Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I move amendment No. 4:

In page 7, between lines 13 and 14, to insert the following:“Employment contributions – members of local authorities

10.Section 30A (inserted by section 14 of the Social Welfare and Pensions Act 2010) of the Principal Act is amended—

(a) in the definition of “public office holder”, by the deletion of paragraph (h), and

(b) in the definition of "public body"—

(i) in paragraph (a), by the substitution of "State, or" for "State,", and

(ii) by the deletion of paragraph (b).".

The purpose of the amendment is to exclude members of a local authority from the class K charge. At present, councillors pay PRSI at the class K rate of 4% on their income as public officeholders, provided that income exceeds €5,200 per annum. Payment of class K by councillors is not reckonable towards establishing entitlement to social insurance pensions and benefits.

Separately, I propose to amend regulations which will, in general, bring the income of members of a local authority into the class S PRSI charge as self-employed contributors. This will mean that members of a local authority will continue to pay a 4% charge on their income, but will be now be entitled to access the same social insurance benefits available to self-employed people, on the basis of paying class S.

I propose this amendment having listened carefully to the views of councillors, Senators and Deputies on the matter. The class K charge was introduced for good reason during the financial crisis. However, it is now appropriate that the position of local authority members in the years ahead be re-examined.

I am particularly cognisant of the changing role of councillors, which means that more and more of them are engaged on a full-time basis in their role as public representatives. Where this is the case, they have no access to social insurance benefits and no contributory pension when they retire.

Given that other public officeholders, such as members of the Oireachtas and the Judiciary, have access to very generous pension arrangements and severance payments, I am convinced that we need to do something to improve the position of councillors given their important role in the democratic process and uniquely unfair situation where they pay 4% PRSI and receive no benefits.

The measure will allow councillors to gain access to the social insurance system and thereby build up entitlements to benefits, including entitlement to the contributory State pension, which is payable at retirement age. Payment of class S contributions will also give entitlement to a range of other benefits, subject to satisfying the contribution conditions for these schemes. In addition to State pension, councillors will be entitled to access widow's, widower's or surviving civil partner's pension should a councillor die while at working age, guardian's payment, maternity benefit, paternity benefit and adoptive benefit should they need to take time off to look after a child.

With effect from December 2017, as we discussed earlier, self-employed workers will have access to invalidity pension on the same basis as employees. Should a local authority member fall sick and have to resign from the council he or she could potentially avail of an invalidity pension. In addition, the self-employed will have access to the treatment benefit scheme which we mentioned previously.