Reviewed by the advisory team at Greenway Financial Advisors Ltd. · Dublin · Updated October 2026
Updated for 2026: auto-enrolment started on 1 January 2026, the Standard Fund Threshold is €2.2 million for 2026 and rises by €200,000 a year to €2.8 million in 2029, and the exemption for older one-member pension arrangements ended on 21 April 2026.
Finance Act 2024 brought in key changes to pension rules that took effect from 2025 and 2026. They affect Personal Retirement Savings Accounts (PRSAs), employer contributions and the Standard Fund Threshold, and they came alongside auto-enrolment for employees.
For company directors, these updates set clear limits on contributions, introduce new tax treatments for excess contributions, and provide guidelines to keep retirement savings closely aligned with income.
Overall, the new rules are designed to make pensions fairer and more manageable for both employees and employers.
In this guide, we go through what company directors need to know in 2026.
Check your retirement income and the tax you could save with our pension calculator, or talk it through with an adviser.
6 pension rules company directors need to know in 2026
Here are the six rules that matter most for company directors this year.
1. Employer Contributions to PRSAs Restricted to 100% of Salary
One of the most notable changes is the new restriction on employer contributions to PRSAs, limiting them to a maximum of 100% of the employee’s or director’s annual salary. Under the new rule, employers cannot contribute more than the equivalent of the individual’s yearly salary to their PRSA.
Example:
If a director earns €50,000 per year, the employer can contribute up to €50,000 to their PRSA. Any contribution above this amount is not permitted, ensuring that contributions align closely with salary levels.
This new restriction provides clearer guidance on contribution limits and prevents overly large pension contributions that exceed an individual’s earnings, helping to keep contributions fair and balanced.
2. Excess Contributions Now Count as Benefit in Kind
Under the new rules, any employer contributions that exceed the 100% salary restriction will be taxed as a Benefit in Kind.
This means that any excess contributions will be considered as income for the employee or director and taxed accordingly, which could lead to an increased tax bill.
Example:
If an employer contributes €60,000 for a director earning €50,000, the additional €10,000 would be treated as income and subject to benefit-in-kind tax.
This new rule places a clear limit on contributions, which is important for employers to remember to avoid any unintended tax costs for both themselves and their employees.
3. Limited Tax Deductions for Employers Based on 100% Salary Rule
Employers are still eligible for tax deductions on their PRSA contributions; however, the tax deduction will only apply up to the 100% salary limit. Contributions beyond this salary limit won’t be eligible for tax deductions.
So, this means that any over-contributions could not only result in a higher tax bill for employees but could also reduce potential tax relief benefits for the employer.
4. Changes to the Standard Fund Threshold
The Standard Fund Threshold is the maximum value your pension savings can reach before an extra tax charge applies.
The Standard Fund Threshold impacts those with higher earnings or larger pension savings, as any amount exceeding this threshold may be subject to tax charges.
It is rising by €200,000 a year: €2.2 million for 2026, €2.4 million for 2027, €2.6 million for 2028 and €2.8 million for 2029.
Planning Ahead:
For high earners or those nearing the Standard Fund Threshold, it’s advisable to consult with a financial advisor to avoid unexpected tax consequences. Being proactive can help individuals maximise their retirement savings within the allowable limits.
5. Auto-Enrolment is now live
Auto-enrolment started on 1 January 2026. Employees aged 23 to 60 who earn €20,000 or more a year, and who aren’t already in a workplace pension, are automatically enrolled in MyFutureFund.
This system will require eligible employees to be automatically enrolled in a pension scheme, ensuring that both employers and employees contribute to retirement savings.
Auto-enrolment is part of a national effort to increase pension participation in Ireland, particularly among those who aren’t currently saving for retirement.
For the first three years, the employee and the employer each pay 1.5% of salary, and the State adds 0.5%. Contributions rise in steps to 6% each by year 10. Employer and State contributions are calculated on salary up to €80,000. If your company has employees who aren’t in a pension scheme, you’re already making these contributions.
Read our more complete guide to auto enrolment here
6. One-member pension arrangements: the April 2026 deadline
Many company directors hold an executive pension set up as a one-member arrangement. Under the 2021 pension regulations, arrangements set up before 22 April 2021 were exempt from many of the new governance requirements. That exemption expired on 21 April 2026.
The Pensions Authority has said that trustees who don’t meet their obligations may be prosecuted, and that some one-member arrangements may no longer be viable. If you have an executive pension and haven’t reviewed it this year, now is the time. Call us on 01 853 2727.
When Will These Changes Take Effect?
The rules are now in place for max pension contributions as part of salary and benefit in kind charges.
The Standard Fund Threshold rose to €2.2 million in 2026 and will reach €2.8 million in 2029.
Auto-enrolment started on 1 January 2026.
The exemption for one-member arrangements set up before 22 April 2021 expired on 21 April 2026.
