S.I. No. 600 of 2015


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S.I. No. 600 of 2015

Social Welfare (Consolidated Contributions and Insurability) (Amendment) (No. 2) (Modifications of Insurance) Regulations 2015

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

PRSI Credit

As part of Budget 2016, the introduction of a new PRSI Credit was announced, to reduce the amount of PRSI charged for lower paid employees paying classes A, H and E once they become liable to pay PRSI at weekly earnings of €352.01, with effect from 1 January 2016.

For classes A and H the maximum PRSI Credit is €12 and applies between earnings of €352.01 and €424. This maximum Credit applies at weekly earnings of €352.01. For weekly earnings in excess of €352.01 the Credit is reduced by one-sixth of the earnings in excess of €352.01. Once weekly gross earnings reach €424, the tapered Credit is exhausted and the PRSI rate (4% for class A and 3.9% for class H) applies without the benefit of the Credit.

For class E the maximum PRSI Credit is €10 and applies between earnings of €352.01 and €412. This maximum Credit applies at weekly earnings of €352.01. For weekly earnings in excess of €352.01 the credit is reduced by one-sixth of the earnings in excess of €352.01. Once weekly gross earnings reach €412, the tapered Credit is exhausted and the 3.3% PRSI rate applies without the benefit of the Credit.

Section 10 of the Social Welfare and Pensions Bill 2015 provides for the necessary amendments of the Social Welfare Consolidation Act 2005 in respect of persons insurable at the class A rate of PRSI.

These Regulations provide for the necessary legislative amendments to secondary legislation in the case of employed contributors insurable at the class E rate (Ministers of religion employed by the Church of Ireland Representative Body) and the class H rate (non-commissioned officers and enlisted personnel of the Defence Forces).

Correction of errors in Articles 86 and 87 of the "Principal Regulations"

These Regulations also retrospectively correct errors in the "Principal Regulations" that is the Social Welfare (Consolidated Contributions and Insurability) Regulations 1996 to 2015.

Article 86 of the Principal Regulations was not amended to take account of the reduction in the Class E employer PRSI rate from 8.12% to 6.87% announced in Budget 2002 and effective from 1 March 2002. However, the lower (correct) rate of class E employer PRSI has been applied since 2002.

Article 87 of the Principal Regulations was not amended to take account of the reduction in the Class H employer PRSI rate from 10.6% to 9.35% announced in Budget 2002 and effective from 1 March 2002. However, the lower (correct) rate of class H employer PRSI has been applied since 2002.

In addition, article 87 was incorrectly amended by way of the Social Welfare (Consolidated Contributions and Insurability) (Amendment) Regulations 2010 (S.I. No. 684 of 2010) to provide with effect from 1 January 2011, a 4% PRSI charge on Class H employees earning over €1,443 per week. This change in rate was appropriate for employees insurable at classes B, C and D who otherwise paid employee PRSI at the rate of 0.9% but it was not appropriate for those insurable at class H who pay employee PRSI at the rate of 3.9%. However, this change in PRSI rate from 3.9% to 4% was never implemented by the employer (the Department of Defence) as it operated on the basis of the Budget announcement which (correctly) did not provide for an increase in the PRSI rate for class H employees.

Last modified:29/12/2015