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Social Welfare Code Issues

Dáil Éireann Debate, Tuesday - 16 October 2012

Tuesday, 16 October 2012

Questions (82, 98, 101, 102, 364)

Seamus Kirk

Question:

82. Deputy Seamus Kirk asked the Minister for Social Protection the proposals, if any, she has to provide adequate social welfare supports to the self-employed; and if she will make a statement on the matter. [44412/12]

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Mary Lou McDonald

Question:

98. Deputy Mary Lou McDonald asked the Minister for Social Protection her intentions with regard to the extension of further social welfare benefits to the self-employed. [44554/12]

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Martin Ferris

Question:

101. Deputy Martin Ferris asked the Minister for Social Protection when she will present options for consideration, having regard, inter alia, to the results of the July 2012 actuarial review of the social insurance fund; and if the detail of these options will be made available to members of the Oireachtas well in advance of Budget 2013. [44566/12]

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Éamon Ó Cuív

Question:

102. Deputy Éamon Ó Cuív asked the Minister for Social Protection if she is considering any changes to PRSI contributions for self-employed persons; and if she will make a statement on the matter. [44416/12]

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Bernard Durkan

Question:

364. Deputy Bernard J. Durkan asked the Minister for Social Protection the extent to which she continues to review the position in respect of entitlements to means tested social welfare payments for the self-employed which will take into account the economic circumstances of families that find themselves in situations of social and economic distress; and if she will make a statement on the matter. [44872/12]

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Written answers

I propose to take Questions Nos. 82, 98, 101, 102 and 364 together.

Self-employed persons are liable for PRSI at the Class S rate of 4% which entitles them to access long-term benefits such as State pension (contributory) and widow's, widower's or surviving civil partner's pension (contributory). Ordinary employees who have access to the full range of social insurance benefits pay Class A PRSI at the rate of 4%. In addition, their employers make a PRSI contribution of 10.75% in respect of their employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI Class A. (For employees earning less than €356 per week, the rate of employer’s PRSI is 4.25%).

The third Actuarial Review of the Social Insurance Fund, as at 31 December 2010, was completed by consultants KPMG in June 2012 and laid before each House of the Oireachtas on 24 August 2012. The Review covers a 55 year period from 2011–2066 and builds on the findings of the 2000 and 2005 Actuarial Reviews of the Fund.

One of the issues examined in the 2010 Review was the long-term cost implications to the Social Insurance Fund (SIF) and the break-even contributions rates required to provide invalidity pensions to the self-employed and to provide jobseeker’s benefit for self-employed workers. The report found that the effective annual rate of contribution, or the required contribution as a percentage of salary, needed to provide the core full-rate State pension (contributory), which is the benefit currently available to self-employed contributors, is approximately 15%. This compares favourably with the 4% rate currently paid by the self-employed. An incremental increase in contribution rates from approximately 15% to 16% would be required if jobseeker’s benefit in addition to core State pension (contributory) is provided. The average contribution rate required for the core State pension (contributory) plus jobseeker’s benefit and the invalidity pension is estimated to be in the region of 17.3%.

Last year I established the Advisory Group on Tax and Social Welfare to meet the commitment made in the Programme for Government. The Advisory Group will, inter alia, examine and report on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable.

The Advisory Group’s overall method of working is based on producing modular reports on the priority areas identified in the Terms of Reference. Where possible, the aim is to provide recommendations that can be acted upon in time for the annual budget, estimates and legislative cycle and to allow the Government to best address its commitments under the EU-IMF Programme of Financial Support. The Group has been considering the issue of social insurance coverage for the self-employed and will submit its report once its examination of the various questions has been completed.

Self-employed workers may establish eligibility to assistance-based payments such as jobseeker’s allowance and disability allowance. In the case of jobseeker’s allowance they can apply for the means-tested jobseeker’s allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services. In general, their means will take account of the level of earnings in the last twelve months in determining their expected income for the following year and, in the current climate, account is taken of the downward trend in the economy. As in the case of a non-self-employed claimant for jobseeker’s allowance or disability allowance, the means of husband/wife, civil partner or co-habitant will be taken into account in deciding on entitlement to a payment .

Any proposals to extend additional cover to the self-employed will have to be considered in a budgetary context, taking account of the finding of the Actuarial Review that the self-employed achieve very good value for money compared with the employed – when the comparison includes both employer and employee contributions in respect of the employed person.

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