Most employers and employees (over 16 years of age and under 66) pay social insurance (PRSI) contributions into the national Social Insurance Fund. In general, the payment of social insurance is compulsory. The term ‘insurable employment is used to describe employment that is liable for social insurance contributions. Some people who have unearned income are also liable for PRSI.
The Social Insurance Fund is made up of a current account and an investment account managed by the Minister for Social Protection and the Minister for Finance, respectively. The current account consists of monies collected from people in employment. This money is then used to fund social insurance payments. 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.
Social insurance classes
Social insurance contributions are divided into different categories, known as classes or rates of contribution. The class and rate of contribution you pay is determined by the nature of your work. 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 pay Class A PRSI.
People getting COVID-19 payments – either the COVID-19 Pandemic Unemployment Payment or Revenue’s wage subsidy schemes (including the Employment Wage Subsidy Scheme and the Employer COVID-19 Refund Scheme) – will be awarded PRSI contributions at the class they were paying immediately before they were laid off, while they are getting the relevant payment or scheme.
Budget 2024: PRSI increase
It was announced in Budget 2024 that all PRSI contribution rates will increase by 0.1% from 1 October 2024.
Work and social insurance
If you are in employment, the amount of social insurance you pay depends on your earnings and the type of work you do. Your social insurance contributions in Ireland are referred to as PRSI (Pay Related Social Insurance). Sometimes, you will hear people describe their PRSI contributions as stamps. This term dated from before 1979 when employers would literally stamp a card each week of employment. That card was then brought to a social welfare local office when claiming social welfare payments.
If you are an employee, your PRSI contributions are deducted by your employer and collected by Revenue under the PAYE (Pay As You Earn) system. In fact, the law makes your employer responsible for PRSI, though you may have to pay an 'employee's share'. Find out more about paying social insurance.
If you are self-employed, you pay Class S social insurance contributions directly to the Revenue Commissioners. The Revenue Commissioners then pay the money into the Social Insurance Fund. Revenue send a record of the contributions you have paid to the Department of Social Protection.
You are not liable for PRSI contributions after the age of 66 - this is the case whether or not you are employed or self-employed. If you do not have enough contributions at age 66, you cannot add to them after that.
Unearned income and social insurance
Unearned income from rents, investments, dividends and interest on deposits and savings is liable to PRSI at 4% since 1 January 2014. People aged under 16 and over 66 are exempt from PRSI and are not liable for the new charge. (In 2013 people paying modified rate contributions (mainly civil and public servants recruited before April 1995) became liable to PRSI of 4% (paid at Class K) on earned self-employed income and any unearned income (from 1 January 2013) and on self-employed income which comes under PAYE (from 28 June 2013).
Anyone with unearned income of over €5,000 is considered to be a 'chargeable person' and is liable to pay the PRSI charge at 4% on all their unearned income. They pay the charge under Revenue's self-assessment system (Pay and File). The new PRSI charge is paid at Class K and does not entitle the person to any social insurance benefits.
PAYE tax payers who are not considered 'chargeable persons' by Revenue are not liable for the new PRSI charge. A person is not a 'chargeable person' if their income from non-PAYE sources is less than €5,000 and this income is taxed under the PAYE system. (Generally such income is taxed by reducing a person’s tax credits to account for tax payable. However if you have paid Deposit Interest Retention Tax (DIRT) on your non-PAYE income you are not required to pay further income tax on this income.)
Employing family members and PRSI
Most employees are liable to pay PRSI. Exceptions to this general rule apply in the case of certain family employment. This term is used to describe a situation in which a self-employed sole trader either employs, or is assisted in the running of the business by a specified family member(s). If the business does not operate on a sole trader basis - for example if it is a limited company or a partnership - it is not family employment.
The following categories of family employment are insurable under the social insurance system in exactly the same way as employments that have no family connection:
- If you are employed as an employee by a prescribed relative and the employment is not related to a private dwelling house or a farm in or on which both you and the employer live (PRSI Class A or Class J applies).
