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Press release

Landmark legislation to introduce Pay-Related Benefit in Ireland passed by the Oireachtas

  • Major reform will ensure people with strong work history receive higher level of payment if they lose their job
  • Bill completes passage through the Oireachtas and is sent to the President for enactment

The Minister for Social Protection, Heather Humphreys TD, has today announced that the Social Welfare (Miscellaneous Provisions) Bill 2024 has been passed by both Houses of the Oireachtas and will now be presented to the President for signing.

The Bill provides for a new Pay-Related Benefit system in Ireland which will ensure that people with a strong work history receive enhanced benefits if they lose their employment.

The introduction of Pay-Related Benefit will bring Ireland in line with other EU countries and represents a fundamental reform of the Social Welfare System.

The new Pay-Related Benefit will be available to new, fully unemployed people who have a strong and recent attachment to the labour market, and who are available for and genuinely seeking employment.

The Minister will bring forward a commencement order for the introduction of Pay Related Benefit later this year once the necessary IT systems have been developed.

Commenting on the Bill’s passing, Minister Humphreys said:

“At the moment, when a person who has worked hard for twenty years suddenly loses their job, they receive the same rate of unemployment payment as somebody who might never have worked. That’s not fair.

“We need to reward the people who have worked hard; paid their dues; and contributed to the economy through their PRSI contributions. That’s what Pay Related Benefit is about.

“This is about supporting workers who lose their employment by ensuring they don’t suffer a cliff-edge drop in income.

“The reality is people enter into financial commitments which are commensurate with their income. When I worked in the Credit Union sector, I saw it first hand; people who had good jobs, who worked hard, and then all of a sudden when they lost their job, they had a cliff-edge drop in income and they weren’t able to meet the mortgage payment. It put families under huge stress. Pay Related Benefit is about giving those people a safety net.

“I am very pleased that this landmark legislation has passed all stages of the Oireachtas. The Bill will now be sent to President Higgins for signature.”

The Bill also provides for the PRSI rate changes from 2024 to 2028. As per the PRSI Roadmap which has already been agreed by Government, there will be incremental increases in all classes of PRSI (employer, employee and self-employed) over the coming years.

These increases will help address the long-term sustainability challenges facing the Social Insurance Fund and support the retention of the State Pension age at 66.

All classes of PRSI will increase by 0.1 percentage point from 1st October 2024, followed by a further 0.1 percentage point in October 2025, gradually rising to 0.2 percentage points in October 2028.

A 0.1 percentage point increase works out at around 90 cent per week for an employee on average earnings. It is a similar amount for employers.

Notes:

Key features of the new Pay-Related Benefit scheme include:

  • The weekly rate of payment for people who have at least 5 years paid PRSI contributions will be set at 60% of previous earnings, subject to a maximum of €450 for the first 3 months.
  • After that, the rate will reduce to 55% of earnings, subject to a maximum of €375 for the following 3 months.
  • A further 3 months will be paid at the rate of 50%, up to a maximum €300 payment.
  • For people who have between 2 and 5 years paid contributions, the rate will be set at 50% of previous earnings subject to a maximum for €300 per week and 6 month’s duration.
  • The scheme will be available to persons who become fully unemployed after the commencement of the scheme.
  • The Minister will bring forward a commencement order for the introduction of Pay Related Benefit later this year once the necessary IT systems have been developed.
  • People who lose their job before that date will be remain entitled to the existing Jobseeker’s Benefit.

As per the PRSI Roadmap, which was agreed by Government last November, there will be a programme of incremental increases in all classes of PRSI (employer, employee and self-employed) totalling 0.7 percentage points over the next five years. These increases will support the retention of the State Pension Age at 66 and help to address the long-term sustainability challenges facing the Social Insurance Fund and provide for the introduction of Pay-Related Jobseeker’s Benefit.

The increases, as set out previously, are as follows, and will come into effect on 1st October of the relevant years:

  • 2024: 0.1 percentage points
  • 2025: 0.1 percentage points
  • 2026: 0.15 percentage points
  • 2027: 0.15 percentage points
  • 2028: 0.2 percentage points

The minimum contribution for self-employed people and voluntary contributors (formerly self-employed) will also increase by €150 to €650 from 1 October 2024.

An amendment was brought at Committee Stage of the Bill to increase the employer PRSI threshold from €441 to €496 with effect from 1 October 2024. This will ensure that employers with employees working full time on the national minimum wage will not be required to pay the higher rate of employer PRSI of 11.05% and will instead pay the lower rate of 8.8%.