Thursday, 26 January 2012
Department of Social Protection
Social Welfare Code
Question 108: To ask the Minister for Social Protection if her attention has been drawn to a loophole in governing legislation that grants a block exemption to certain public sector workers which absolves them of the requirement to pay PRSI on secondary income streams and unearned income such as rental and investment income as well as income from dividends, deposits and savings and from overseas investments; if she intends to close this loophole; and if she will make a statement on the matter. [4626/12]
Permanent and pensionable employees in the public service, other than those who were recruited after 6 April, 1995, are liable to pay social insurance contributions at modified PRSI rates during their working lives. Subject to having the required number of PRSI contributions, employees who pay modified contributions may be entitled to the following payments: (a) widow’s/widower’s (contributory) pension; (b) guardians payment (contributory); (c) bereavement grant, and (d) carer’s benefit. Modified rate contributions are not reckonable for establishing entitlement to state pension contributory.
While these workers currently pay PRSI on earnings derived from their civil/public service employment, they do not pay PRSI on any other stream of income, whether that additional income is earned from a trade or profession or from unearned sources such as income from dividends, deposits and savings and from overseas investments.
One of my key goals in the Department is to reform the system of social protection to put it on a sounder financial footing in the future. One of the matters I am most concerned about is the deficit in the Social Insurance Fund. It is my intention to widen the PRSI income base to make certain types of unearned income, such as those outlined above, liable to PRSI. Any proposal to bring additional sources of income within the base on which PRSI is charged would have to be considered taking account of all of the implications, including the potential for providing access to additional social insurance entitlements.