Dáil Éireann díospóireacht -
Wednesday, 29 Nov 2000

Vol. 527 No. 1

Written Answers. - Social Welfare Payments.

Pádraic McCormack

Ceist:

118 Mr. McCormack asked the Minister for Social, Community and Family Affairs if he has any proposals to correct the anomaly whereby self-employed people paying a stamp at status S rate are eligible for the contributory old age pension after 66 years but are not eligible for the retirement pension at 65 years; the steps he will take to correct this anomaly; and if he will make a statement on the matter. [27848/00]

Minister for Social, Community and Family Affairs (Mr. D. Ahern)

Class S contributors are currently covered for old age contributory pension, payable from age 66, widow/er's contributory pension, maternity benefit, adoptive benefit, orphan's contributory allowance and bereavement grants. These contributors are not covered for retirement pension which is payable from the age of 65. One of the conditions for receipt of retirement pension is that a person must be retired from insurable employment or self-employment. The retirement condition ceases to apply from the age of 66.

The majority of employees are covered by PRSI class A and are covered for all benefits and pensions, including retirement pension. The degree of cover available to class S contributors is reflected in the rate of contribution payable. Class S contributors pay social insurance contributions at a rate of 5% whereas the combined employee and employer rate applicable to class A contributors is either 13% or 16.5%, depending on the level of earnings.

Any consideration of the extension of cover for retirement pension to class S contributors would have to have regard to the financial implications of such a move, the necessity to adjust class S contribution rates to reflect the increase in cover provided and the administrative implications of applying a retirement condition to the self-employed.

Gerry Reynolds

Ceist:

119 Mr. G. Reynolds asked the Minister for Social, Community and Family Affairs his views on whether welfare recipients are hardest hit by current inflation; and the plans he has to reduce this hardship, as the unemployment allowance increase of £4 per week in 1999 has been wiped out by inflation. [27849/00]

Minister for Social, Community and Family Affairs (Mr. D. Ahern)

I share the Deputy's concerns in relation to the impact of inflation on people dependent on social welfare payments. Last December's budget provided for a £7 a week increase for pensioners over 66; a special increase of £5.90 a week for invalidity pensioners aged under 65 years and a £4 increase for other recipients under 66. The £7 increase for pensioners represents an increase ranging between 7.9% and 8.9%, while the £4 general increase represents an increase ranging between 5.2% and 5.6%.

Since this Government took office, social welfare payments have been substantially increased in real terms. For example, social welfare pensioners aged 66 years and over have received total increases of between 23% and 27% compared with an increase of 11.2% in the cost of living during the same period.

It is also clear that for many social welfare recipients and their families, the overall rate of increase in payment this year will be ahead of the increase in the cost of living. Pensioners who received the £7 increases are well ahead of inflation. In addition, special increases in the rates of qualified adult allowances were provided this year, ranging from 8% to 17%. The budget also provided for significant increases of between 22% and 23% in monthly child benefit payments.

Furthermore, as part of our commitment to align the tax and social welfare changes by 2001, all of the increases were paid four weeks earlier this year, from the beginning of May. We have already announced that the increases will take place at the start of the tax year from April next. In addition, I recently announced that this alignment of tax and social welfare changes will be maintained when the tax year is changed to coincide with the calendar year in January 2002. Social welfare weekly rates will be increased from January in that year – a full 23 weeks earlier than when we came into office. This progressively earlier payment of increases has to be taken into account in assessing the real level of increases which have been provided by this Government over its period of office.

The higher than expected inflation has, of course, had the effect of reducing the real value of this year's budget increases in social welfare payments. However, in the forthcoming budget the Government will be taking full account of the increased level of inflation in setting increases for 2001.