Dáil Éireann Debate, Tuesday - 10 November 2015
166. Deputy Denis Naughten asked the Tánaiste and Minister for Social Protection her plans to provide access to illness benefit payments to the self-employed; and if she will make a statement on the matter. [39518/15]
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.
The cost of extending certain social insurance benefits, including invalidity pension, was considered in the Actuarial Review of the Social Insurance Fund, as at 31 December 2010. The Review covers a 55 year period and builds on the findings of previous Actuarial Reviews, taking account of the policy, economic and demographic changes with particular reference to income and expenditure projections as well as value for money and break-even contribution rates issues.
The Review found 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 report also 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% at national average earnings level. This is compared favourably with the 4% rate currently paid by the self-employed. While the Review did not examine the cost of extending cover for illness benefit to the self-employed it did examine the cost of extending invalidity pension to that group. The Review found that an incremental increase in contribution rates from approximately 15% to approximately 17% would be required.
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 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.
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.
