Government’s Auto-Enrolment Pension Scheme: ‘Another USC in the Making?’

Independent Ireland Leader Michael Collins Queries Government’s Auto-Enrolment Pension Scheme: ‘Another USC in the Making?’

Independent Ireland Leader Michael Collins has raised a number of concerns around the Government’s upcoming Auto-Enrolment Pension Scheme, set to launch on 30 September 2025, highlighting the financial burden on both employers and employees, while questioning whether in the long term this scheme is intended to replace the current State Pension.

“This scheme is eerily similar to the Universal Social Charge (USC) fiasco—another compulsory deduction from wages that disproportionately impacts workers and small businesses. Employers and employees are forced to contribute 3% of gross wages, while the Government contributes a mere 0.5%. Is this the beginning of the end for the State Pension?”, I am aware the government have said this will not replace the state pension but I can remember they previously campaigned on abolishing USC and workers continue to pay it, 14 years since its introduction"

Deputy Collins raised a number of key concerns with the scheme which need to be addressed:

Unequal Contribution – Government Paying the Least

• Under the scheme, employees and employers are both required to contribute 3%, while the Government is only contributing 0.5%. This raises serious questions:

  • Why is the Government demanding more from workers and businesses than it is willing to contribute itself?

  • Will this scheme eventually phase out the current State Pension?

Mandatory Financial Burden on Employers & Employees

• Employers must match employee contributions, leading to significant cost increases for small and medium-sized businesses.

• Employees will have no choice but to contribute unless they actively opt out after six months—only to be auto-enrolled again every two years.

Heavy Penalties for Non-Compliance

• Employers who fail to comply face fines and prosecution, adding another layer of risk and red tape for businesses.

• No clear opt-out path for employees beyond short windows, trapping workers in contributions they may not afford.

Administrative Nightmare for Employers

• Employers must track contributions, manage opt-outs, and handle automatic re-enrolments, significantly increasing payroll complexity and compliance costs.

 Is This Replacing the State Pension?

• The Government must immediately guarantee that auto-enrolment is a top-up or a long-term replacement for the current State Pension system.

• If we do not get a cast Iron guarantee that this will not replace the state pension, workers will be expected to fund their retirement almost entirely on their own while still paying high taxes.

Michael Collins Demands Clarity:

"We must provide clarity for both employers and employees on such an important issues.  I will be writing to the minister for social protection to clarify the these most pressing of issues including a request that a guarantee will be put in place that this is not a replacement for the State Pension. We need clarity as to why is the Government contributing so little compared to employees and employers? and most importantly,  Will this turn into another USC – a ‘temporary’ deduction that never disappears?"

"The Government must come clean on its long-term intentions with this scheme. People need certainty that their pensions and hard-earned wages are protected, the government must provide clarity immediately”