Dáil Éireann Debate, Thursday - 1 July 2021
129. Deputy Richard Bruton asked the Minister for Social Protection the capacity the social insurance fund has to support workers in the face of new challenges in the work, life environment; and the way this can best be harnessed. [34509/21]
Amharc ar fhreagraSocial insurance contributions from employed workers and their employers, and from self-employed workers are paid into the social insurance fund. All social insurance benefits are paid out of the fund which operates on a pay-as-you-go basis, with the Exchequer acting as the residual financier where there is a shortfall between social insurance income and the cost of social insurance benefits paid.The social insurance fund is currently facing significant financial and sustainability challenges. In 2020, the fund recorded an operational deficit of €3.44 billion. The revised estimate provides for a deficit of €4.2 billion in 2021 as receipts from contributions to the fund are expected to be insufficient to meet expenditure due to the impact of the Covid-19 pandemic on employment and the scale of expenditure on benefits, such as the pandemic unemployment payment, required to mitigate its effects. Funding this deficit will require an Exchequer subvention of €3.76 billion in addition to the remaining €453 million accumulated when the fund was in surplus prior to 2020. While employed workers who are contributors to the social insurance fund have always had access to the full range of benefits available from it, there has been significant expansion of access to such benefits to self-employed workers in recent years. However, the 4% of income contribution rate to the fund by self-employed workers, who are now covered for approximately 93% of the value of all benefits paid by the fund, is 11 percentage points lower than the standard combined employee and employer rate of 15.05% of employee earnings. This is one example of several sustainability challenges facing the fund. The Programme for Government ‘Our Shared Future’ includes two commitments that are likely to impact on the future income and expenditure of the social insurance fund. One being to consider increasing all classes of social insurance over time to replenish the fund to help pay for measures and changes to be agreed including, inter alia, to the State pension system, improvement in short-term sick pay benefits, parental leave benefits, pay-related jobseeker’s benefit and treatment benefit. The second commitment is the establishment of a Commission on Pensions to examine sustainability and eligibility issues with State pensions and the social insurance fund. The Commission was established in November 2020 and I expect that, in accordance with its terms of reference, it will submit its report to me in the near future. Considering the interaction of the social insurance and taxation systems, the terms of reference of the Commission on Taxation and Welfare, established by the Department of Finance in April 2021, includes an intention to examine what changes, if any, should be made to the social insurance system, including structure and benefits coverage, while ensuring sustainability. I expect that the work of this Commission in this regard will contribute to informing future policy in the area of social insurance generally.I, as Minister for Social Protection, am required to have an Actuarial Review of the social insurance fund undertaken at five yearly intervals. The purpose of the review is to determine the extent to which the fund may be expected, in the long term, to meet the demands in respect of payment of benefits and other payments. The review takes account of the adequacy or otherwise of contributions to support benefits and other payments as well as other matters relevant to the current and future financial condition of the Fund. Preparation for the next Actuarial Review of the fund in respect of the year ending 31 December 2020 is underway. The review is expected to be completed and published in 2022. I trust that the foregoing sets out the current financial position of the social insurance fund as well as the initiatives underway with a view to ensuring its financial stability and sustainability in order for it to meet the significant income support challenges required of it in the years ahead.
