Latest news with #PayRelatedSocialInsurance
RTÉ News
07-08-2025
- Business
- RTÉ News
What's the story with this PRSI tax thing on my payslip?
Analysis: All you need to know about one of the very taxes where what you pay is directly linked to your future entitlements We've all been there. You look at your payslip, see all the deductions and wonder where your money's going. One of those deductions is PRSI. It's a small amount, it's easy to ignore and it often gets bundled into the same frustration as tax. But PRSI isn't just another tax. It's one of the few things you pay that is directly linked to you and your entitlements. Without it, we wouldn't have the protections many of us take for granted. So what exactly is PRSI really doing for you and why should you care? From RTÉ Radio 1's Today with Claire Byrne, will the amount of PRSI workers pay increase? What the flip is PRSI? PRSI stands for Pay Related Social Insurance. It's a system designed to protect you if you hit tough times, like losing your job, getting sick, or reaching retirement. If you're working in Ireland, you're almost certainly paying it, and it's your ticket to a range of benefits. In 2023, PRSI contributions brought in over €15 billion, funding things like pensions, illness benefit, maternity leave and more. In simple terms, you pay in when you can and you're supported when you need it. How does PRSI work? The system is straightforward. Employees pay 4% of their gross weekly income (over €352) and employers pay between 8.8% and 11.05% on top of your wage. Self-employed people also contribute, with slightly different rules. This money goes into the Social Insurance Fund, which covers: In a way, it's like insurance: if you've paid in, you've earned the right to claim. From RTÉ Radio 1's Late Debate, increases in PRSI to fund pensions and pay-related jobseekers allowance Time to debunk some myths 'It's just another tax.' It's a contribution towards your own safety net. Income tax funds public services; PRSI is specifically for social insurance. There's a big difference. 'I won't ever get anything back from it' You might not need illness or jobseeker's benefits now, but the State Pension alone is likely to play a key part in your retirement income. Things like dental benefits, maternity, and paternity leave are real-world supports that many people use. 'It's wasted money' Of course, the system isn't perfect but there would be no pensions, unemployment supports or sick pay without PRSI. It's a lot more efficient than it's given credit for. Why the pension matters (even for Gen Z) The most significant thing PRSI does for many people is build up your entitlement to the State Pension (Contributory). When you reach retirement age and start receiving that pension, it's a clear reflection of the contributions you've made over your working life. From RTÉ News, State pension age to remain at 66 There's also a Non-Contributory Pension, which is means-tested and available to those without enough contributions. But here's the key difference: if you're receiving the Contributory Pension, you've earned it. This isn't free money, it's yours because you played your part in supporting the system through your working years. And that does matter. There's a certain dignity and reassurance in knowing your pension is based on what you've put in, not just on circumstance. What would happen without PRSI? If PRSI didn't exist, the consequences would be huge. No State Pension. No paid maternity or paternity leave. No jobseeker's benefit. No illness or disability supports. No dental or optical subsidies. In other words, people would be completely on their own to plan for every major life event. For many, that simply wouldn't be realistic. Thumbs up for PRSI Ireland's social insurance system isn't perfect (no system is), but PRSI is a clear example of something that actually works for most people. It's easy to get caught up in focusing on the negatives, but it's just as important to look at the parts of the system that are doing their job. Without PRSI, a lot of people would face real financial hardship. It spreads the cost of social protection across society and, in doing so, it makes sure that support is there when it's needed. It's worth pointing out that being able to contribute consistently is a privilege in itself. Not everyone is able to work full-time, whether due to health, caring responsibilities or other challenges. A system that offers protection across the board is essential, even if it's not flawless. We all groan when we see deductions on a payslip. That's natural. But PRSI is not just a government levy. It's your safety net, your pension, your support system. Next time you see PRSI on your payslip, remember that you're playing a part in keeping the system running for yourself, your family, and your community. It's not perfect, but it works, and that's something worth recognising.
