Cabinet gives approval to draft law for new Pay-Related Jobseeker’s Benefit

From Department of Social Protection

Published on 9 January 2024

Last updated on 9 January 2024

- Pay-Related Benefit represents fundamental reform of social welfare system

- People with strong work history to receive enhanced benefits if they lose their employment

- Minister Humphreys: ‘This is about cushioning workers from sudden ‘cliff-edge’ income shock’

- The Minister for Social Protection, Heather Humphreys TD, has today secured Cabinet Approval to draft law that will introduce a new Pay-Related Jobseeker’s Benefit.

Approval of the general scheme for the Bill represents a major step in delivering a fundamental reform of Ireland’s social welfare system.

The introduction of Pay-Related Benefit will bring Ireland in line with other EU countries and will ensure that people with a strong work history receive enhanced benefits if they lose their employment.

Under the new system, there will be three rates of payment as follows:

- A top rate of a maximum of €450, or 60 per cent of your prior income, for people who have made at least five years PRSI contributions. The €450 rate will be paid for the first three months;

- A second rate of a maximum of €375, or 55 per cent of your prior income. This will be paid for the following three months;

- A third rate of a maximum of €300, or 50 per cent of your prior income for the final three months.

Speaking today, Minister Humphreys said:

“I’m delighted today to have secured Cabinet approval to draft law that will provide for the introduction of a new Pay-Related Benefit System.

“Under these major reforms, people who have a strong work history and who have contributed to the system via their PRSI will receive higher benefits if they find themselves out of work.

“The introduction of Pay-Related Benefit will also bring Ireland in line with other European countries that already have similar systems in place.

“This is about ensuring that people who have worked for long periods, perhaps even all their working lives, won’t suffer that cliff edge drop in their income if they become unemployed.”

As agreed by Government, the Minister will now begin the pre-legislative scrutiny process by providing a copy of the general scheme to the Joint Oireachtas Committee on Social Protection, Community and Rural Development and the Islands for its consideration.

The Minster will also publish the general scheme on the Department’s website.

The Department will work on the necessary administrative, technical and IT arrangements over the coming months to facilitate the introduction of this scheme in Quarter 4 of this year.

As per the PRSI Roadmap which has already been agreed by Government, there will be incremental increases in all classes of PRSI (employer, employee and self-employed) over the coming years. These increases will support the retention of the State Pension Age at 66. All classes of PRSI will increase by 0.1 per cent from October 2024, followed by a further 0.1 per cent in October 2025, gradually rising to 0.2 per cent in October 2028.

A 0.1 per cent increase works out at around 90 cent per worker per week.

In relation to the PRSI Roadmap, Minister Humphrey’s said:

“As previously announced, it has been agreed by Government that all classes of PRSI will increase by 0.1 per cent from October 2024, followed by further modest increases up until 2028.

“These measures will ensure that we can retain the State Pension age at 66 years and also provide for Pay-Related Benefit.”

Notes:

Key features of the new Pay-Related Benefit scheme include:

- The weekly rate of payment for people who have at least 5 years paid PRSI contributions will be set at 60% of previous earnings, subject to a maximum of €450 for the first 3 months.

- After that, the rate will reduce to 55% of earnings, subject to a maximum of €375 for the following 3 months.

- A further 3 months will be paid at the rate of 50%, up to a maximum €300 payment.

- For people who have between 2 and 5 years paid contributions, the rate will be set at 50% of previous earnings subject to a maximum for €300 per week and 6 month’s duration.

- A minimum weekly payment of €125 will apply

- Self-employed people will continue to be catered for under the current Jobseeker’s Benefit (Self-Employed) Scheme.

- The Programme for Government and the Economic Recovery Plan include commitments to consider a Pay-Related Benefit scheme for jobseekers. Specifically, the commitment is to:

“Consider increasing all classes of PRSI over time to replenish the Social Insurance Fund to help pay for measures and changes to be agreed including, …pay-related jobseeker’s benefit.”

As per the PRSI Roadmap, which was agreed by Government last November, there will be a programme of incremental increases in all classes of PRSI (employer, employee and self-employed) totalling 0.7 percentage points over the coming years. These increases will support the retention of the State Pension Age at 66 and provide for the introduction of Pay-Related Jobseeker’s Benefit.

The increases are as follows:

2024: 0.1 percentage points

2025: 0.1 percentage points

2026: 0.15 percentage points

2027: 0.15 percentage points

2028: 0.2 percentage points

The Minister has secured Cabinet approval for Heads of Bill providing that these increases will come into effect on 1st October of the relevant years.

The minimum contribution for self-employed people and voluntary contributors (formerly self-employed) will also increase by €150 to €650 from 1 October 2024.