Budget 2027 did not announce any changes to these rules, but the Finance Bill is expected to change how defined benefit pensions are valued against the Standard Fund Threshold from 1 January 2027. We’ll update this guide when it’s published.
What Actions Should Employers and Employees Take?
The new rules affect both companies and individual savers, so here’s a guide to the next steps for everyone:
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For Employers:
Review your current pension contributions to ensure they follow the new 100% salary restriction. Exceeding this limit could result in unintended tax charges for both your business and your employees. By adjusting your contributions now, you can ensure compliance and avoid additional tax costs.
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For Employees and Directors:
Take note of how these new limits could impact your retirement savings. If you’re close to the salary restriction, it’s a good idea to plan ahead to prevent unexpected tax bills. Setting a clear retirement savings goal that aligns with the new contribution limits will help you make the most of your PRSA contributions.
- For High Earners and Those Nearing the Standard Fund Threshold:
If your pension savings are nearing the Standard Fund threshold, consider seeking financial advice. A pension advisor can provide guidance on how to maximise your savings within the new limits and help avoid any additional tax penalties.
- For Everyone:
Keep an eye on updates regarding auto-enrolment, as this will impact pension savings for a wide group of employees across Ireland. Employers, in particular, will need to prepare for this new system to ensure that all eligible employees are enrolled and that contributions are handled according to the new guidelines.
Get your director pension reviewed
We’ll check your contributions against the 2026 limits and make sure your pension arrangement is compliant. Call 01 853 2727 or book a free initial meeting.
Summary of the 2026 pension rules
The pension rules for 2026 bring significant changes for company directors, from capped employer contributions to Personal Retirement Savings Accounts and a rising Standard Fund Threshold to auto-enrolment and new requirements for one-member arrangements.
However, these updates aim to simplify and improve the fairness of retirement savings, but navigating these changes can be challenging. To stay compliant and make the most of these new rules, it’s essential to plan ahead and understand your options fully.
Furthermore, for expert guidance on how these changes may impact your retirement plans, reach out to Greenway Financial. Our team is here to help you secure a solid financial future under the new regulations.
FAQ
Can employers contribute more than an employee’s annual salary to their PRSA?
No. Since 1 January 2025, employer contributions to an employee’s or director’s PRSA are capped at 100% of their salary for the year.
This means that if an individual earns €50,000 per year, the employer can contribute up to €50,000 to their PRSA—no more.
This new limit ensures that contributions remain directly tied to the employee’s salary level, setting clear boundaries for retirement savings
What happens if an employer’s contribution to a PRSA exceeds the salary limit?
If an employer contributes more than the allowed 100% of an employee’s or director’s salary to a PRSA, the excess amount will be treated as a Benefit in Kind.
This means the extra contribution will be taxed as income for the employee or director.
For example, if the employer contributes €60,000 for an employee earning €50,000, the additional €10,000 will be taxed as part of the employee’s income.
Can employers claim a tax deduction for contributions above an employee’s salary?
No, employers can only claim a tax deduction on PRSA contributions up to the 100% salary limit.
If an employer contributes more than the employee’s annual salary, the company won’t be able to get a tax break on the extra amount.
Additionally, the employee will be taxed on the excess contribution, leading to a higher tax bill for that overcontribution.
What is the Standard Fund Threshold, and how might changes affect me?
The Standard Fund Threshold is the maximum amount you can build up in pension savings before an extra tax charge applies. It is rising by €200,000 a year from 2026 to 2029.
The Standard Fund Threshold is €2.2 million for 2026 and €2.4 million for 2027. It reaches €2.8 million in 2029.
If your pension savings are nearing the Standard Fund Threshold, it’s a good idea to monitor updates and plan ahead to avoid any unexpected tax charges.
What is auto-enrolment, and how will it affect employers and employees?
Auto-enrolment is the national workplace pension scheme, MyFutureFund. Since 1 January 2026, eligible employees who aren’t already in a workplace pension are automatically enrolled.
Both the employer and the employee will be expected to contribute to this pension.
This initiative aims to expand pension coverage across Ireland, especially for people who currently aren’t enrolled in any retirement scheme.
The employee and employer each pay 1.5% of salary for the first three years, and the State adds 0.5%.
Auto-enrolment started on 1 January 2026.
Read our more complete guide to auto enrolment here
When will the new pension changes take effect?
All changes are now in effect or have dates when they come into effect.
PRSA max contributions 100% of salary – in effect.
Standard Fund Threshold: €2.2 million for 2026, rising €200,000 a year to €2.8 million in 2029.
Auto-enrolment – First deductions from January 2026
General information for the 2026 tax year. Not personal advice. Sources: Revenue (Personal Retirement Savings Account and retirement lump sum pages), Finance Act 2024 section 13, the Pensions Authority (23 March 2026) and Citizens Information (auto-enrolment).