Dáil Éireann Debate, Thursday - 16 July 2015
109. Deputy Denis Naughten asked the Tánaiste and Minister for Social Protection her plans to allow self-employed persons pay extra voluntary contributions in order that they will be allowed access to social welfare entitlements; and if she will make a statement on the matter. [30266/15]
View answerSelf-employed persons who earn €5,000 or more in a contribution year are liable for PRSI at the class S rate of 4%, subject to a minimum payment of €500, and are entitled to access long-term social insurance 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.
In June 2011 I established the Advisory Group on Tax and Social Welfare to examine a number of specific issues including the issues involved in providing social insurance cover for the self-employed.
In its 2013 report the Group found 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. Therefore it 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.
However, the Group found that extending social insurance for the self-employed was warranted in cases related to long term sickness or injuries, through the invalidity pension and the partial capacity benefit schemes. In this regard the Group recommended that the rate of contribution for class S should be increased by at least 1.5 percentage points, payable on a compulsory basis only.
This recommendation will be considered in conjunction with the Actuarial Review of the Social Insurance Fund 2010 finding that the self-employed achieve better value for money compared to employed workers. The Actuarial Review found that the effective annual rate of contributions needed to provide the core full-rate state pension (contributory), currently available to the self-employed, is approximately 15%.
The Advisory Group considered the issue of allowing self-employed persons pay extra contributions, at their own discretion, in order that they would be allowed access to social welfare entitlements and decided that this could lead to the selection of bad risks. The whole principle of social insurance is social solidarity where everybody pays in and, if needed, cover is available. Allowing people to opt in or opt out could result in a negation of the social solidarity contributory principles which underline the system.
Any changes to the PRSI system for the self-employed would have to be considered in a budgetary context and, in particular, the funding position of additional entitlements.
