Auto-Enrolment VS Occupational Pension

As an employer you know that Auto-Enrolment came into force at the beginning of January 2026. However perhaps it is time to see whether Auto-Enrolment is the best option for your business or should you opt to set up an occupational pension instead. Both have their benefits and drawbacks.

Auto-Enrolment

Advantages

• Little administration needed by Employer. Employees automatically enrolled and contributions deducted from payroll
• Government is topping up employee’s contribution by 33%. This is most beneficial for employees below the standard rate tax band of €44,000
• Employees can opt out after 6 months

Disadvantages

• Contribution rates are set and phased over time
• Contributions are deducted from net pay so no tax relief. With the Government top up this is ok for those below the standard tax rate band however it is not beneficial for those earning over €44,000
• Employees get automatically re-enrolled after 2 years

Occupation Pension

Advantages

• Employer and Employee can decide what contribution rate they want to make
• Contributions are deducted from gross pay and tax relief is given. This is better for higher earners
• Ability to make additional voluntary contributions

Disadvantages

• Changing pension legislation can increase costs and obligations were as Auto-Enrolment is set and controlled by state administration system
• More administration burden on employers. Employers need to arrange occupation pension with a provider and liaise with pension provider and payroll to manage ie. Including new employees, updating payroll with contribution rates etc
• More investment risk

Auto-Enrolment is ideal for employers who want little administration burden however it leaves high earning employees at a disadvantage.

Occupational pensions are more attractive for high earners but require a lot more input from the employer.

For many employers, neither option may be the most effective so perhaps a combination approach is better suited. An employer can run both schemes in the same business and cater to their needs as well as their employees.