Minister for Social Protection Leo Varadkar has reformed the PRSI system to make it easier to take a career break without losing your State pension entitlements.
The reforms also benefit self-employed people, those who move abroad temporarily, and people who take early retirement.
The reforms make it easier for people to make voluntary contributions under the PRSI system. They are designed to ensure that more people who take career breaks, early retirement, move abroad temporarily, or experience a bad year in self-employment can protect or improve their right to a contributory State pension, and a pension for their spouse or child’s guardian should they die prematurely.
Speaking about the measure, Minister Varadkar said: “At the moment, if you pay into the PRSI system for long enough, you become entitled to certain benefits without having to pass a means-test. These include the State Pension Contributory when you reach 66 and the Widows/Survivors Pension for your partner if you die before the age of 66.
“However, in many circumstances, you can lose this entitlement or have it reduced if you leave work and stop paying PRSI for a number of years. Voluntary contributions allow you to prevent this from happening. I am making it easier to make these voluntary contributions by given people up to five years to decide to do so instead of just one.
“The main beneficiaries will be self-employed people who have a bad year or a few bad years and don’t pay PRSI in those years, people who take early retirement who might otherwise have their State pensions reduced, people who go overseas for a few years and do not pay into an equivalent system, people who retire early due to ill-health, and also parents who decide to stay at home.”
These changes build on the other social insurance reforms the Minister has announced since he came into office. They include the introduction of Paternity Benefit last year as well as a range of important measures he announced on Budget Day.
From next month the self-employed will have access to the treatment benefit scheme which includes free eye and dental examinations, and contributions towards the cost of hearings aids. Treatment benefit entitlements will also be extended from October 2017 to provide further dental and optical benefits both for employees and the self-employed.
Even more significantly, self-employed contributors will be eligible for the Invalidity Pension from December 2017. For the first time, this will give the self-employed access to the safety-net of State income supports if they become permanently incapable of work as a result of an illness or disability without having to go through a means test. This is a real advance in the level of cover available to the self-employed.
The Minister plans to continue modernising and enhancing the social insurance system and is looking forward to making further improvements in future Budgets.