Sir, – An interesting change in PRSI has been brought in this year, with very little publicity.
Those born on or after January 1st, 1958, will have to pay PRSI on their earnings unless they are drawing the State pension, which is available from age 66 but gets higher with each year to age 70 that it is deferred.
This change seems to be targeted at those who continue to work and voluntarily defer the State pension to get the higher rate at a later age, maximum age 70. It changes the cost-benefit analysis for such choices as PRSI is levied at 4 per cent of gross income (not after tax income) so net pay derived from working past age 66 and deferring the State pension goes down.
However, for some categories the effect is more serious – and unavoidable.
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If someone at age 66 has no pension entitlement at all and is born on or after January 1st, 1958, then they must pay PRSI on their earnings from age 66 to age 70 which was previously exempt.
An employee with a date of birth of January 1st, 1958, could join the Civil Service on on January 1st, 1978, at age 20, paying Class D PRSI, with no previous PRSI contributions, and therefore with no entitlement to the State pension or to some other PRSI benefits.
Retiring at age 66 on January 1st, 2024, their income from any new job will now become liable to PRSI.
Another category would be workers returning at age 66 from long-term jobs outside the EU who have no PRSI contributions in Ireland.
Their income from work here would now be liable for PRSI deductions whereas previously it would be exempt from age 66 to 70.
I have not seen any rationale to explain why drawing the State pension should confer exemption from this new PRSI deduction. – Yours, etc,
DONAL McGRATH,
Greystones,
Co Wicklow.