Does your company pension exempt your staff from My Future Fund?

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Short answer: yes, if it meets two tests. The pension must run through your payroll, and the contributions must clear a minimum level. Miss either test and your staff are enrolled in My Future Fund regardless of what pension arrangements they hold.

This article sets out both tests, the edge cases that catch employers out, and what it costs to clear the bar. Spoiler on that last one: if you pick the right provider, nothing beyond the contributions you would be paying the state scheme anyway.

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The two tests

Test one: the pension must run through payroll. NAERSA, the authority that runs My Future Fund, identifies eligible employees from payroll data. If an employee's payslip shows a pension contribution, they are in exempt employment and are not enrolled. If it does not, they are enrolled automatically, whatever pensions they may have elsewhere. The exemption attaches to the employment, not the person.

Test two: the contributions must meet the qualifying minimum. Advisor guidance from Mercer and Grant Thornton puts the bar at a total contribution of 3.5% of gross pay, with at least 1.5% coming from the employer. Both firms note this is the understood standard rather than a long-settled one, so confirm the current figures with your provider when you set contribution levels, and leave headroom rather than sitting exactly on the line.

Clear both tests and the machinery of the state scheme never touches those employees. No deductions to reconcile, no opt-out windows to field questions about, no two-year re-enrolment cycle.

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The cases that catch employers out

The two tests sound simple. In practice, most exemption problems come from one of the following.

An employee has a personal PRSA they pay themselves. Not exempt. A PRSA funded by direct debit from the employee's own bank account is invisible to payroll data, so NAERSA enrols them. This is probably the most common surprise in the scheme's first year. The fix is to bring that PRSA into payroll with an employer contribution, which converts it into exempt employment and usually leaves the employee better off through the employer money alone.

Some staff are in your scheme, some are not. Exemption is per employee, not per company. Having a company pension does not exempt your workforce; it exempts the members of it. Anyone eligible who has not joined is enrolled in My Future Fund, and you pay the state-scheme employer contribution for them on top of running your own scheme for everyone else. Two systems, two sets of admin.

New hires. Auto-enrolment applies from the first day of eligible employment. There is no probation grace period. If your scheme entry process takes a payroll cycle or two, a new hire can be swept into My Future Fund in the gap, and unwinding that means opt-out windows and refund mechanics. The clean answer is a scheme that onboards people before their first payslip.

Contributions that drift below the bar. A scheme at exactly 3.5% has no margin. If an employee reduces their contribution, or a percentage is applied to a definition of pay narrower than gross, the employment can fall out of qualification without anyone noticing until NAERSA's data says otherwise.

Someone already enrolled in My Future Fund. Joining a qualifying scheme through payroll pauses their participation. Money already contributed to My Future Fund stays in their fund; their own contributions can be refunded only through the scheme's opt-out windows, which run on the scheme's timetable, not yours. The employer and State portions remain in the pot either way. So the earlier you move, the less there is to unwind.

What clearing the bar costs

Here is the arithmetic that matters.

If you do nothing, My Future Fund costs you 1.5% of gross pay per eligible employee today, rising in legislated steps to 6% by year ten. You have no discretion over rates, fund choice, or who is in.

If you run your own qualifying scheme, the employer minimum is the same 1.5%. The contribution cost is identical. The difference between the two options is therefore everything except the contribution: fees, setup effort, admin, and what your employees get.

With a Zen Pensions PRSA, that difference all runs one way. The employer pays no fees of any kind: no setup charge, no platform fee, no per-employee cost. Setup is digital, staff onboard from their phones in minutes, and new hires can be in before their first payslip, which closes the day-one gap described above. Employees get full marginal-rate tax relief on their own contributions, up to 40%, where the state top-up in My Future Fund equates to 25%, and they pay a single all-in fee of 0.9% a year with no contribution charges and no broker taking a cut. Zen Pensions is regulated by the Central Bank of Ireland and the product is approved by the Pensions Authority.

In other words, the exemption bar costs nothing to clear beyond the contribution you were going to pay the state scheme regardless. What you buy with that same money is choice, speed, and a pension your senior staff will not be asking awkward questions about.

If you want your staff in a scheme you chose rather than the default, it takes one call. [Book a call.]

Employer FAQ

What makes a pension scheme "qualifying" for auto-enrolment exemption?It must run through payroll and meet the minimum contribution level, understood to be 3.5% of gross pay in total with at least 1.5% from the employer. Confirm current thresholds with your provider.

Does a company pension exempt my whole workforce?No. Exemption applies per employee. Only staff actually contributing through payroll are exempt; everyone else eligible is enrolled in My Future Fund.

An employee has their own PRSA. Are they exempt?Not if they pay it outside payroll. Bringing the PRSA into payroll with an employer contribution makes the employment exempt.

Do new hires get a grace period before auto-enrolment applies?No. Eligibility applies from day one. A scheme that onboards new hires before their first payslip avoids them being swept into My Future Fund in the gap.

What happens to money an employee already paid into My Future Fund if they join our scheme?Their participation pauses once they contribute through payroll. Their own contributions can be refunded through the scheme's opt-out windows; employer and State contributions stay in their My Future Fund pot.

Can we make our scheme a condition of employment?You cannot force existing employees to join. For new hires, membership can generally be made a condition of employment if stated clearly in contracts. Take advice on the contractual wording.

What does a qualifying scheme cost the business?The contributions. The employer minimum of 1.5% is the same rate you would pay under My Future Fund, and Zen charges the employer no fees on top of it.

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