Since January 2011, public office holders pay PRSI at the Class K rate of 4% on their income as an office holder, provided that income exceeds €5,200 a year.
All public office holders are liable to pay the contribution regardless of age. Payment of Class K PRSI does not establish any social insurance entitlements.
Prior to the introduction of the Class K charge, all public office holders were exempt from PRSI on their income as a public office holder. Then, as now, they could establish and protect their social insurance entitlements based on their non-office holder activities or through the payment of Voluntary Contributions.
The Class K PRSI charge for public office holders was introduced on the basis that public office holders were a group who unlike most self-employed and employees did not pay a 4% contribution and so has a lower marginal rate of income tax/USC and PRSI.
I am currently examining whether changes are required to the basis on which class K is charged for councillors. There are a number of possible approaches including removing the Class K charge from councillor or bringing them into cover under Class S in line with the self-employed generally.
There are pros and cons to each approach. In particular, any changes to the current Class K arrangements will need to take into account the social insurance and occupational pension position of office holders generally.
I will be consulting with relevant Ministers on this issue. I also intend meeting with the representative body for councillors to discuss the options available.