Tax and pay-related social insurance (PRSI) contributions are deducted where relevant from your pension. Tax rates and various terms and conditions are subject to change from time to time and are normally announced by the Minister for Finance in his annual budget speech.

Your Tax Office will issue a new tax certificate to you annually. A copy will also issue to the ESB Pensions Office. This certificate shows your Cut-Off Point and Tax Credit. The Tax Office also issues a leaflet to you explaining how the Cut-Off and Tax Credit are calculated. If you have any queries on this you should contact your local Tax Office. These details are included on your tax certificate.

• The Tax System
• Entry Point to Income Tax
• Tax Exemption Limits
• USC
• P60
• P.R.S.I./(Health) Contribution
• Medical Cards

The Tax System

• The standard tax rate is applied to your total taxable pension up to your cut-off point for each pension payment period.
• The balance of your total taxable pension above this cut-off point in that period is taxed at the marginal or higher tax rate.
• Your tax credit is deducted from the total amount of tax as calculated above (i.e. the total at the standard rate and higher rate) to arrive at the actual tax which is payable for the period. This amount is deducted from your total pension.
• These amounts are shown on your payslip.
• The amounts under each heading are accumulated for each payment period during the year, i.e. for pension, tax credits, cut-off points and tax paid/due.

Entry Point to Income Tax
In 2010, a single PAYE person could earn up to €18,300 before paying Income Tax. As a direct result of the reductions in the Personal Tax Credits, the same individual will start paying Income Tax in 2011 on any income over €16,500.

Tax Exemption Limits
There is currently a total exemption from income tax for individuals aged 65 and over whose income does not exceed €20,000 if single or widowed and €40,000 if married where either spouse is over 65. These limits have been reduced to €18,000 for single or widowed individuals and to €36,000 for a married couple for 2011

USC
The Income Levy, introduced in 2009 has been abolished for 2011 and subsequent years.

Universal Social Charge (USC)
With effect from 1st January 2011, a new Universal Social Charge (USC) will be introduced. The USC will replace the current Health Contribution Levy and Income Levy. USC will be chargeable on gross income, including notional pay, at the following rates:

• Where income does not exceed €4,004 (€77 per week), no USC liability will arise.
• Where income exceeds €4,004, the entire amount will be liable to USC at the above rates.
• There is no exemption from the USC for holders of full medical cards
• Social Welfare payments are exempt from the USC

P60
Every February ESB Pensions Office will issue you an important document called a P60 which confirms your total pension, tax and PRSI payments for the previous tax year. This should be retained as it will be required by the Department of Social and Family affairs if you are making a claim or the Revenue Commissioners if you are completing a tax return.

Pay Related Social Insurance (P.R.S.I.) changes from 1st January 2011

• PRSI will be a stand alone deduction in 2011 as the Health Contribution Levy has been abolished.
• The Employee PRSI ceiling of €75,036 will be abolished. For employees on high earnings, this will result in them paying PRSI on total income with no earnings ceiling.

Medical Cards
A medical card issued by the Health Service Executive (HSE) allows the holder to receive certain health services free of charge.

To qualify for a medical card your weekly income must be below a certain figure for your family size. Cash income, savings, investments and property (except for your own home) are taken into account in the means test - see general income guidelines below.

Normally, your dependent spouse or partner and your children are also covered for the same range of health services. Medical cards are small plastic cards (similar in size to a credit card). Your medical card will show your doctor's name. It is usually issued for a year, after which it is reviewed.

Medical card holders pay the Universal Social Charge on their income (except for social welfare and HSE payments), but at a maximum rate of 4%. The only exemption is for people earning less than €4,004 per annum.

GP Visit Cards
Unless you have a medical card, visits to GPs (family doctors) are not free. If you do not qualify for a medical card on income grounds, you may qualify for a GP Visit Card. It is means tested, but the income limits are 50% higher than for the medical card.

What health services are normally covered?
If you have a medical card, you are entitled to:

• Free GP (family doctor) services
• Prescribed drugs and medicines (with some exceptions). See section on prescription charges.
• In-patient public hospital services, out-patient services and medical appliances
• Dental, optical and aural services
• Some personal and social care services, for example, public health nursing, social work services and other community care services

Prescription charges for medical card holders
From 1st October 2010 medical card holders pay .50 cent charge per prescription item, subject to a monthly ceiling of €10 per family.

Additional information is available on HSE website www.hse.ie