Finance Bill Update: Auto-Enrolment and SFT
The Minister for Finance, Jack Chambers TD, has published Finance Bill 2024, following approval by Government.
The Finance Bill 2024 implements the taxation changes announced on Budget Day as well as introducing some necessary administrative and technical changes.
We have reviewed Finance Bill 2024 and broken down the key proposed changes that may have an impact on you.
Standard Fund Threshold (SFT)
- The SFT defines the maximum tax-efficient pension fund in Ireland. It is set to rise to €2.8 million by 2029, with the threshold rising by €200,000 per annum from 2026 – 2029.
- From 2030 onwards, the threshold is then set to rise in line with an applicable level of growth each year (yet to be determined).
Chargeable Excess Tax (CET)
- No changes to the rate of CET applicable on claims above the Standard Fund Threshold (SFT) limit were detailed in the Finance Bill which will remain at 40% for the time-being.
- No change was indicated to being able to offset the20% tax on a retirement lump sum between €200,000 - €500,000 against CET.
We may see a change to both of the above once the first SFT increase happens in 2026.
Auto-Enrolment (AE)
The Minister for Social Protection, Heather Humphries TD, has signed the commencement order for the Automatic Enrolment Retirement Savings System, named “My Future Fund”, with the first enrolments set to begin on 30 September 2025.
Additionally, Government approval has also been granted for the National Automatic Enrolment Retirement Savings Authority (NAERSA) to be in place from 31 March 2025. This will ensure the oversight of the necessary systems and arrangements before the administration of the AE scheme.
The Finance Bill 2024 provided for the following tax provisions:
- Employee contributions to the AE scheme will not be eligible for tax relief (as the Government is making direct contributions).
- Employers will be entitled to tax relief for their contributions.
- The growth of the AE funds will be exempt from taxation.
- Retirees will be subject to taxation on the annuities payable from the AE funds.
- Individuals may withdraw a lump sum of up to 25% of the fund, which will be tax-free up to €200,000; a tax rate of 20% will apply to the next €300,000, with a 40% rate on any amount exceeding that threshold.
Links to gov.ie publication of Finance Bill 2024 as well as additional and further information on Budget 2025 is listed below:
Finance Bill 2024:
Budget 2025: