The Social Welfare Bill 2011 as passed by Dáil Eireann last month provides for the employee PRSI charge on share based remuneration and the abolition of employer PRSI relief on employee pension contributions.

Section 13 of the Bill amends the definitions of reckonable earnings and reckonable emoluments and inserts a definition for share based remuneration. That section also confirms that share based remuneration arising in 2011 in respect of shares that are the subject of a written contract or agreement that is in place before 1 January 2011 is not subject to the employee PRSI charge.

As highlighted in Chartered Accountants Budget Special bulletin, the current relief of 50% of employer PRSI for employee contributions to occupational pension schemes and other pension arrangements is being removed. This follows the previous 50% reduction announced at Budget 2010 effectively completely wiping out this relief. Section 14 of the Bill as passed legislates for the abolition of this relief with effect from 1 January 2012.

Section 15 of the Bill as passed provides for the reduction in the redundancy rebate with effect from 1 January 2012. The Bill confirms that where an employer makes a claim for a rebate on or after 1 January 2012 in respect of a lump sum payment paid to an employee, and the date of redundancy occurs before 1 January 2012, the reduction will not apply.