C&AG: Concern over PRSI payments to the National Training Fund

A new report from the Comptroller & Auditor General found weaknesses in the process used to collect and allocate PRSI receipts

The NTF is used to support lifelong learning, vocational education and training. File picture 

Concerns have been raised over the accuracy of the funding for the National Training Fund (NTF), which is paid for by employers and is currently valued at €1.8bn.

A new report from the Comptroller & Auditor General (C&AG) found weaknesses in the process used to collect and allocate Pay-Related Social Insurance (PRSI) receipts. The Revenue collected €18.1bn in PRSI payments last year, largely used for the Social Insurance Fund (SIF) to pay for social welfare payments. 

However, a smaller but significant sum is paid into the NTF, which is used to support lifelong learning and vocational education and training. It is funded by a 1% levy on employers, collected through the PAYE/PRSI system.

However, the levy is incorporated into employer PRSI contribution rates, so employers do not separately report NTF levy amounts in their payroll submissions to Revenue. As a result, the department of social protection allocates the amounts received between the SIF and the NTF using estimates based on underlying payroll data from Revenue.

According to the report, Revenue said that a reconciliation between the amounts paid and the underlying payroll data would only be achieved with a full real-time payroll system which they considered would not be an efficient or effective method of tax collection and would be costly and burdensome on employers and their businesses.

The issue was further complicated by the covid-era supports such as the Employment Wage Subsidy Scheme, which included a reduced PRSI rate but the NTF levy was still applied at the full rate to reckonable, leading to a likely over-allocation from the SIF to the NTF.

The report recommends that the department and Revenue should review the way in which available PRSI payroll-related data is captured and processed to establish if more timely and detailed information can be provided to the department.

An accounting officer at the department of social protection said they will explore with Revenue if further improvements can be made in a cost-effective manner. 

"However, we note that changes to the current approach are likely to require legislative change as well as IT systems and process development. Any decision to progress this would have to take account of the costs involved as compared to the potential benefits," they stated.

Revenue made a similar comment that requirement for additional data would require policy decisions that facilitate legislative change, as well as parallel IT developments.