There have been numerous changes to Irish pensions in 2024, and there is more to follow in 2025. 

These changes are all broadly aimed at improving the pension coverage of our ageing population, improving access to the state contributory pension, and paying for the pensions of the retirees of the future.

Changes allowing people to choose to work longer to qualify for a state contributory pension as well as measures to recognise long term carers, who have historically often been excluded from the state contributory pension, came about in 2024.

Auto enrolment pensions were named as My Future Fund in 2024, and plans and timelines for the new pension scheme have been firmed up for 2025.

There are also changes to private pensions, changes in the way eligibility for the state contributory is assessed, and PRSI increases upcoming in 2025.

The National Pension Helpline is a free service offering information about pensions in Ireland. You can contact us to discuss your retirement finances and how these changes may affect your pension.

2025 pension guide

Table of Content

Pension changes in 2024

There were two key changes in January 2024 that continue into 2025:

January 2024 brought a new degree of flexibility in that, while the state pension age of 66 remains, those that choose to defer retirement until the age of 70 may do so. 

This means that, unlike previously where those above the age of 66 did not pay PRSI, now those that defer retirement continue to pay PRSI up to the age of 70 while they are still in employment. 

This may be in order to get an increased rate of state contributory pension, or to make additional contributions in order to qualify for a state contributory pension.

January 2024 also saw the introduction of the Long Term Carers Contribution Scheme to allow long term carers to qualify for the state contributory pension. 

In order to qualify you have to have provided full time care and attention for at least 20 years. If you qualify for long term carer’s contributions you do not need to have 10 years of employment contributions to qualify for the state contributory pension.

Auto enrolment updates

The new auto enrolment pension scheme, My Future Fund, is also finally expected to begin on the 30th September 2025.

The auto enrolment pension scheme will apply to those aged between 23 and 60, who are not currently part of a pension plan, and who earn above €20,000 a year. Anyone who earns less than €20,000 can voluntarily opt into the scheme.

The employee, the employer, and the Government all contribute to the pension of the employee.

For the first year of the scheme, you and your employer will pay 1.5% of your annual salary, with the Government contributing 0.5%. These contributions will rise incrementally until Year 10 of the auto enrolment scheme when the employee and employer contribute 6%, and the Government pays 2%.

There has also been some clarity brought to the way in which pension benefits from the auto enrolment pension scheme are due to be paid on retirement. It is envisaged that 25% of the employee’s fund may be taken as a retirement lump sum. A lump sum up to €200,000 will be tax free, any amount from €200,000 to €500,000 will be taxed at 20%, and any amount above €500,000 will be taxed at 40%.

Pension drawdowns taken after the lump sum will be taxed at the marginal rate of tax, and subject to USC and PRSI up to the age of 70.

As there is a Government contribution to the employee’s auto enrolment pension, there will be no tax relief on employee contributions (unlike contributions to a private pension).

auto enrolment pension

Pension rates 2025

Budget 2025 brought an increase of €12 per week to the state contributory pension, bringing the maximum personal rate for those under 80 to €289.30 per week, and the maximum personal rate for those over 80 to €299.30.

The increase for a qualified adult has also been raised to €192.70 for an adult under 66, and €259.40 for an adult over the age of 66.

Social welfare rates

The rates of the fuel allowance and the living alone allowance were not changed in Budget 2025. They remain at €33.00 and €22.00 per week.

Pension Changes 2025

Upcoming changes to pensions in 2025 (aside from auto enrolment) are intended to update the standard fund threshold of private pensions, change the way that pension contributions are assessed, and increase PRSI contributions from the working age population in order to fund pensions of the future.

These include various changes, some of which have already begun and some of which will come on stream in 2025:

The Standard Fund Threshold is the single maximum capital value of all tax relieved pension benefits that an individual can draw down in his or her lifetime.

Prior to 2025, this was €2 million. However, from January 2025 there will be incremental increases bringing it up to €2.8 million in 2029, with regular increases planned from that point.

As the cost of living increases and wages have increased over time, this has meant that even average earners have found themselves reaching or close to the €2 million threshold, necessitating this increase in the SFT.

From January 2025, there will be a new way of calculating your entitlement to a state contributory pension.

Previously pension entitlements were calculated for workers using a Yearly Average Method, however from January 2025, this is being phased out in favour of a Total Contributions Approach.

This will be done in phases with the changeover to the new total contributions approach finalised by 2034.

The differences between the methods of calculating pension entitlements are complex but essentially, the method of calculation changes to one based on your total social insurance (PRSI) contributions over your working life rather than one based on your yearly average contributions.

The yearly average method has been used since 1961 but has given rise to anomalies. One of the main anomalies that arises is where someone starts work early in life then has a number of years off work, for whatever reason, and then returns to work. As they have gaps in their contributions, the average will be taken over a longer number of years and therefore be lower than someone who has been in continuous employment and with the same total number of PRSI contributions.

The advice remains that if you have ever worked and paid PRSI at any time, you should check your entitlement to a state contributory pension.

Pay related social insurance (PRSI) has begun to be increased in order to maintain a retirement age of 66 for those who choose to retire at this age and to fund pensions for the current working population in retirement.

Employee, employer, and self employed rates of PRSI will all increase each year, having begun in October 2024, until 2028.

  • 2024 0.1%
  • 2025: 0.1%
  • 2026: 0.15%
  • 2027: 0.15%
  • 2028: 0.2%

Contact the National Pensions Helpline

We hope that you found this guide to pension changes in 2025 useful. The National Pension Helpline can help you to plan for your retirement and discuss all aspects of pensions with you. 

Our website has loads of information on all things pension related and you can take a free 90 second online pension review to claim your free pension planning consultation with a central bank regulated advisor.

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