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Publication

PRSI - Pay Related Social Insurance

Published: 9 March 2020
From: Department of Employment Affairs and Social Protection Department of Employment Affairs and Social Protection

Introduction

Pay Related Social Insurance (PRSI) contributions go to the Social Insurance Fund (SIF) which helps pay for Social Welfare benefits and pensions.

Most employers and employees (between the ages of 16 and pensionable age, currently 66 years) pay social insurance (PRSI) contributions into the national SIF.

In general, the payment of PRSI is compulsory. The term ‘insurable employment’ is used to describe employment that is liable for PRSI contributions. Some people who have unearned income are also liable for PRSI.

The Social Insurance Fund consists of monies collected from people in employment. This money is then used to fund social insurance benefits. The investment account is a savings account that is managed by the Minister for Finance.

The Comptroller and Auditor General is responsible for ensuring that the accounts are kept in order and reports are made to the Houses of the Oireachtas. The Comptroller and Auditor General is responsible for ensuring that the accounts are kept in order and reports are made to the Houses of the Oireachtas.

The Social Welfare (Consolidation) Act, 2005 makes provision for the carrying out of actuarial reviews of the Social Insurance Fund at five yearly intervals.

Following a competitive tender process, KPMG was appointed by the Department of Employment Affairs and Social Protection to carry out the fourth Actuarial Review of the SIF with an effective date of 31 December 2015, which was published in October 2017. The purpose of the Review serves to meet the outlined legislative requirement and to inform both short-to-medium-term and long-term policy development in relation to the social insurance system generally. The most current Review builds on the findings of the 2000, 2005 and 2010 Reviews in relation to social insurance based benefits and pensions, and provisions for 2020 Review are under way.

To view the Actuarial Review of The Social Insurance Fund 31 December 2015, please follow click here

PRSI Contribution Classes

PRSI contributions are divided into different categories, known as ‘PRSI classes’. This determines the rate of PRSI you are liable to pay, or your ‘rate of contribution’.

The class and rate of contribution you pay is determined by the nature of your employment and your weekly earnings.

For example, a person employed in a supermarket earning less than €38 per week will be insured under Class J. If that person earned over €38, they would probably be insured under Class A. Most employees are liable to pay Class A PRSI.

There are a variety of PRSI classes (A, B, C, D, E, H, J, K, M, S, and P) and subclasses (such as A1, J0, CX, etc.).

The class of PRSI you pay determines the social welfare benefits for which you may qualify. The range of benefits include the likes of the State Pension (Contributory), Jobseeker’s Benefit and Illness Benefit, for example. An entitlement to a benefit is dependent on a person meeting specific criteria.

To find out more about the different PRSI classes, how much PRSI you will pay i.e. your ‘rate of contribution’ and the benefits you may be entitled to, please refer to the Current rates of social welfare payments (SW19)

More detailed information about PRSI classes can be found here

PRSI for Employees

With very few exceptions:

  • all employees, whether full-time or part-time, earning €38 or more per week, and
  • self-employed workers with an income of €5,000 a year or more

Who are between the ages of 16 years and pensionable age (currently 66 years) pay social insurance (i.e. PRSI) contributions into the national Social Insurance Fund.

Employers of the above employees are liable for PRSI contributions on the reckonable earnings of the employee, including that of notional pay.

PRSI contributions are payable on the following basis:

  • At the appropriate rate for an employee on all reckonable earnings (including notional pay).
  • The employer's share at the appropriate rate on the reckonable earnings of the employee (including notional pay).
  • The employer's contribution for classes A and H includes a 1% National Training Fund Levy.

Employees covered under Classes A, B, C, D and H with reckonable earnings of not more than €352 do not pay PRSI for that week. However, the employer's share of PRSI remains payable as normal. Employees continue to be covered for the benefits appropriate to their PRSI Class.

Once earnings exceed €352 both Employee and Employer PRSI is charged.

Reckonable earnings for PRSI purposes are gross pay, including notional pay (or benefit in kind) if applicable, plus superannuation and permanent health insurance contributions made by an employee. These payments may be allowable for income tax purposes.

Employees usually pay PRSI in the country where they are working. When employees work abroad, Ireland has long standing agreements with the EU Member States and it has bi-lateral agreements with some non-EU countries, to clarify the country in which PRSI should be paid.

PRSI for Employers

As an employer, you record and pay PRSI contributions for all employees aged 16 and over.

Revenue collects PRSI contributions in most cases through the Pay-As-You-Earn (PAYE) income tax system and the self-assessment system for the self-employed.

