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.
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