PRSI credited contributions are an integral part of the social insurance system. The primary purpose of PRSI credits is to secure social welfare benefits and pensions of insured workers by covering gaps in insurance where workers are not in a position to pay PRSI, such as during periods of unemployment, illness or caring.
To qualify for social insurance credits, a person must have previously worked and paid PRSI, must have paid PRSI in the last two full contribution years and must show evidence of the underlying contingency giving rise to the credited contribution, such as illness, unemployment or maternity. In addition, credited contributions are provided in particular circumstances for periods of studying or training or when undertaking work as a volunteer development worker.
Separate arrangements have been put in place to protect the long-term social insurance pensions of men and women who spend periods outside the workforce for caring purposes. From 6 April 1994, periods spent out of the workforce caring for children up to the age of 12 years, or incapacitated people, are disregarded when calculating pension entitlements, subject to a maximum period of 20 years. In addition, the homemakers scheme provides for credits to be awarded for the balance of the tax year in which the person leaves the workforce and from the beginning of the tax year to the date of re-entering employment.
An examination of the provisions of the homemakers scheme is being undertaken as part of the review of eligibility conditions for old age contributory pensions. I expect to receive recommendations on foot of that review later this year.
A scheme providing the option of purchasing voluntary PRSI contributions also exists. It allows previously insured workers to maintain their entitlement to long-term benefits such as old age pension. To qualify as a voluntary contributor, a person must be under 66 years, have ceased to be compulsorily insured, have a minimum number of paid contributions and apply within 12 months from the end of the contribution year in which he or she last paid contributions on a compulsory basis.