Agriland
31-07-2025
- Business
- Agriland
Study: Lack of pension stalls generational renewal
Low pension coverage and late retirement are stalling generational renewal. That's according to new research which compares EU systems to explore solutions to support Irish farmers through the retirement transition. Research undertaken by Maynooth University and Teagasc examines the design of social security pension systems for farmers in five European countries. The aim is to identify gaps in Ireland's current system and suggest practical solutions. The research indicates that the sustainability of agriculture in Europe is deeply intertwined with the financial wellbeing of its farmers, particularly concerning retirement provisions. As the farming population ages, ensuring adequate pension systems and the financial security of individual farmers becomes crucial in not only maintaining the vitality of rural communities, but in facilitating generational renewal and the broader dynamics of farm succession, the researchers stated. The study explored the current state of pension coverage among Irish farmers in comparison to EU counterparts, examining various national approaches to farm retirement schemes and drawing lessons to enhance pension provisions in the agricultural sector. Senior research economist in the Rural Economy and Development Programme at Teagasc, Anne Kinsella said: 'Farmers face unique challenges regarding pension provision due to lower and variable incomes, the intergenerational nature of farm ownership and cultural attitudes towards retirement. "In Ireland, a significant portion of farmers have limited pension coverage, with many not planning to retire formally.' The research found that this is worsened by the fact that some farmers may not qualify for the state pension (Contributory or Non-Contributory), due to gaps in their Pay Related Social Insurance (PRSI) contributions. Such gaps can arise from late succession to farm ownership or low-income years where PRSI contributions were not made. As a result, many farmers may need to continue working later in life or rely financially on family members, according to the researchers. This can hinder farm succession and generational renewal. The Central Statistics Office has previously stated that in 2023, approximately 45% of those working in the agriculture, forestry, and fishing sector had supplementary pension coverage, compared to 88% in the financial services sector. A key challenge facing the European agricultural sector is the low level of private pension coverage among farmers. A study funded by the Department of Agriculture, Food and the Marine (DAFM) revealed that only 50% of Irish farmers have private pension coverage. Disparities exist across farming systems; around 70% of dairy and tillage farmers have private pensions, compared to only 40% of sheep and cattle farmers. 'Barriers to uptake include affordability, procrastination, distrust in private providers, and reliance on savings or assets instead," Kinsella continued. "Many farmers expect to rely on the state pension, family support, continued farming, or personal savings once they reach retirement age.' To assess Ireland's position relative to 'best practice', researchers evaluated pension systems for farmers in five European countries: Austria; Finland; France; Germany; and Poland. These countries, all members of the European Network of Agricultural Social Protection Systems (ENASP), offer tailored social welfare schemes for farmers, serving as important benchmarks. Assistant professor of accounting at Maynooth University, Michael Hayden, highlighted that each country has its own approach to farmer-specific social insurance. 'In contrast, Ireland operates a single social security system with a general distinction between self-employed and employed workers," he explained. "Farmers are classified as self-employed, but with some limitations in the definition for social insurance purposes.' ENASP countries recognise the unique needs of rural populations, including economic vulnerability, demographic challenges, and the central role of family farms. The research identified which aspects of these systems could be adapted to help increase pension coverage and improve retirement adequacy for Irish farmers. Using data from ENASP countries and international OECD comparisons, the analysis explored coverage levels, contribution models, and qualification criteria. The findings highlight how policy reform could bring Ireland more in line with European norms. EU countries take two broad approaches - either farmers are included in the general self-employed social insurance system, or they benefit from a dedicated preferential system. There are good reasons to adopt a separate model for farmers, according to the research. Agriculture is a high-risk, low-profit sector, and higher pension contributions may not be viable without support, according to Bridget McNally who is associate professor of accounting at Maynooth University. 