The Minister is welcome to the House. I am rather disappointed the Minister for Employment Affairs and Social Protection is not present but I am sure the Minister for Education and Skills will have an answer for this in his reply. Class K PRSI for office holders was first introduced in 2011 under the Social Welfare and Pensions Act 2010. For the first time, all office holders, including Members of both Houses of the Oireachtas, judges, the Attorney General, the President and city and county councillors, were required to pay class K PRSI, which is deducted at a rate of 4% from their salaries but for which there is no entitlement to social protection benefits.
As soon as I was elected to the Seanad in 2014, I raised this issue on a regular basis and began work as a rapporteur on a report of the Oireachtas Joint Committee on Education and Social Protection on class K. Having failed to progress the matter in the Houses, despite numerous debates and the report, I took a constitutional challenge to class K in the High Court. My main concern was the impact of class K on city and county councillors, who receive a small representational payment on which many are dependent and the additional deduction without benefit was excessively punitive.
In anticipation of the outcome of the legal challenge, the then Minister for Social Protection, Deputy Leo Varadkar, who is now Taoiseach, introduced an amendment to the Social Welfare Bill 2016 on Committee Stage to remove city and county councillors from the office holders category, and their PRSI categorisation was changed to class S. I continued with my legal challenge to class K and was joined by a number of councillors. The case was settled with all of the plaintiffs, myself included, being compensated and the State accepting that class K was wrong.
It is my contention that the continued imposition of class K PRSI on all other office holders, including Members of the Oireachtas, is unconstitutional, as office holders are paying for a social welfare fund without any right to benefit from it. In essence, class K PRSI is a tax on public service. While it was only fair that councillors on a paltry representational payment were removed from the category of office holders in the 2016 Act, all other office holders, including Members of the Oireachtas, remained and have been paying class K at 4% ever since. I only found out in recent days that I am still on class K, having won a High Court action to remove me from it and to put me on class S.
There are a number of problems with class K with which I am sure the Minister is familiar.
The insurance benefits that accrue to a person paying class K PRSI are nil. The terms and conditions of employment for an elected Senator or Deputy do not carry any entitlements to illness benefit once the Members exceed the period of office. If an election is called and the Senator or Deputy loses his or her seat, there is no illness benefit cover. Worse still, having lost a seat and illness benefit from the Oireachtas, the Deputy or Senator is not entitled to claim any illness benefits through his or her social protection contributions. There is no entitlement to invalidity pension or any of the benefits going with invalidity pensions.
As a Member of the Oireachtas, I have the facility to make voluntary PRSI contributions to keep a class A stamp going. The price of a voluntary contribution for me is €5,000 per year. Depending on the class of PRSI being paid before coming to the Oireachtas, the figure for Members can be as low as €500 but in my case and the case of many of my colleagues, it is €5,000. With a class A contribution, a person is entitled to an old age pension. Many of my colleagues and those of the Minister have historically been elected for one term and at the end of that term, being contributors at class K has destroyed their social protection record, meaning that in years to come, they will have a disrupted PRSI record. It is simply unacceptable.
The Taoiseach was wise when, as Minister for Social Protection, he removed the line in the 2010 Act referring to a member of a local authority within the meaning of the Local Government Act 2001. That action should be extended to Members of the Oireachtas. If we need to do something to ensure Members of the Oireachtas cannot benefit from a contributory old-age pension, it needs to be legislated for separately.