Most employers and employees (over 16 years of age) in Ireland pay social insurance contributions into Ireland’s national Social Insurance Fund. In general, the payment of social insurance is obligatory.
Ireland’s Social Insurance Fund is made up of a current account and an investment account managed by the Minister for Social and Family Affairs and the Minister for Finance, respectively. The current account consists of money collected from people in employment. This money is then used to fund social insurance payments. The investment account is a savings account 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.
As well as paying into the Social Insurance Fund, you will also have to pay what is called the Health Contribution, which is charged at 2% on all income. The Health Contribution is not paid into the Social Insurance Fund. This money is collected from your wages and paid to the Department of Health and Children to fund health services in Ireland.
The Health Contribution
In addition to payment of social insurance, you also pay a Health Contribution. Since January 2007, the Health Contribution is paid at the rate of 2.5% on earnings over €100,100 and 2% on all earnings up to €100,100.
The following people do not pay the Health Contribution:
- People earning less than €500 gross per week
- People who have a medical card
- Those who are receiving One-Parent Family Payment, Deserted Wives Benefit/Allowance, the Widow’s/Widower’s Contributory Pension and the Widow’s/Widower’s Non-Contributory Pension.
- It is important that you notify your employer if you are receiving any of these benefits or services as you may already be paying the Health Contribution. If you have paid the Health Contribution and think you should not have, you should contact your local tax office to find out how to reclaim the money.
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 local social welfare office in order to claim social welfare payments.
If you are an employee, your social insurance contributions are deducted by your employer and collected by the Revenue Commissioners. In fact, the law makes your employer responsible for PRSI, though you may have to pay an ’employee’s share’. 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 and Family Affairs.
Social insurance rates
For people in employment in Ireland, social insurance contributions are divided into different categories, known as classes or rates of contribution. The type of 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 then €38 per week will be insured under Class J. If that person earned over €38, they would probably be insured under Class A. In fact, most employees in Ireland pay Class A PRSI. This class of contribution may entitle you to the full range of social insurance payments that are available from the Department of Social and Family Affairs, if you meet the qualifying criteria.
The other classes of social insurance are Classes C, D, B, E, H, J, S, K, M, and P. If you are insured under one of these classes, you are paying insurance at a lower rate than Class A contributors, which means that you are not entitled to the full range of social insurance payments. This is because you are paying less towards social insurance than a Class A contributor.
The amount of PRSI you pay will depend on your earnings and the class you are insured under.
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 and Family Affairs 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 your Irish contributions and contributions paid in other states while working abroad 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 can miss out paying a PRSI contribution for the week you are not working.
All records of your insurance contributions are kept and managed by the PRSI Records section in the Department of Social and Family Affairs. The Department is responsible for the payments made as a result of your social insurance contributions.
In order to check your social insurance record, you will need your Personal Public Service Number (PPSN). This number is a unique identification number that you need when dealing with state agencies.
Social insurance payments and benefits
There is a wide range of benefits available to people who have paid social insurance. Entitlement to these benefits depends on a number of conditions other than the social insurance contribution requirement. The social insurance qualifying criteria vary, depending on what payment you are applying for. In general, the following will be examined:
- What class/classes of social insurance you have paid;
- The age when you started making social insurance contributions (this applies in the case of State Pensions);
- How many 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;
- A yearly average of the number of your contributions in the case of some pensions;
The social insurance payments that are available include:
- Jobseeker’s Benefit
- Illness Benefit
- Maternity Benefit
- Adoptive Benefit
- Health and Safety Benefit
- Invalidity Pension
- Widow’s/Widower’s Contributory Pension
- Guardian’s Payment (Contributory)
- State Pension (Contributory)
- State Pension (Transition)
- Bereavement Grant
- Treatment Benefit
- Occupational Injuries Benefit
- Carer’s Benefit.