In some unusual employment arrangements, employers may not have access to the PAYE system to return PRSI for their employees. When this is the case, PRSI is collected (also on a pay related basis) and is paid directly to the Department of Employment Affairs and Social Protection under a special collection system.

Further detail outlining special collection arrangements is available at: Operational Guidelines: PRSI - PRSI Special Collection System

PRSI for Self-Employed

The class of PRSI contribution paid by self-employed people is Class S.

All self-employed people aged between 16 years and pensionable age (currently 66 years) with earnings more than a specified amount (currently €5,000 per annum) must pay PRSI.

This PRSI contribution is either 4% of all your reckonable income, or an annual minimum charge of €500, whichever is greater. Under the self-assessment system, PRSI is paid directly to Revenue together with any other amount due.

With regards to insurable self-employment, persons aged over 16 and under current pensionable age of 66 years are compulsorily insured as self-employed contributors if:

  • they work under a contract for services, and
  • have reckonable income (where tax is payable at Schedule D)

or

  • have reckonable emoluments (where tax is payable at Schedule E) which is at least €5,000 per annum.

For more information, please refer to the SW74: A Guide to PRSI for the Self-Employed

PRSI and Family Employment

There are some exceptions to the general rules of the payment of PRSI contributions and these apply in the case of certain 'Family Employment'. This term is used to describe a situation in which a self-employed sole trader/businessperson either employs, or is assisted in the running of the business, by a spouse/civil partner or by other family member(s).

Full information on Family Employment may be found at PRSI and Family Employment

Credited Contributions

If you are an employee, PRSI deductions are made from your earnings each week. If you are sick, unemployed or retire early, for example, PRSI deductions may not be made. However, you may qualify for credited contributions or 'credits' instead. These credits are similar to the PRSI contributions which you pay while in employment.

Credits are usually awarded at the same rate as your last paid PRSI contribution. For example, if you paid Class A PRSI in your last employment and you are eligible for credits, they will protect your entitlement to Class A benefits.

The primary purpose of the PRSI credited contributions scheme (credits) is to protect social welfare benefits and pensions of employees, by covering gaps in insurance where you are not in a position to pay PRSI, during periods of unemployment or illness for example. These credits protect your entitlement to benefits and pensions in the future. For the most part, they are linked to having an underlying entitlement to a social welfare payment while temporarily detached from the labour force or having entitlement to statutory leave e.g. parental or maternity leave.

To be entitled to PRSI credits, you must previously have worked and paid PRSI contributions. If, at any stage in your working life, you have no PRSI contributions paid or credited for 2 full consecutive tax years, you cannot get credits until you return to work and pay PRSI contributions for at least 26 weeks. Contributions paid at Class J or Class S cannot be used to satisfy this condition.

For more information, please refer to the SW 12 Credited Contributions booklet.

Voluntary Contributions

If you are no longer an employee, or if you are self-employed and you are no longer making compulsory PRSI contributions you can opt to make Voluntary Contributions. If you are getting a social welfare payment or signing for credits you may get credited contributions which will also keep your social insurance record up to date.

Voluntary Contributions can help maintain your social insurance record and help you to qualify for social insurance payments in the future. They cover long-term benefits such as pensions. They do not cover short-term benefits for illness, maternity or jobseekers.

You can choose to pay Voluntary Contributions (if you are under the current pensionable age of 66 years and meet the other conditions) if you:

  • Are no longer covered by compulsory PRSI in Ireland
  • Are no longer covered by PRSI on a compulsory or voluntary basis in another EU country

For more information, please refer to the SW8 Voluntary Contributions booklet.

Scope Section

The functions of Scope Section are to give decisions and information on the insurability of employment in accordance with the law.

Scope Section deals with employers and employees, or their representatives, who may apply to have an employment investigated to make sure that the correct class of PRSI is applied. Social Welfare Inspectors may also identify cases during the course of their inspection work which warrant investigation by Scope Section. Insurability cases may also arise during the course of claims processing. The Department of Business, Enterprise and Innovation, whose Redundancy and Insolvency legislation is tied into insurability under the Social Welfare Acts, may also request confirmation of insurability. Where there is a doubt, the case will be formally decided by a Deciding Officer (DO) in Scope Section.

Contact Details

PRSI Policy

PRSI Policy Section Contacts

Address:
PRSI Policy, Department Employment Affairs & Social Protection, Áras Mhic Dhiarmada, Store Street, Dublin 1

Advance notice of PRSI changes for computer users 2020

Download

PRSI contribution rates and user guide 2020 (SW14)

The SW 14 ‘PRSI Contribution Rates and User Guide 2020 guide will be issue shortly

Download