Dáil Éireann díospóireacht -
Wednesday, 4 Jul 1990

Vol. 401 No. 1

Ceisteanna — Questions Oral Answers. - PRSI Rates.

Michael Bell

Ceist:

10 Mr. Bell asked the Minister for Social Welfare if widows and unmarried mothers who are not claiming benefit or assistance and who are in the paid work-force pay PRSI at a higher rate than those who claim benefit or assistance; his views on whether this situation is fair; if it was his intention to bring about such a situation; if this is a discouragement to those widows and unmarried mothers who wish to become self-sufficient and who are struggling against the odds to support themselves and their families; and if he will make a statement on the matter.

Dr. Woods

The Social Welfare Act, 1990, provides for the phasing out of the arrangement whereby women getting widows pension, deserted wives benefit, deserted wives allowances or unmarried mothers allowance pay PRSI contributions at a lower rate than employees generally. From April this year, these women pay PRSI at a rate of 3 per cent on earnings from employment. Next year, the rate will rise to 4 per cent and the following year the standard PRSI rate of 5.5 per cent will apply in all cases.

In the light of this development I have provided that women getting these payments will be entitled to half-rate disability benefit, in addition to their pension, for a period of up to 15 months when they are out of work through illness. They are already entitled, where they become unemployed, to half-rate unemployment benefit which also applies for 15 months. In addition, they will now receive the full PRSI tax allowance for which they were not previously eligible.

Mr. Bell

Is it not a fact that where claims are broken the two tier payment system will not continue? Would the Minister agree there has been an anomaly in this area and will the steps he has taken correct that anomaly?

Dr. Woods

The intention is to correct the anomaly. It is also intended to provide disability benefit for 15 months.

Mr. Garland

I would put it to the Minister that this is another example of the total unworkability of the PRSI system. It is totally unjust, is full of anomalies and is a disincentive to employment creation.

An Ceann Comhairle

That is a matter for another Minister. It is not the responsibility of the Minister in charge today.

Mr. Garland

Could I have a reply from the Minister please?

Dr. Woods

Certainly. I totally disagree with the Deputy. I would be very happy to debate this matter with him at any time. I spoke to a widow last night who has four children and she will be looked after under this scheme, and will be able to go back to work at the same time. She was very relieved to learn that from mid-July she will receive £116 per week from this system, which is very necessary.

Miss Flaherty

I was not going to comment on this matter but in the light of the Minister's last reply I have to ask how he can say that he has given a benefit to people this year when he took it away last year? Some widows who are working have to pay £30 PRSI if they are on a reasonable income——

An Ceann Comhairle

This is leading to argument.

Miss Flaherty

For the Minister to make a virtue of giving back something he took away——

An Ceann Comhairle

The Deputy is embarking on a statement now.

Dr. Woods

The net effect is that a widow with three children on contributory widow's pension and earning £120 a week will receive £101 from the social insurance fund with effect from 27 July. The PRSI payable would be £3.60 and the reduction in tax, £2.64. Therefore the net cost per week would be £0.96. In addition, the disability benefit for 15 months is restored. The cost of restoring the disability benefit for that period far outweighs the cost of paying the PRSI contribution. That is why the Widow's Association welcome that move.

Miss Flaherty

The Minister has cleverly brought them into the net by sleight of hand.