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Social Welfare Code

Dáil Éireann Debate, Tuesday - 7 November 2017

Tuesday, 7 November 2017

Questions (1189)

Jim O'Callaghan

Question:

1189. Deputy Jim O'Callaghan asked the Minister for Employment Affairs and Social Protection if the PRSI on non-PAYE earnings of employed persons has been deemed as a new class K9 rather than class S which would qualify the persons for some benefits including maternity benefit; and if she will make a statement on the matter. [45822/17]

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Written answers (Question to Employment)

All workers pay PRSI on their earnings from employment or self-employment. In the case of individuals who more than one income source, PRSI is generally paid on all forms of income.

Prior to 2013, exemptions from PRSI applied to the self-employed income of specific groups. These exemptions have since been abolished.

In 2013, modified rate employees contributors (i.e. civil and public servants recruited prior to 1995) who also have earned self-employed income or unearned income over €5,000 became liable, for the first time, to pay PRSI on that income. This income is liable at the class K rate of 4% and recorded as K9. Entitlement to social insurance benefits does not accrue from the payment of this charge.

Since 2014, all employees (in the public and private sector) and occupational pensioners under 66 years, with unearned income only, are liable to pay Class K PRSI on that unearned income where it exceeds €5,000. Class K PRSI is charged at 4% and recorded as class K9 and does not give access to social insurance entitlements based on the payment of the charge. Prior to 2014 these employees were exempt from PRSI on such unearned income, which includes rental and investment income, dividends and interest on deposits. This provision applies to all employees, regardless of the PRSI class they pay on their employment income.

All workers pay PRSI on their earnings from employment. If an employee has income from self-employment e.g. taxi driver, farmer etc. he or she also pays PRSI as a self-employed contributor on the profits from, say, the taxi driving plus any other unearned income he or she might have e.g. rental income. The measure to charge class K PRSI on employees who were previously exempt was introduced to ensure equity by ensuring that PRSI is chargeable, regardless of the source of the employee’s additional income.

Employees paying class K PRSI on unearned income can generate entitlement to social insurance benefits based on PRSI they pay on their employment income. Class A employees with unearned income already have access to the full range of social insurance benefits, because of their PRSI class A status. Modified rate employees have access to a limited range of social insurance benefits but have entitlement to generous Exchequer-funded occupational pensions.

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