Questions And Answers

I am an old-age pensioner trying to make sense of my entitlements as a result of the PRSI payments I have made down through the years. Can you please advise me under what circumstances I would be eligible to claim a contributory old-age pension and what, if any, other benefits I may receive?

Ms A.C., Dublin

Pay Related Social Insurance (PRSI) is essentially a tax on your net earnings to cover, or partly cover, the cost of providing benefits to you during your working life, into retirement and even following your death.

Both the level at which you pay PRSI and the benefits you can derive from those payments vary according to your type of employment, when that employment commenced and how much you earn.

In general terms, the 11 classes of PRSI contribution - A, B, C, D, E, H, J, K, M, P and S - can be divided into three broad categories. First, there are those classes applicable to the private sector, then there are the classes relevant to public and civil servants and finally, there are special classes payable by self-employed people. These broad divisions have become slightly blurred in recent times as the Government has decided that public servants employed since the 1995/96 tax year will pay PRSI at the full private sector rate.

The simplest way to explain the benefits and to whom they apply is to go through each of the classes individually. Depending on your employment, you may have paid PRSI at different rates and in different classes through your working life and that would affect the level of benefits available to you. The class at which you paid PRSI in any given year will be stated on your P60.

Starting from the top, the first class is A. It covers all those in the private sector employed in the industrial, commercial and service enterprises, who are taxed under the Pay As You Earn (PAYE) system and who have reckonable earnings of £30 a week or more. It also, since April 6th, 1995, covers civil and public servants recruited after that date.

Benefits available to people paying at Class A include the contributory old age pension, contributory widow's/widower's pension, contributory orphan's allowance, unemployment benefit, disability benefit, maternity benefit, adoptive benefit, health and safety benefit, invalidity pension, retirement pension, death grant, treatment benefit and occupational injuries benefit.

Two other classes apply to private sector employment - J and E. Class E applies to Church of Ireland ministers, according to the Department of Social Community and Family Affairs. The benefits available are broadly similar to those under Class A, with the exception of unemployment benefit and occupational injuries benefit, which do not apply to people in this class. Class J normally includes those people whose reckonable earnings from all jobs are less than £30 a week - essentially part-time workers. However, it also includes employees above the age of 66, regardless of earnings. While the contributions are lower, the benefits are very restricted and essentially only cover occupational injuries benefit.

Turning to people working in the public sector, Class B covers permanent and pensionable civil servants as well as doctors and dentists working in the public sector and gardai employed prior to April 6th, 1995. Such contributors are entitled to limited occupational injuries benefits as well as the contributory widow's/widower's pension and the contributory orphan's allowance.

Class C covers commissioned Army officers and members of the Army nursing service recruited before the April 6th, 1995 cut-off date. Their benefits differ from Class B in that they are not entitled to an occupational injuries benefit. Non-commissioned officers and listed personnel in the defence forces come under Class H. In contrast to their superior officers, their contributions entitle them to a wide range of benefit - effectively everything applying to Class A employees except for occupational injuries benefits. However, only some of these benefits are payable during service.

The final public sector class is Class D. It covers all permanent and pensionable employees in the public service apart from those covered by Classes B and C and recruited before the 1995 changes. The benefits available are the same as those for Class B except that they are entitled to full occupational injuries benefits.

Self-employed people come within a separate category - Class S - which allows them access to the contributory old-age pension as well as maternity and adoptive benefits, contributory widow's/widower's pensions and contributory orphan's allowances. Certain limited groups of people, such as fishermen, can receive limited unemployment and disability benefit as well as treatment benefits by paying an additional contribution under Class P.

Holders of occupational pensions, the judiciary and self-employed people over the age of 66 pay under Class K, which effectively involves their health and employment levy payments, but receive no benefits.

Finally, employees who have no contribution liability, such as employees younger than 16 and certain Class K payees who have no liability, come under Class M, which allows them occupational injuries benefits in certain circumstances.

As you can see, the benefits available vary widely as, indeed, does the cost of PRSI from one class to another. In this case, you will be eligible for a contributory old age pension under Classes A, E, H, and S - provided that you have made sufficient contributions in these classes over the years.

The minimum number of monthly contributions is 156, although to get the maximum pension available, you would need to average 48 weekly payments per year worked. Indeed, to draw down the minimum pension sum, you will have to have a yearly average of 10 weekly contributions for every year from the date you first started work (or 1953, whichever is the earlier) and the end of the last complete tax year before you turned 66.

It is important that people ensure they are in the right category and paying the right amount of PRSI if they hope to avail of the benefits they expect. This is especially true of part-time workers, who, increasingly, are earning above the limits of Class J. If they do not get themselves into the appropriate class and pay the requisite amount, they could lose out on benefits later on.

Send your queries to Q&A, Business This Week, 10-15 D'Olier St, Dublin 2, or email to dcoyle@irish-times.ie.