Dáil Éireann Debate, Wednesday - 29 November 2023
96. Deputy Maurice Quinlivan asked the Minister for Social Protection if the case of a person (details supplied) will be examined, who recently received a redundancy payment classified as stamp ‘S’, despite never having been self-employed, and believes they should be on class A stamps; and if she will make a statement on the matter. [52684/23]
Amharc ar fhreagraPay Related Social Insurance (PRSI) contributions go to the Social Insurance Fund (SIF) which helps pay for Social Welfare benefits and pensions.
Most employers and employees (between the ages of 16 and pensionable age, currently 66 years) pay social insurance (PRSI) contributions.
The PRSI payments made in recent years by the person concerned have been examined.
The employee PRSI contributions were deducted from the individual at Class A while in employment, and up to and including redundancy, in accordance with the Social Welfare Acts.
The PRSI deductions referenced by the Deputy were unrelated to employment or redundancy incomes. They arose after the individual made drawdowns from a privately held Revenue Approved Retirement Fund.
Approved Retirement Funds have a long-term investment nature and capital drawdowns are subject to a PRSI deduction in the same manner as other investments, such as dividends and interests. The PRSI charged on such incomes is levied at the same rate that applies to the self-employed, hence why the individual was subject to a 4% charge, recorded under PRSI Class S.
When individuals are deemed liable to PRSI as a self-employed contributor, they are awarded an annual compliment of 52 Class S contributions, which are fully reckonable towards the contributory State pension.
I trust this reply clarifies the matter.
