Skip to main content
Normal View

Social Welfare Code

Dáil Éireann Debate, Thursday - 5 March 2015

Thursday, 5 March 2015

Questions (36)

Denis Naughten

Question:

36. Deputy Denis Naughten asked the Tánaiste and Minister for Social Protection her plans to review the current schemes to ensure that they support the self-employed, in view of the fact that they are the main driving force for sustainable job creation; and if she will make a statement on the matter. [9176/15]

View answer

Written answers

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) as well as guardians payment (contributory), maternity benefit and adoptive benefit. 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 8.5%).

Self-employed workers who have lost their business and become unemployed may access social welfare supports by establishing eligibility to assistance-based payments such as jobseeker’s 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. As in the case of a non-self-employed claimant for jobseeker’s allowance, the means of husband/wife, civil partner or co-habitant will be taken into account in deciding on entitlement to a payment.

In September 2013, I published the report of the Advisory Group on Tax and Social Welfare on Extending Social Insurance Coverage for the self-employed. The Group was asked to examine and report on issues involved in extending social insurance coverage for self-employed people in order to establish whether or not such cover is technically feasible and financially sustainable, with the requirement that any proposals for change must be cost neutral.

The Group found that the current system of means tested jobseeker’s allowance payments adequately provides cover to self-employed people for the risks associated with unemployment. In this context, the Group noted that almost 9 out of every 10 self-employed people who claimed the means tested jobseeker’s allowance during the three-year period from 2009 to 2011 received payment. Consequently, the Group was not convinced that there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker’s benefit.

The Group also found that extending social insurance for the self-employed was warranted in cases related to long term sickness or injuries. To this end, the Group recommended that Class S benefits should be extended to provide cover for people who are permanently incapable of work, because of a long-term illness or incapacity, through the invalidity pension and the partial capacity benefit schemes. The Group further recommended that the extension of social insurance in this regard should be on a compulsory basis and that the rate of contribution for Class S should be increased by at least 1.5 percentage points.

This recommendation will require further consideration in conjunction with the findings of the most recent Actuarial Review of the Social Insurance Fund which indicated that the self-employed achieve better value for money compared to the employed when the comparison includes both employer and employee contributions in respect of the employed person. The Actuarial Review found that the effective annual rate of contributions needed to provide the core full-rate State pension (contributory), currently available to self-employed contributors, is approximately 15%.

My colleagues in Government and I will continue to reflect on the findings of the Advisory Group on this issue and will consider the recommendations contained in the report taking into account future developments in terms of the budgetary and fiscal situation.

Top
Share