolment is ready to launch and works seamlessly within Ireland’s pension tax system.

  • Employers should start preparing now by adjusting payroll systems and planning for contribution costs.
  • Employees will benefit from an easier, automatic way to build pension savings, with clear tax treatment and government support.

While these changes don’t directly affect existing pension savers, they lay the groundwork for a system where regular pension saving becomes the norm rather than the exception.

Contact Us

Should you wish to discuss any aspect of pensions or the Automatic Enrolment Retirement Savings System, please contact our team.

Disclaimer: While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, RBK do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not intended to be an advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.

Author: Patrick Keegan