Vol. 472 No. 2
66 Mr. O'Dea asked the Minister for Social Welfare his views on the appropriate level of social insurance contribution in view of the fact that the Department of Enterprise and Employment strategy paper on the labour market and the Forfás report, Shaping our Future recommended a reduction in the burden of employer social insurance costs. [22167/96]
The appropriate level of social insurance contribution rates is that which maximises employment creation and retention while maintaining and improving pensions and benefits for workers who have made social insurance contributions during their working lives. This is a judgment to be made in the light of changing economic and social circumstances. In Ireland the level of social insurance contributions, including employer's PRSI, is low by international standards.
The position is reviewed each year in a budgetary context. Regard is had to the amount of finance needed to maintain and where possible improve the old age contributory pension, the retirement pension, the widow's pension and the other contributory pensions and benefits. Specifically in relation to employer's PRSI contributions, regard is also had to the extent to which low rates of employer's PRSI might assist employers to create additional jobs and maintain existing jobs.
I do not see scope for overall reductions in the total amount of social insurance contributions because of the need to protect the position of the 405,000 people who are paid weekly pensions and benefits based on social insurance contributions which they have made during their working lives. However, changes in the structure of contribution rates are possible in order to meet specific requirements which arise from time to time, including the need to maintain and improve competitiveness and the overall employment environment. Significant reductions in employer's social insurance contribution rates have been introduced in the last three budgets at a recurring cost of £162 million per annum.
68 Mr. M. McDowell asked the Minister for Social Welfare the circumstances in which maintenance payments made between separated spouses are subject to PRSI. [20316/96]
Social insurance is payable on maintenance payments where there is a legally enforceable agreement between the former spouses unless the individuals concerned are entitled to, and opt for, joint assessment for income purposes. Where social insurance is payable, the former spouses' individual incomes, whether from employment, maintenance payments or other sources, are not regarded in aggregate as "the same moneys". In particular, maintenance payments are not regarded merely as a transfer from one individual to another such as is the case with a married or cohabiting couple who have not separated. In these circumstances, each individual's income becomes an entirely separate entity for social insurance purposes.
Where the couple is separated but the marriage has not been dissolved or annulled and both continue to live in the State, the individuals concerned may opt for joint assessment for income tax purposes i.e. as if they were still living together. In these cases, maintenance payments are disregarded for the purposes of PRSI, income tax and levies even if paid under a legally enforceable maintenance agreement.
This option was extended in the Family Law Act, 1995, to couples who have a foreign divorce where neither has remarried. A provision in the Divorce Bill, which shortly will be enacted, will extend similar treatment to people who, in the future, obtain divorces in Ireland.
Maintenance payments that are not legally enforceable have no significance for PRSI, income tax of levies. In effect, they are treated as a transfer similar to income sharing between a cohabiting couple.
