Written answers

Wednesday, 10 July 2013

Department of Social Protection

Social Insurance Issues

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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170. To ask the Minister for Social Protection if a person who paid class S stamps while self-employed is entitled to pay PRSI contributions on unearned income derived from letting of the farm land having retired on the early retirement scheme; the benefits the PRSI payments will provide the person; and if she will make a statement on the matter. [33702/13]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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A farmer who retired on the early retirement scheme and has reckonable income (including income from the letting of the farm land) over €5,000 is liable for Class S PRSI contributions on that income, provided the person is under pensionable age (currently 66) and no tax exemptions apply to the rental income from the farm. Where tax exemptions apply to the rental income from the farm then the income threshold at which Class S PRSI contributions are due may be higher. The Office of the Revenue Commissioners applies tax exemptions where exemptions are due.

The benefits of Class S PRSI payments are Maternity Benefit, Adoptive Benefit, Bereavement Grant and long-term benefits such as State Pension (Contributory) and Widow’s, Widower’s or Surviving Civil Partner’s Pension (Contributory). Compulsory PRSI deductions are not made from payments under the Early Retirement Scheme. A farmer who retired on the early retirement scheme and is not liable for Class S PRSI contributions on unearned income could, subject to certain conditions, opt to pay voluntary contributions up to age 66, in order to qualify for the State Pension (Contributory).

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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171. To ask the Minister for Social Protection if a person who previously had paid class S stamps while self employed is entitled to receive full PRSI credits towards a contributory pension when reclassified to class M due to reduction in income; and if she will make a statement on the matter. [33703/13]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Class M PRSI relates to people with a nil contribution liability (such as employees under age 16, people aged 66 or over (including those previously liable for Class S), persons in receipt of occupational pensions or lump-sum termination payments and public office holders with a weekly income of less than €100 a week). PRSI credited contributions are an integral part of the social insurance system. For the most part they are linked to having an underlying entitlement to a social welfare payment while temporarily detached from the labour force or having entitlement to statutory leave e.g. parental or maternity leave. The primary purpose of PRSI credits is to secure social welfare benefits and pensions of employees by covering gaps in insurance where they are not in a position to pay PRSI such as during periods of unemployment, illness, etc.

The class at which a contributor paid his or her last PRSI contribution determines entitlement to credited contributions. Credits are usually awarded at the same rate as your last paid PRSI contribution. For example, Class A PRSI contributions may entitle a person to all insured DSP benefits, provided they satisfy the qualifying conditions. Credits are not available to a person who has only Class S contributions.

People who cease to be covered by compulsory social insurance, may opt to protect their existing long-term social insurance pension entitlements by becoming insured on a voluntary basis and paying voluntary contributions. Payment of voluntary contributions does not provide social insurance cover for short term benefits such as jobseeker’s benefit. A person who wishes to become a voluntary contributor must satisfy certain contribution conditions and must apply to become a voluntary contributor within 12 months after the end of the contribution year in which he/she was last compulsorily insured. A person cannot be a voluntary contributor while also an employed contributor or in receipt of credited employment contributions.

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