- If you are employed as an apprentice by a prescribed relative (even if the apprenticeship employment relates to a private dwelling house or a farm in or on which both you and the employer resides) there must be a registered contract of apprenticeship involved (PRSI Class A or Class J applies).
- If you assist your spouse or civil partner in the running of the family business but are not an employee (PRSI Class S applies)
A prescribed relative is a parent, grandparent, stepparent, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother, or half-sister.
The following categories of family employment are the exceptions that are not covered by the social insurance system:
- A spouse or civil partner employed by their self-employed spouse or civil partner
- If you are employed as an employee by a prescribed relative and the family employment relates to a private dwelling house or a farm in or on which both you and the employer reside
- If you assist or participate in the running of the family business but not as an employee. (For example, a son/daughter who is attending full-time education who participates in the business after school hours but is not an employee.)
Before 2014, spouses and civil partners of self-employed sole traders who worked in the business (either as an employee or in another capacity) were not liable for PRSI. Since 2014, certain spouses and civil partners of self-employed sole traders can pay PRSI and therefore establish entitlements to benefits in their own right. People affected by this change are people who work in their self-employed spouse or civil partner’s business doing similar or ancillary (supporting) tasks but who are not business partners or employees. The €5,000 income threshold applies to these spouses or civil partners in the same way as other self-employed people, so if a spouse or civil partner earns less than this threshold they are not liable to pay PRSI.
If two or more family members (including spouses or civil partners) operate a business as a partnership and share the profits each business partner is insurable as a self-employed contributor (provided they earn over the €5,000 threshold).
Points to note:
PRSI Class M is used to record situations in which there is no liability to social insurance.
Subject to certain conditions, if you cease to be covered by compulsory PRSI you may opt to become insured on a voluntary basis and pay voluntary contributions.
Social insurance payments and benefits
A wide range of benefits are available to people who have paid social insurance. Your entitlement to these benefits depends on a number of conditions as well as the social insurance contribution requirement. The social insurance qualifying criteria vary, depending on what payment you are applying for. In general, when you apply for a social insurance payment the following will be examined:
- What class or classes of social insurance you have paid
- Your age when you started making social insurance contributions (this applies in the case of State pensions)
- The number of paid and/or credited contributions you have made since entering insurable employment
- The number of contributions paid and/or credited in the relevant tax year before the benefit year in which you make the claim. The relevant tax year is the second last complete tax year before you make a claim.
- The yearly average number of contributions in the case of some pensions
The social insurance payments available include:
- Jobseeker's Benefit
- Jobseeker's Benefit (Self-Employed)
- Illness Benefit
- Maternity Benefit
- Paternity Benefit
- Adoptive Benefit
- Parent's Benefit
- Health and Safety Benefit
- Invalidity Pension
- Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension
- Guardian's Payment (Contributory)
- State Pension (Contributory)
- Treatment Benefit
- Occupational Injuries Benefit
- Carer's Benefit
Maintaining your social insurance
It is important that you maintain, as far as possible, your social insurance record. If you leave the workforce, it is important that you keep your social insurance record active. To protect your social insurance record and keep it active, you should contact the Department of Social Protection to check if you can get credited contributions. It may be possible in certain circumstances for you to make voluntary contributions. You can also add Irish contributions and contributions paid in certain other states while working abroad together to qualify for a social insurance payment.
If you are a part-time worker or in a job-sharing work arrangement you should be aware of how your pattern of work can affect your social insurance record. This is particularly relevant if you are part-time or job-sharing with a week off as part of your work pattern because you may miss out paying a PRSI contribution for the week you are not working. Find out more about part-time and job-share workers and social insurance contributions.
All records of your insurance contributions are kept and managed by the PRSI Records section in the Department of Social Protection. The Department is responsible for the payments made as a result of your social insurance contributions.
You can also request a copy of your complete PRSI record online at MyWelfare.ie. If you have difficulty using this online facility, you can contact the PRSI Records customer service team for assistance (see 'Where to apply')