Government Disability Programs
Ireland’s Social Welfare supports are designed to provide for the basic necessities of life. Employers and employees in Ireland make PRSI (Pay Related Social Insurance) contributions of 10.95% employer and 4% employee on all income to support this system. These payments fund the invalidity pension, illness, job seekers/unemployment benefit, maternity leave, paternity leave, and the state pension. Employers are not required to pay sick leave or any maternity
or paternity benefits; however additional employer support is valued by employees.
Supplemental Disability Programs
Companies and individuals may establish either group or income protection (Long-Term Disability) benefits assuring up to a maximum 75% of income (less the state annual social welfare benefit of €10,556) where the individual becomes long-term ill and/or disabled or incapacitated. These policies are generally established to cover the individual to retirement age, should the person remain verifiably and medically certified unable to carry out their duties. A deferred period is required and ranges from 13 weeks to 52 weeks to commence payment on becoming ill.
Ordinary employer and employee pension contributions can be assured in addition under this policy, as can the cost of maintaining life cover. Insurers will not assure beyond the stated maximum as they are required to maintain a financial incentive for the employee to return to work. There is no cost or tax implication to employees where an employer funds this type of policy. For this reason, it is of particular value as a benefit. Where individuals take their own policies out, and pay the premiums themselves, they may claim income tax relief on the premiums at their marginal rate.
Group Life/Death In Service plans complement the income protection benefit and are normally arranged to pay out between three and four times annual base salary. Again, where an employer establishes this plan for its employees, there is no cost implication for them. Such plans are set up under a trust arrangement. An employee completes a letter of wishes document to inform the trustees where they would wish the benefit to be paid. Trustees must take this into account but are not bound by this and must identify all of the financial dependents of the deceased prior to determining payment.