'Dedicated systems can also serve wider goals, like preventing rural depopulation, encouraging timely retirement and promoting regional equality," McNally said. In some cases, early retirement schemes are linked to succession incentives, which free up land for younger farmers. The study outlined that critics may argue that mandatory pension insurance is unnecessary, given that farmers can continue working, lease or sell their land, or rely on family – but that these assumptions do not reflect every farmer's situation. Not everyone can perform physical labour into old age, and relying on family support is not always practical or fair, the researchers found. Drawing from the experiences of EU countries, several key lessons emerged from the study for improving pension provisions, and facilitating generational renewal in agriculture: Offer early retirement incentives: Finland's model shows how financial support can ease the path to retirement; Boost private pension uptake: Address affordability and trust barriers with financial planning support and education; Make PRSI contributions mandatory for farm workers: Ensure young farmers and family members build up entitlements from the start; Register spouses and partners for PRSI: Independent contribution records reduce reliance on means-tested supports; Provide transitional supports: Help current farmers without adequate coverage close the gap; Review the means test requirements for Non-Contributory state pensions: Farmers should be able to retain a small amount of land (<30ac) without affecting entitlements. By adapting these strategies to Ireland's context, policymakers can help secure the financial future of family farms, support rural vitality and promote meaningful generational renewal, the research determined.
Irish Examiner
10-06-2025
- Business
- Irish Examiner
State to lose tax revenues as people move to electric vehicles but missed climate targets will cost us
Tax revenues could fall by as much as the Universal Social Charge brings in each year as more people switch to electric vehicles and renewable energy sources, the Irish Fiscal Advisory Council has warned. However, the budgetary watchdog has warned that missing key climate transition targets would be much costlier and could amount to €5,000 for every person in the country. In its biannual Fiscal Assessment report, the Council warned that the Government's two-year forecast horizon is much too short, and the twin challenges of an ageing population and the climate transition cannot be adequately prepared for. In relation to climate change, the Council estimated that 'reasonably manageable' spending increases of approximately €2bn per year will be required to achieve the necessary transitions. However, they said a bigger challenge will be to replace the taxes likely to fall away as people shift to cleaner transport and energy. The Council said the current tax system would raise far less revenue in a future where electric vehicles and renewable energy become the norm. If today's tax system was left unchanged, they said the fall in annual revenues would amount to €5bn in today's money, almost as much as the USC tax raises. While the climate transition raises challenges for tax revenues, the Council warned that doing nothing has substantial costs. "If Ireland fails to reduce its emissions, as it currently looks set to by a wide margin, it may have to transfer an enormous amount of money to neighbouring countries," the report states, with the government required to purchase transfers or credits from other countries, the costs of which could be extremely high. The Council estimates that the costs of missing climate targets could reach as high as €26bn. "A transfer of as much as €26bn would be a colossal waste of taxpayers' money — equivalent to almost €5,000 for every person in Ireland," the report warns. "Instead of transferring this money to neighbouring countries, the government should take more effective action to avoid these costs, reduce energy costs and pollution, and improve people's health." In relation to Ireland's ageing population, the report said that action taken sooner rather than later will ultimately be less costly. "While other countries are experiencing ageing populations, Ireland is facing a more rapid change," the report states, warning that by 2057, one in three people will be over the age of 65, putting more demand for healthcare, long-term care and pensions. It will also mean slower growth in the economy and hence in tax revenues. The Council said the steps taken by the Government should have an impact. The Future Ireland Fund has been established as a way of saving the 'extraordinary' corporation taxes being collected. The Government has planned gradual increases in Pay Related Social Insurance (PRSI) to help fund increased spending needs. "Modelling by the Council suggests that the Future Ireland Fund could make a substantial dent in ageing costs, covering more than half of the rise in annual spending associated with ageing between 2023 and 2041 and a quarter by 2050," the report states. "On their own, these measures will still not fully offset costs associated with ageing. However, they are an important part of the solution to dealing with these costs, which will fall much more heavily on the next generation of taxpayers."
