Nearly half-a-million low-paid employees will gain up to £5.67 a week when they are exempted from paying PRSI contributions from April.
Details of the move, which arises from the proposed Partnership for Prosperity and Fairness agreement, were announced yesterday by the Minister for Social, Community and Family Affairs, Mr Ahern.
More than 172,000 workers and self-employed people will benefit when they are exempted from paying the 2 per cent health contribution.
From April, more than 460,000 workers, mainly in the private sector, will be taken out of the PRSI net. Those who earn £226 a week or less will be exempted from paying PRSI. The amount which this will save them will depend on their earnings (some are already outside the PRSI net) - but the maximum will be £5.67 per week.
The cost to the Exchequer will be £50 million in a year.
Anyone earning less than £280 a week will be exempted from paying the health contribution. The maximum gain, to employees and self-employed people, will be £5.60 a week. The cost to the Exchequer will be £52.6 million in full year.
The changes will be included in the Social Welfare Bill, which will be published on Monday. It will also include Budget increases and additional changes made by the Cabinet at its Ballaghaderreen meeting.
These changes are:
The new Carer's Benefit, which will allow employees to take job-protected leave of absence to care for an incapacitated relative will be payable for 15 months instead of 12. The benefit, based on PRSI contributions and not means-tested, is £88.50 a week, payable from next October.
People on unemployment assistance and non-contributory pensions will be allowed to have savings of up to £10,000 without affecting their payment in any way. A married couple will be allowed to have £20,000. This will mean an extra £6 a week for a single pensioner with £10,000 savings and an extra £19 a week for a recipient of unemployment assistance with £10,000.
The invalidity pension for persons under 65 will go up by £5.90 a week in May, which is £1.90 more than provided in the Budget.
Anomalies which prevented certain pensioners from continuing to receive the full payment for six weeks after a spouse dies will be removed from April. In addition, people receiving a one-parent family allowance and who have only one child will continue to receive the allowance for six weeks if the child dies.