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PRSI Gap following Redundancy - impact on future benefits and pension

  • 08-08-2022 9:08am
    #1
    Eirae
    Registered Users, Registered Users 2 Posts: 6 ✭


    Hi All,

    I am about to be made redundant (effective mid-September) and I would like to take some time off before starting a new job (until January 2023).

    I will get the mandatory redundancy (capped 600eur/week for 10y of employment)

    I am not sure yet if I will claim job seeker benefits (as I may be travelling in fall and I understand you need to be in the country to get your JB payment).

    My big wonder before I make any decision is what the impact will be on my PRSI contributions and benefits. Is there anything I should consider in regards to impact on later benefits and pension? Anything else I should consider?

    Thanks a lot in advance



Comments

  • #2
    c_keogh
    Registered Users, Registered Users 2 Posts: 4 ✭c_keogh


    Hi Eirae,

    You are correct. If you do not claim job seekers benefits (during a period that you are not actively seeking employment - proved unemployment) then you will not have any contributions credited to your social welfare account for that period. (Article 58, Social Welfare (Consolidated Contributions and Insurability) Regulations, 1996).

    The ability to claim various social welfare benefits (e.g. State Pension, Maternity benefit etc) depends on the amount of contributions standing to a persons credit at any particular point in time. You can just Google to find the specific requirements for each type of benefit.

    The requirements are generally much lower than most people assume. For example, people often worry about their future entitlement to a the State Contributory Pension. However, to get the highest rate for State Pension (currently €253 per week) as person only has to have 520 weekly contributions (throughout their working whole life), with an average of 48 weeks per year. Taking a few months to travel is not going to cause a person to fall below that threshold (over a 40+ year working life). Even if it did, falling to an average of 40 weeks only reduces the benefits by €5 per week (currently €248).



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