Dáil Éireann Debate, Tuesday - 17 July 2012
24 Deputy Michael Moynihan asked the Minister for Social Protection her views on the viability of the PRSI fund in terms of social protection costs; and if she will make a statement on the matter. [34968/12]
Amharc ar fhreagra59 Deputy Thomas P. Broughan asked the Minister for Social Protection if she will report of the deficit in the Social Insurance Fund; her plans to address this deficit; and if she will make a statement on the matter. [34335/12]
Amharc ar fhreagraI propose to take Questions Nos. 24 and 59 together.
The Social Insurance Fund (SIF) is a pay-as-you-go social insurance scheme that is financed by contributions from employees, employers, the self-employed and by a contribution or ‘subvention' from the Exchequer when the cost of the benefits paid from the Fund exceeds the contribution income. The Exchequer is the residual financier of the Fund and such subventions were the norm for over 40 years. For example, in 1967, the State contribution was 38% of SIF expenditure and almost 29% in 1985.
From 1997 to 2007 inclusive, social insurance income exceeded Fund expenditure. In 2008, the current operating balance of the SIF moved into deficit with expenditure exceeding income by €255m. This deficit accelerated in 2009 when it reached €2.49 billion and further rose to €2.75 billion in 2010. In addition, the surplus carried forward from previous years was eliminated during 2010, giving rise to the need for Exchequer subvention for the first time since 1996.
In total, the operating deficit of the Fund over the period 2008 to 2011, inclusive, was very close to €7 billion. The Revised Estimates for my Department provide for a deficit of nearly €1.82 billion in 2012. Significant exchequer subvention will be required to meet ongoing expenditure requirements in the absence of reductions in expenditure levels or increases in PRSI income.
I am most concerned about the deficit in the SIF and one of my key goals is to reform the system of social protection and to put it on a sounder financial footing for the future. In the context of the SIF, Budget 2011 introduced a number of changes to the PRSI system and, in Budget 2012, my colleague the Minister for Finance announced a further widening of the PRSI base from 2013 to cover rental, investment and other forms of income from 2013.
In addition, I established the Advisory Group on Tax and Social Welfare last year in line with the commitment made in the Programme for Government. The Group will, inter alia, examine and report on issues involved in providing social insurance cover for self-employed persons while the Actuarial Review of the Social Insurance Fund will inform both short to medium term and long term policy development in relation to the social insurance system generally.
Any proposals to address the sustainability of the Fund will have to be considered in a budgetary context.
