Thursday, 4 November 2004

Questions (144, 145, 146)

Brian O'Shea

Question:

141 Mr. O’Shea asked the Minister for Social and Family Affairs his proposals to extend social welfare benefits to legally separated spouses whose only income is the maintenance payments from the other separated spouse and who still pay the health levy at 2% and PRSI at 3% of income (details supplied); and if he will make a statement on the matter. [27656/04]

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Written answers (Question to Minister for Family)

Legally enforceable maintenance payments paid by one spouse to another are assessable as reckonable emoluments, as provided for under the Social Welfare (Consolidation) Act 1993 and liable for social insurance contributions at PRSI class S. Section 23 of the Social Welfare Act 2000 provided for new PRSI arrangements relating to legally enforceable maintenance payments between spouses. Previously a charge for PRSI arose by both the payer and the recipient of a maintenance payment, amounting in effect to a double payment of PRSI. The revised provisions ensure that PRSI is not charged twice on maintenance payments and that a refund is available to the payer where such occurs. The maintenance recipient continues to be liable for PRSI at class S on the amount of maintenance received. This measure brought liability for PRSI in line with previously existing arrangements for the health contributions and income tax.

Where the recipient of a maintenance payment is in insurable employment and already paying employee contributions at PRSI class A, the recipient is exempted from liability for class S PRSI. In such a case, no social insurance contributions are due on the maintenance payments received. Where a maintenance recipient has income arising from a trade or profession, the maintenance payment is accumulated with other class S income, with liability to social insurance contribution arising accordingly. These arrangements allow the recipient to build an entitlement to social welfare contributory pensions on an individual basis. Payment of class S contributions will enable a self-employed contributor to accrue personal entitlements, most notably to old age contributory pension. Others benefits payable include: widow's or widower's contributory pension; orphans contributory pension; maternity benefit; adoptive benefit; and bereavement benefit.

Any extension of the range of benefits for self-employed contributors who are legally separated from their spouses would have to encompass all self-employed contributors and could give rise to significant additional costs to the social insurance fund.

To extend the range of benefits for self-employed contributors would in any event necessitate an appropriate increase in the rate of PRSI class S contribution. There are no plans at present to extend coverage for further benefits to the self-employed contributors. A self-employed contributor may claim an assistance based payment, such as one parent family payment, unemployment assistance or supplementary welfare allowance. Entitlement to these payments is contingent on fulfilling relevant qualification criteria and satisfying a means test. Income received by way of maintenance from an separated spouse would be assessable as means.

The Department of Health and Children has responsibility for the health levy.

Enda Kenny

Question:

142 Mr. Kenny asked the Minister for Social and Family Affairs the numbers in receipt of family income supplement as against numbers applicable five years ago; if the eligibility threshold of 1999 is comparable to the threshold of 2004; the way in which this index is calculated; his views on increased cost of living being factored into such eligibility threshold; and if he will make a statement on the matter. [27608/04]

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Enda Kenny

Question:

143 Mr. Kenny asked the Minister for Social and Family Affairs the income threshold for eligibility for family income supplement for couples with one, two or three dependent children; if he will provide a breakdown of the way in which and the comparative by which this threshold is determined; the cost of living factors included in this assessment and the standard by which this is determined; and if he will make a statement on the matter. [27609/04]

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I propose to take Questions Nos. 142 and 143 together.

Family income supplement, FIS, is designed to provide cash support for employees on low earnings with families and thereby preserve the incentive to remain in employment in circumstances where the employee might only be marginally better off than if s/he were claiming other social welfare payments. The range of improvements to the family income supplement scheme instituted in recent years, including the assessment of FIS on the basis of net rather than gross income and the progressive increases in the income limits, have made it easier for lower income households to qualify under the scheme.

Budget 2004 provided for further increases in the FIS income limits with effect from January 2004. These increases raised the weekly income limits by €28 at each point, adding an extra €16.80 to the payments of most existing FIS recipients. The minimum FIS weekly payment was also increased by €7, from €13 to €20. The average weekly payment now stands at €74.16 per week, with a total of 14,303 families — end October 2004 — receiving a supplement under the scheme.

The weekly income thresholds for families with one, two and three children are €407, €433 and €458, respectively. At end December 1999 there were 14,686 FIS recipients compared to 14,303 at end October 2004. To ensure that employment remains an attractive option to people with families, FIS thresholds have been increased in line with increases in the rate of unemployment assistance, UA, relevant to each family size, which have exceeded cost of living increases in recent years.

The following tables demonstrate that the 2004 thresholds compare favourably with the 1999 rates when increase in the consumer price index is taken into account, table 1, and list the numbers of FIS recipients each year from December 1999 to October 2004, table 2. Any decision to increase FIS thresholds will be taken in a budgetary context and in the context of priorities generally, having regard to available resources.

Table 1: FIS Thresholds 1999 and 2004.

Family size

1999

1999 Updated to 2004 using CPI*

2004

1 Child

279.34

341.91

407

2 Children

304.73

372.98

433

3 Children

330.13

404.07

458

4 Children

355.52

435.15

483

5 Children

387.27

474.01

515

6 Children

412.66

505.09

541

7 Children

434.25

531.52

562

8 or more

455.83

557.93

584

* Consumer Price Index

Table 2: Number of Recipient Families of Family Income Supplement.

Number

December 1999

14,686

December 2000

13,181

December 2001

11,880

December 2002

12,043

December 2003

12,317

October 2004

14,303