Vol. 77 No. 5
I move:
That the Social Welfare (Members of the Defence Forces) Regulations, 1974, proposed to be made by the Minister for Social Welfare and laid in draft before Seanad Éireann on the 7th day of March, 1974, under subsection (4) of section 10 of the Social Welfare (Pay-Related Benefit) Act, 1973, be approved.
The regulations which are the subject of the resolution and those which are covered by the next resolution on the Order Paper deal with the question of bringing noncommissioned officers and men of the Defence Forces within the scope of the scheme of pay-related benefit under the Social Welfare (Pay-Related Benefit) Act, 1973. I propose therefore to deal with both resolutions together.
Pay-related benefit is designed for persons whose social insurance covers them for disability benefit, maternity allowance and unemployment benefit. It will be paid as a supplement to those benefits at a rate which will be based on the claimant's average weekly earnings between £14 and £50 in a previous income tax year. The scheme will be financed by pay-related contributions levied on employers and employees. These contributions will amount to 3 per cent of the employee's current earnings up to a ceiling of £2,500 in the year, the employer paying 2 per cent and the employee 1 per cent. They will be collected by the Revenue Commissioners through the income tax machinery.
When the Social Welfare (Pay-Related Benefit) Act, 1973, was passed it was envisaged that the scheme, initially at any rate, would cover only persons in industrial, commercial and services-type employment paying the ordinary flat-rate social insurance contributions. Provision was made in the Act however to enable the scheme to be extended to other employees by regulations and agricultural workers were recently brought within the scope of the scheme by such regulations, a draft of which was approved by both Houses of the Oireachtas.
Commissioned Officers in the Permanent Defence Forces will not come within the scope of the pay-related benefit scheme as their position under the Social Welfare Acts is similar to that of pensionable civil servants, local authority officials, pensionable teachers and so on. On the other hand, noncommissioned officers and men are covered for all benefits of the social insurance system. They are not eligible however to draw disability benefit or unemployment benefit while serving in the Defence Forces but they pay flat-rate social insurance contributions at a special rate while serving and these contributions enable them to qualify for disability benefit and unemployment benefit after they leave the Defence Forces.
In pursuance of the policy of extending the scheme to cover classes of employees other than those in respect of whom the ordinary rates of employment contributions are payable it was agreed, following discussions with the Department of Defence, that noncommissioned officers and men of the Defence Forces should be included in the scheme on a basis which would enable them to qualify for pay-related benefit should the need arise after they leave the service. For this purpose the draft regulations which are the subject of the first resolution will apply the provisions of the Social Welfare (Pay-Related Benefit) Act, 1973, to members of the Defence Forces in respect of whom the special rate of flat-rate social insurance contributions is payable. This will be done by including pay derived from their employment in the Defence Forces in the definition of reckonable earnings for the purposes of pay-related benefit and contributions.
As I have already mentioned, noncommissioned officers and men of the Defence Forces are not eligible to draw disability benefit or unemployment benefit while in service. Consequently they will not be eligible while serving for pay-related benefit, which will be payable as a supplement to those benefits. It would be inequitable that they should be charged pay-related contributions on reckonable earnings which they will not be able to use to get pay-related benefit.
Provision is therefore made in the draft regulations so that when the stage has been reached where the earnings of a member of the Defence Forces in a particular income tax year can no longer be used for pay-related benefit purposes because he has continued in the service, then an appropriate refund of contributions which were paid on reckonable earnings in excess of £700 in that income tax year may be made. If however the man leaves the service while his earnings in an income tax year can still be taken into account for purposes of the scheme he will of course be eligible for pay-related benefit on foot of those earnings and no refund of contributions will be involved. The regulations which are the subject of the first resolution are being made under section 10 of the Act which requires that drafts of regulations must be laid before each House of the Oireachtas and that the regulations cannot be made until the draft has been approved by resolution in each House. It is intended that these regulations should come into force on 6th April, 1974.
In the case of persons already included in the pay-related benefit scheme regulations have already been made to reduce their flat-rate employment contributions payable with effect from 1st April, 1974. A draft of these regulations was approved by Seanad Éireann on 13th February, 1974. It was explained to the House on that occasion that in order to facilitate the collection of pay-related contributions it would be necessary to charge the 3 per cent pay-related contributions on all earnings up to the ceiling of £2,500 in a year.
The effect of this would be that pay-related contributions would be levied on pay up to £700 in the year which is the equivalent of £14 a week for pay-related benefit purposes. Since pay below £14 a week does not attract pay-related benefit there would thus be what amounts to an overcharge of pay-related contributions on that amount. To compensate employers and employees for this overcharge their flat-rate contributions were reduced by 42p, the employee's part being reduced by 14p and the employer's part by 28p. Now that it is proposed to apply the provisions of the Social Welfare (Pay-Related Benefit) Act, 1973, to non-commissioned officers and men of the Defence Forces by regulation, it is proposed also to make similar reductions in the flat-rate social insurance contributions payable in respect of them. The effect of the regulations which are the subject of the second resolution will be to reduce the employee's element of those contributions by 14p and the employer's element by 28p from 1st April, 1974.
These regulations which it is proposed to make under subsection (9) of section 6 of the Social Welfare Act, 1952, also may not be made until a resolution approving of the draft regulations has been passed by both Houses of the Oireachtas.
I recommend both the draft regulations for the approval of Seanad Éireann.
There is no objection to the making of these very desirable improvements. I appreciate the difficulties involved of course in having them during service. The proper attitude is being adopted in regard to contributions.
