# A PRSI question??



## bogartsqueen (14 Sep 2009)

Can someone tell me where exactly does my prsi contribution go every week?
I earn 528.22 gross a week, I pay 10.96 to the income levy and usually €30 tax, and my prsi is €40 + or - €2 a week.  
I have private health insurance (not sure if that makes a difference)
I've been working full time for 11 years and my status is the same, I am under 55 and single.  I've never claimed off the social for anything and hopefully will never have too. 

Just wondering where does the prsi money go to? Am I entitled to claim anything back?


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## Towger (14 Sep 2009)

bogartsqueen said:


> Just wondering where does the prsi money go to? Am I entitled to claim anything back?



It goes in the government's pockets along with tax (PAYE).  No. Unless you have glasses or get your teeth cleaned etc.

BTW, if you earned E500 per week you would be about 20 cent better off!


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## gipimann (14 Sep 2009)

Your PRSI contributions (depending on the type you're paying) will count towards a State Pension when you reach 66.


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## Towger (14 Sep 2009)

Umm, I wonder how much that will be worth in real terms by the time I reach 66.


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## Bronte (14 Sep 2009)

Even if it's not worth as much as it is currently in real terms, it will probably always be at least equal to the means tested pension and it very important as you get it no matter how wealthy you are.  This is very important.  

It's also about the only pension that has any real guarantee of being paid out.  I think we should go down the route they did in Australia with the state pensions.  That seems to be a great system.


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## Welfarite (14 Sep 2009)

Bronte said:


> I think we should go down the route they did in Australia with the state pensions. That seems to be a great system.


 

Tell us more!


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## Towger (14 Sep 2009)

I thought the Chile Pension System was supposed to be one of the best in the world. In the link they have to put (at least) 10% of salary into their pension fund, although I think it was closer to 30% in Pinochet's day.


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## bogartsqueen (14 Sep 2009)

BTW, if you earned E500 per week you would be about 20 cent better off![/QUOTE]


Is that 20% better off or 20c?


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## Towger (14 Sep 2009)

bogartsqueen said:


> Is that 20% better off or 20c?



Cent. When your earn over €500 (in very simple terms as PRSI is so complex even most accountants don't understand it) you pay 8% PRSI after the first €127. Between €356.01 and €500 you pay 4%. BTW. What counts toward your Pension is your number of Insurable Weeks (Stamps), the goverment just spends the PRSI they take in on the day to day running of the country. So we have to hope that by the time we retire the country will have enough (day to day) income to pay us decent pensions. There a 'National Pension Fund' but in reality that will be used up in just paying the Public Sector 'Index Linked' Pensions. These pensions are linked to the current salary of the job being  performing when the employee retired. So in the likes of the ESB, is/was standard practice to give employees promotions a couple of years or so before retiring. It was estimated (during the boom times) that for a private sector employee to have the equivalent pension as a Public Sector employee, they would have to contribute almost 30% of their income for life into a Private Pension Scheme.

Now before Public Sector brigade start up, please use the search option to find my and others previous posts on the subject, which are complete with links and calculations.


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## bogartsqueen (14 Sep 2009)

Thanks Towger


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## Bronte (15 Sep 2009)

Welfarite said:


> Tell us more!


 
I remember reading about it about 3 to 5 years ago I think but the idea was that it's compulsory for everybody and it is a certain percentage of your salary (I think it's quite a high percentage) but you were guaranteed a certain payout on retirment.  It means they won't have a pension time bomb.  But from a country looking after itself everybody paying into it knows how much they pay how much they will receive and there is no pension intermediary (private pensions) taking their cut.  A win win for a country and it's citizens.

The problem with the Irish system is that no one is sure how much one will get at the end and therefore it's impossible to know how much else one needs to have in retirement.  I feel it won't be at the level it is at now because of the pension time bomb.


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## Welfarite (15 Sep 2009)

How is the payment guaranteed and by whom? at the moment in Irel;and, we pay about 10% PRSI (normally) that guarantees a state pension at 65 years of age, at the rate set by government.


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## Bronte (15 Sep 2009)

But Welfarite the prsi payment is not equal to what you get at the end.  I know PRSI is 'technically' divided into different things, dole/pension/health etc but this doesn't really mean anything as the money doesn't really go into those areas and as you said it's the government who decides what is paid.  Basically in Irealnd prsi is just tax by another name.  There is no correlation between what you pay in, where it goes and how much you get out.  

I'm checking by email with an Austrialian friend how it works there and I'll get back on this if I find out.


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