Thursday, 17 December 2015
Department of Social Protection
Social Welfare Code Reform
45. To ask the Tánaiste and Minister for Social Protection if she has analysed the impact of the increase in the national minimum wage from January 2016 on income disregards pertaining to schemes and payments under the auspices of her Department; and if she will make a statement on the matter. [45668/15]
I am pleased that this Government will be increasing the National Minimum Wage for the second time from January 2016, up from €8.65 to €9.15 per hour.
I am also introducing the tapered PRSI Credit as part of Budget 2016, to address a significant issue with the manner in which charging PRSI impacts those on lower weekly earnings. This will also benefit many of those gaining from the increase in the minimum wage.
Currently Class A employees become liable to pay PRSI on all earnings, once weekly earnings exceed €352.01. This creates a “step effect” as net income reduces immediately by the full 4% PRSI charge applied to all earnings. This means that a €0.01 increase in weekly earnings of €352 attracts a weekly PRSI charge of €14.08. The introduction of the PRSI Credit will address the “step effect” by reducing the actual amount of PRSI charged, for those earning between €352.01 and €424 in a week. At weekly earnings of €352.01 the maximum PRSI Credit of €12 will reduce the PRSI charge payable from €14.08 to €2.08.
The Family Income Supplement (FIS) income thresholds will also increase by €5 for families with one child and €10 for families with two or more children thereby benefitting lower income households.
The income disregards for means tested schemes are being fully maintained for all schemes. In the case of Jobseeker's Transition, the income disregards for earnings from employment will increase from €60 to €90 and the taper will reduce from 60% to 50%.