Minister Humphreys secures Cabinet approval for major Social Welfare reforms
Minister Humphreys secures Cabinet approval for major Social Welfare reforms
- New Pay-Related Jobseeker’s Benefit System to be introduced
- Landmark reforms to the State Pension, including enhanced pension provision to support long-term carers
- Social Welfare Bill to give effect to Budget 2024 measures
- €12 increase in weekly payments; €10 increase in Domiciliary Care Allowance
- Working Family payment thresholds to increase by €54
- Child Benefit to be extended to 18-year-olds in full-time education
- Parents Benefit to increase from seven weeks to nine weeks
The Minister for Social Protection, Heather Humphreys TD, has today announced a series of major social welfare reforms, as well as measures that will support pensioners, carers, people with disabilities and low-income families.
The Minister secured Cabinet Approval for the establishment of a new Pay-Related Jobseeker’s Benefit System in Ireland.
This represents a fundamental reform of the social welfare system and will ensure that people with long work histories will receive enhanced benefits if they lose their employment.
The introduction of Pay-Related Benefit will bring Ireland in line with other EU countries.
Under the system approved by Cabinet, 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.
If a person is still unemployed after the nine month period, they can apply for the basic Jobseeker’s Allowance.
Announcing details of the new Pay-Related Benefit today, Minister Humphreys said:
“I’m delighted to have secured Cabinet approval for a new Pay-Related Benefit System in Ireland.
“Under these major reforms, people who have a long work history and who have contributed to the system via their PRSI will receive enhance benefits if they find themselves in that awful situation of losing their job.
“This new system represents an enhanced safety net for workers and will help to soften the cliff-edge drop in income that can be faced when a person suddenly loses their job.
“The introduction of Pay-Related Benefit will bring Ireland in line with the vast majority of European countries that already operate similar systems.
“After securing Cabinet approval today, I have now asked my officials to draft the necessary legislation that will see Pay-Related Benefit introduced in the second half of 2024.”
Social Welfare (Miscellaneous Provisions) Bill 2023
Minister Humphreys also today secured Cabinet approval for the Social Welfare (Miscellaneous Provisions) Bill, which gives effect to the suite of measures contained in Budget 2024.
The 2024 Social Welfare Budget package is the largest in the history of the State and provides for a range of supports for pensioners, carers, people with disabilities and low-income families.
Among the Budget measures included in the Bill are:
- €12 increase in weekly social welfare payments from January 2024;
- An increase of €10 per month in the rate of Domiciliary Care Allowance, bringing the monthly rate to €340;
- Increases in the income thresholds for the Working Family Payment by €54 per week, for all family sizes;
- Extension of Child Benefit to 18-year-olds in full-time education from September 2024;
- Extension of Parent’s Benefit from 7 weeks to 9 weeks from August 2024.
Following today’s decision by Government, Minister Humphreys commented:
“The Social Welfare Bill gives effect to a wide range of important Budget measures.
“These measures were secured as part of the largest Social Welfare package in the history of the State.
“They will help to support our pensioners, carers, people with disabilities and low-income families with the ongoing cost-of-living pressures.
“I’m particularly pleased to have agreed an extension of Child Benefit to 18-year-olds in full time education, which I know will benefit a lot of families”.
The measures approved by Cabinet also provide for the introduction of key structural reforms to the State Pension system from January 2024. These include:
- The introduction of flexible access to the State Pension (Contributory) to allow people who defer their pension at age 66 to receive an actuarially adjusted higher payment rate up to age 70.
- Enhanced pension provision for long-term carers of incapacitated dependents, who have provided care for 20 years or more, by attributing the equivalent of paid contributions for the time spent caring. This is to help with gaps in the contribution record faced by long term carers for State Pension (Contributory) purposes. This will mean that some long-term carers who never had a contributory pension will receive one for the first time in their own right.
Minister Humphreys added:
“The measures agreed by Cabinet today represent a significant structural reform of the Irish State Pension System.
“I am delighted in particular to secure approval for measures to ensure that long-term carers are provided with contributions for gaps in their social insurance record. This will help ensure that thousands of people, mainly women, who have spent time caring for loved ones will now be able to qualify for the State Pension.”
In addition, statutory sick pay will increase from three days to five days, as part of measures approved in today’s Bill.
The Personal Micro Credit Scheme provides for small-scale loans by credit unions to borrowers who have difficulty accessing low-cost credit. The Bill increases the maximum amount of a loan that Credit Unions can provide under the scheme, with the weekly Direct Debit transactions fees covered by the Department. These measures aim to encourage take up of this scheme so that vulnerable people do not use money lenders.
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 persons 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.
- For all recipients, 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.”
Long-Term Carers Contributions will make it easier for a carer to qualify for a State Pension (Contributory) when they reach pension age. Any period of 20 years or more in which a carer is registered with the Department of Social Protection as providing full-time care for an incapacitated dependent, usually to a loved one, can be included in their pay-related social insurance (PRSI) record.
As per the PRSI Roadmap which has 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. They 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