Pay Related Social Insurance

Definition

Pay Related Social Insurance (PRSI) is a system of social insurance contributions in Ireland that funds social welfare benefits and pensions. 

What is Pay Related Social Insurance?

Pay Related Social Insurance is a mandatory insurance scheme that both employees and employers contribute to, based on the employee’s earnings. Employees’ PRSI contributions are deducted from their wages at a specified rate, while employers also contribute a percentage of their employees’ earnings to PRSI.

PRSI contributions are divided into different categories, known as classes, based on the individual’s employment status, earnings, and other factors. Each PRSI class determines the level of contributions payable and the entitlements to social welfare benefits and pensions.

PRSI contributions entitle individuals to various social welfare benefits and pensions, including:

• Jobseeker’s benefit
• Illness benefit
• Maternity benefit
• State pension (Contributory)
• Guardian’s payment (Contributory)
• Treatment benefit (e.g., free medical and dental treatment)
• Invalidity pension

Self-employed individuals are responsible for making their own PRSI contributions based on their income. They are required to register with the Revenue Commissioners and pay PRSI contributions directly. 

Certain individuals may be entitled to PRSI contribution credits or exemptions, depending on their circumstances. For example, individuals who are unemployed, on certain social welfare payments, or in specific employment categories may be eligible for PRSI credits or exemptions.

Example of Pay Related Social Insurance

Emma works as a software engineer and as a part of her employment, her employer deducts PRSI contributions from her monthly salary. These contributions are remitted to the Revenue Commissioners and allocated to the Social Insurance Fund.

In return for her PRSI contributions, Emma becomes entitled to various social welfare benefits. Should Emma need any of these benefits, she can apply through the Department of Social Protection, and her entitlements will be based on her PRSI contributions.