PRSI changes in Ireland: What’s new for 2024?

PRSI changes are in place thanks to Ireland’s new law that came into effect on 1^st January 2024. This changes how payroll should treat workers aged between 66 and 70 for PRSI purposes. It follows an amendment to the Social Welfare Consolidation Act 2005, made in December 2023.

Up to now, employees and self-employed workers aged 66-70 who weren’t drawing a State Pension Contributory (SPC) didn’t pay PRSI on income. 

From the start of 2024, anyone who enters this bracket and isn’t drawing down the pension is subject to PRSI. This is under class A or S, depending on whether they’re self-employed or not. It lasts until the age of 70, when all employees become PRSI-exempt. 

Why are these PRSI changes happening?

The change of the upper limit for PRSI exemption as embodied in the new legislation is to align with the shift of the compulsory retirement age in Ireland from 66 to 70. It applies to both the employee and employer PRSI liabilities.

Are there any exceptions?

Those employees who have already reached 66 years of age by 1^st January, 2024 (born before 1^st January, 1958) who were previously exempt from PRSI continue to be exempt. According to estimates from the Central Statistics Office, this cohort currently comprises about 110,000 employees.

For anyone in receipt of the State Pension, attained on or after reaching 66 years of age, the earnings are not subject to PRSI. Also, the change doesn’t impact the current provisions for occupational pensions, which are exempt from PRSI.

What are the main PRSI changes for 2024?

If currently in Class A:

For people born before 1st January 1958, the new PRSI class (once they reach age 66) will be J.

For those born after 1st January 1958, the new PRSI class is A (where SPC is not drawn down) or J (where SPC is drawn down, or they are aged 70 and over).

If currently in Class S:

For people born before 1st January 1958, the new PRSI class (once they reach age 66) will be M.

For those born after 1st January 1958, the new PRSI class will be S (where SPC is not drawn down) or M (where SPC is drawn down, or they are aged 70 and over).

How should PRSI classifications happen now?

The Department of Social Protection and the Irish Revenue Commissioners are planning to automate the process of informing employees about the correct PRSI class. This is likely to be through Revenue Payroll Notifications (RPNS) later in 2024. 

What do employers need to do to be compliant?

As of1^st January, employers need to make the above determinations themselves when it comes to PRSI classifications for people entering the 66–70 age bracket in 2024.

“The amendment to the age exemption criteria from the Department of Social Welfare came into effect from 1^st January, 2024, and notice of this change has been late coming.  We would therefore strongly urge employers to review the age profile of their current employees, establish current PRSI classes, and make an assessment as to which employees may require a class change and when. The same scrutiny should apply to new hires who are approaching retirement age, thus avoiding any non-compliance pitfalls.”

Seán Murray, Director of Product Services Ireland, Zellis

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