asked the Minister for Social Welfare whether changes are proposed in the administration of the maternity allowance; and if he will make a statement on the matter.
Written Answers. - Maternity Allowance.
635.
The Deputy may have in mind the recent adjustment of the rate of allowance from 80 per cent to 70 per cent of reckonable weekly earnings in the case of the maternity scheme for women in employment. This scheme was introduced in April 1981 as part of the Second National Understanding for Economic and Social Development. The purpose of the scheme was to ensure that women would be fully compensated for loss of earnings after all deductions from wages or salary. The formula devised at that time, following discussion with representatives of employers and employees, allowed for payment of an allowance amounting to 80 per cent of reckonable weekly earnings.
Because of changes which have occurred in the meantime in tax and other deductions, the original formula was providing levels of benefit very much higher than was intended. By September 1983 the continued use of the 80 per cent factor meant an effective replacement rate of take-home pay of 110 per cent. Therefore, the anomaly was corrected by altering the rate from 80 per cent to 70 per cent of reckonable earnings with effect from 2 April 1984.
The effect of this change is that women benefiting under the scheme will receive the equivalent of their net take-home pay as originally intended. The table following illustrates the replacement ratio as it has varied since the scheme commenced:
Maternity Scheme for Women in Employment
Replacement Ratios for Women in the Transportable Goods Industries
|
Item |
Sept. 1981 |
Sept. 1982 |
Sept. 1983 |
Sept. 1984 (est) |
|
£ |
£ |
£ |
£ |
|
|
1. Average gross weekly pay |
79.64 |
90.00 |
100.50 |
112.50 |
|
2. Average net weekly pay |
61.45 |
69.57 |
74.43 |
81.64 |
|
3. Reckonable earnings for PRB purposes |
58.90 |
70.67 |
82.27 |
93.40 |
|
(79/80) |
(80/81) |
(81/82) |
(82/83) |
|
|
4. Amount of benefit payable at 80% rate |
47.12 |
56.54 |
65.82 |
74.72 |
|
5. Average tax rebate |
11.54 |
15.90 |
15.88 |
18.08 |
|
6. (4) plus (5)As % of net pay |
58.66(95%) |
72.44(104%) |
81.70(110%) |
92.80(114%) |
|
7. % rate required for 100% replacement of net pay |
85% |
76% |
71% |
68% |