Mark Stedman/Photocall Ireland
Social insurance

PSRI changes will hit employees by €264.16 per year

The Budget will see the abolition of the PRSI-free allowance, meaning all employee income is hit at 4 per cent.

CHANGES to the PRSI system announced by Michael Noonan in this afternoon’s Budget will mean every individual employee in the country will see their net income fall by €264 a year.

The changes will see a weekly PRSI-free allowance abolished  - meaning each individual employee will see their take-home pay fall as a result.

Currently, employees earning over €352 per week pay PRSI at a rate of 4 per cent on their gross pay – though €127 of that is exempted from the rate.

This will be scrapped from January, however – meaning employees will have to pay the levy on all of their income.

Having to pay the 4 per cent rate on the extra €127 of weekly income means each employee will see their take-home pay fall by €5.08 a week – or €264.16 per year.

Noonan’s speech did not suggest that the pay floor of €352 per week would be abolished.

However, with the minimum wage at €8.65 per hour – or just over €302 for a 35-hour week – the changes will affect the vast majority of full-time workers.

The move is aimed at curbing the deficit in the Social Insurance Fund, which is funded by PRSI payments, and which is in significant deficit.

LIVE: Budget 2013 as it happens

Read: Burton asks for extra €685 million in social protection funding… for 2012

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