HOW IS PRSI CALCULATED
Employee PRSI contributions are will be payable at the appropriate rate for an employee on all *reckonable earnings.
Employer PRSI contribution will be payable at the appropriate rate on the *reckonable earnings of the employee. For employees contributing under Class A & H, employers will pay a 0.7% National Training Fund Levy (this is incorporated into the employers PRSI rate and is remitted as PRSI).
Once the employee is assigned the correct PRSI class, a rate will be attached to proportionate levels of earnings in accordance with the rules pertaining to that class/subclass. The list of rates attached to each of the PRSI classes explained in the above table is available from the issuing Department of Social Protection in leaflet SW14 (click here to download).
The PRSI calculation is very straightforward and is calculated on a week 1 basis, i.e. the calculation is based on each individual pay period earnings only without any reference to previous pay periods.
The majority of employees is private sector employment will contribute under Class A. Below is a working example of calculating PRSI for an employee earning €500 per week.
PRSI Calculations: Class A1
Self-employed individuals contribute under Class S PRSI. It is important to note that not all Company Directors are considered as self employed, a judgement should be sought from the SCOPE section of the Department of Social Protection if in any doubt to the employment status of a Director.
Some PRSI classes and/or subclasses do not attract an actual monetary contribution, however, the employee continues to be covered for benefits and pensions appropriate to their class.
*Reckonable earnings for PRSI purposes are gross pay including notional pay (benefit in kind) plus superannuation and permanent health insurance contributions made by an employee. In determining an employees pay subject to PRSI the same rules as applied for determining pay subject to income tax and/or USC DO NOT apply.
IMPORTANCE OF DATE RECORDING
It is important to hold the date of birth of each employee on file as this will trigger a change in the category of PRSI under which an employee contributes.
Aged under 16
Employees aged under 16 contribute under Class M PRSI. While a Class M contributor, the employee pays reduced PRSI contribution and receives fewer benefits than older employees who are contributing under Class A.
PRSI Calculations: Class M
Once the employee turns 16 it is important to change their PRSI Class IMMEDIATELY from Class M to Class A. Once the employee starts contributing under Class A they will accrue entitlements to Social Welfare benefits. If the employee continues to contribute under Class M once they are 16, this will negatively affect their entitlement to claim certain benefits at a later stage, due to a shortfall in the necessary Class A contributions.
PRSI Calculations: Class A
Aged 66 or over
Once an employee is 66 years old, who previously contributed PRSI under Class A, should thereafter contribute PRSI under Class J. The PRSI class should be changed to Class J in the corresponding pay period to their birthday. Class J attributes a lower rate of PRSI to periodical pay as there is no benefit to an employee to continue contributing under any other class once they are 66 years old.
PRSI Calculations: Class J