Joan Burton (Dublin West, Labour) | Oireachtas source

-----was originally an insurance based payment. The replacement levy, which the previous Government introduced, was described by the Economic and Social Research Institute in the original papers as a universal social contribution. However, when the then Minister for Finance, Mr. Brian Lenihan, presented it in the budget the levy had morphed into a universal social charge, in other words, a general tax to provide for a range of social spending as opposed to a contribution. One of the issues we need to address is whether we can rebalance the contributory element if the social welfare system. When Lord Beveridge developed the notion of modern social welfare 70 years ago he did so on the basis of an insurance based system. This is an extremely important concept because during their working lives people pay into an insurance based system from which they earn an entitlement to claim if they fall unemployed, become sick or retire. They can, therefore, look forward to some comfort from a fund into which they have paid. In that sense, it is important to keep the social insurance fund in balance.

On Senator Marie Moloney's query about bringing people who are self-employed into the social insurance fund, the actuarial review the joint committee studied last week showed that on an actuarial basis the self-employed, who pay a 4% contribution, do better from the fund than any other group. The 4% contribution gives a self-employed person who becomes unemployed an entitlement to an old age pension or a widow's-survivor's pension on a contributory basis. This represents extraordinarily good value for a 4% contribution. The actuarial review report notes that such a contribution would only fund a pension of around €28 if it were valued on an actuarial basis. The difficulty with regard to self-employed people, as highlighted in the programme for Government, is whether they can be brought into wider social insurance schemes. While this is possible, they would also have to make sufficiently large contributions to make the system viable as the deficit in the fund would otherwise increase.