The Government's Social Insurance Fund, which underpins state welfare and pension benefits, has plummeted from a surplus of just under €4 billion at the end of 2019 to a deficit of almost €1.2 billion due to the pandemic, the Department of Social Protection has confirmed.
The sharp reduction highlights the unprecedented government spending on Covid-related supports such as the Pandemic Unemployment Payment, coupled with a €920mn collapse in PRSI revenue from people out of work.
The special 0.5% PRSI rate for people on the Employment Wage Subsidy Scheme also contributed to the shortfall.
The Social Insurance Fund (SIF) is funded by PRSI contributions.
That income is used to pay for social insurance benefits such as unemployment supports and the state pension on a "pay as you go" basis each year.
Where there is a shortfall between PRSI contributions received and the cost of social insurance benefits/pensions paid out in any given year, and there are no accumulated surpluses from previous years, the Department says that "the Exchequer acts as the residual financier of the Fund".
While the SIF saw a significant deficit following the 2008 financial crisis, as the economy recovered it recorded a surplus in each of the years between 2016-2019.
By the end of 2019, the total accumulated surplus was almost €4 billion.
However, last year's income from PRSI fell by €920m - over 7% - compared to 2019, as hundreds of thousands of workers were laid off due to the pandemic.
At the same time, 2020 expenditure on benefits and Covid-related supports such as the Pandemic Unemployment Payment rose by over €4 billion.
The SIF deficit for 2020 was €3.348 billion - though when the pre-existing surplus of €3.888 billion was factored in, the year ended with a surplus of €450m.
By the end of last month, however, even that reduced surplus had been wiped out, with the deficit now estimated at €1.18 billion.
However, the Department insisted that all social insurance entitlements will be delivered.
"In the event that expenditure on social insurance benefits continues to exceed PRSI income, annual shortfalls in the SIF will be met by the Exchequer," the Department stated.