Dáil Éireann Debate, Tuesday - 7 November 2023
735. Deputy Fergus O'Dowd asked the Minister for Social Protection to respond to concerns and proposals (details supplied) relating directly to the introduction of a temporary abolition of pay-related social insurance (PRSI) for lower earning workers in 2024, 2025 and 2026 which is a matter for her; and if she will make a statement on the matter. [47921/23]
View answerThe correspondence referred to in the Question seeks a temporary abolition of social insurance liability for low earning workers in 2024, 2025 and 2026 (whether for employees, employers or both). Such a move would have significant financial implications for the Social Insurance Fund.
The Social Insurance Fund derives income, in the main, from social insurance contributions paid by employees, their employers, and self-employed persons. Contributions made can therefore be differentiated from taxation in that those who participate do so in the knowledge that once the contributions and any other scheme specific requirements are satisfied, they will benefit from these contributions in the event of certain contingencies arising during their working life such as unemployment, illness, maternity and, thereafter, upon retirement from the work force. It is essential to ensure the long-term sustainability of the Fund is financially secure to meet these benefits.
The 2020 Actuarial Review of the Social Insurance Fund found that even without any economic shocks to the economy or change to policy, the long-term sustainability of the Fund will face significant challenges. In the absence of any action to tackle the shortfalls, the excess of expenditure over income of the Fund will increase significantly over the medium to long term with an accumulated deficit by 2076 of €500 billion.
In this context, the Government has approved proposals for PRSI changes as one of the primary means of addressing the projected shortfalls in social insurance income. This approach was agreed as an alternative to increasing the State Pension age. Under Budget 2024, the Government agreed to increase all rates of PRSI by 0.1 percentage points effective from 1 October 2024.
Any proposal to introduce a temporary abolition of social insurance liability for low earning workers in 2024, 2025 and 2026 would have to be considered in a budgetary context, taking account of the current economic circumstances and with a view to the sustainability of the Social Insurance Fund.
I trust this clarifies the matter for the Deputy.
