MICHAEL NOONAN has defended his decision in PRSI to raise the minimum PRSI contributions paid by self-employed workers, and scrap a tax-free allowance for employees, in Budget 2013.

Measures announced yesterday will see employees whose gross weekly pay is above €352 per week – which includes almost all full-time workers – have to pay an extra €5.08 per week in PRSI, as they can no longer have some of their income declared PRSI-free.

The minimum annual PRSI contribution for self-employed workers, meanwhile, is to be increased from €253 to €500 – the equivalent of €4.75 per week.

PRSI income is ringfenced and put into the Social Insurance Fund, which is used to pay for welfare payments such as jobseeker’s allowance and child benefit.

“People on high incomes pay in more [in PRSI] than they’ll ever get out” in terms of social benefits, Noonan explained on RTÉ’s Today with Pat Kenny.

“Somebody on law pay – somebody on €25,000 – an extra €5 a week [from them], to replenish the social welfare fund, will guarantee their benefits but in particular their contributory pension,” he said.

“It’s about the best value for €5 that anyone can ever get,” he said.

The increase for the self-employed had similar benefits, he said.

€500 a year, to guarantee you a contributory pension, is the best value anyone will ever get in this world.

Noonan said that the Social Insurance Fund, which is currently running at a deficit because of the lower-than-expected number of people in work and the higher numbers claiming social welfare, needed to be replenished.

“You can’t really swap [PRSI increases] for other tax measures, because other tax measures don’t go into the Social Insurance Fund,” he said.

Public expenditure minister Brendan Howlin added that while the abolition of the PRSI-free allowance for employees was one way of getting the “significant replenishment” that the fund needed, other measures had also been introduced.

“Unearned income from rental, consultants fees, private income fees, will be taken into the net of PRSI,” Howlin said.

Income from those sources was previously not liable for PRSI.

Read: PSRI changes will hit employees by €264.16 per year

In full: TheJournal.ie‘s coverage of Budget 2013