The Pandemic Unemployment Payment is to be extended until next April but will be gradually reduced to €203 per week over that period based on the pre-pandemic earnings of the claimant.
The total cost of extending the PUP scheme from now until April is estimated at €2.24 billion - around €380 million more than would have been paid out if the PUP claimants were on the standard Jobseekers' Allowance.
The scheme will close to new applicants from 17 September, but for those already on it, there will be three rates of payment instead of two.
The new top rate of €300 (down from €350) will apply to those who earned over €300 per week before the pandemic.
Those who earned €200-€300 pre-Covid will see their payment fall from €350 to a new rate of €250.
Sources stress that while this is a reduction of €100 per week, affected claimants will still receive between 83% and 125% of their pre-pandemic earnings.
Claimants who earned less than €200 per week prior to the pandemic will continue to receive €203.
These rates will continue until February, at which point those who earned €200-€300 pre-pandemic will move from the €250 Pandemic Unemployment Payment rate to Jobseekers' Benefit of €203.
Those who previously earned over €300 will see their PUP payment fall to €250.
Finally, from 1 April, the remaining PUP claimants will be required to apply for the standard Jobseekers’ Allowance, and the PUP scheme will be closed.
The scheme had been due to expire on 10 August, but it is understood the Minister for Social Protection Heather Humphreys was anxious to avoid a "cliff-edge" reduction in benefits for people who might not have been able to return to work.
The PUP was launched on 16 March as a flat rate €350 per week emergency payment to provide income support to those who lost their jobs.
At the peak of the crisis in early May, 598,000 people were claiming the PUP - though as the economy has gradually re-opened, that figure has fallen to 313,000.
Following complaints that some lower paid or part-time claimants were better off on the PUP, the Government introduced a two-tier system.
Those who were earning less than €200 per week prior to the pandemic had their payment reduced from €350 to €203 (the Jobseekers' Allowance rate). Those earning above €200 retained the full €350.
At the time, the government argued that no claimant would be worse off than they were before the pandemic.
