Séamus Brennan (Dublin South, Fianna Fail)

Family members working together are generally not insurable under the Social Welfare Acts. Spouses of employed or self-employed contributors are specifically excepted from social insurance contributions in respect of their working activity with their spouses. However, there is scope within the provisions of social welfare legislation to enable spouses who are partners in an enterprise, or who work together in a legally incorporated business, to be insurable and thereby accrue entitlement to contributory pensions in their own right.

At the heart of the issue lies the fact that current social welfare provisions recognise that family members regularly support each other without having any intention of entering into formal contractual arrangements. Employment under a contract of service as an employee, or as a contract for services as a self-employed person, is, by its very nature and necessity, a formal agreement between two or more parties. All contracts bring with them rights and responsibilities that, in this instance, include compliance legislation relating to PRSI, taxes and employment rights.

In general, close family members must show an express agreement to overcome the presumption that parties did not intend to be bound in a legally binding contract. Evidence of a partnership between spouses or the incorporation of a business will overcome this presumption and establish liability for Class S contributions providing income is above the annual threshold of €3,174. These provisions apply to couples engaged in farming activities and other self-employment activities, for example in retailing or in providing professional services.

The exception of spouses from PRSI liability in respect of a shared occupation does not preclude them in certain circumstances from accessing the voluntary PRSI contribution scheme. Access to this scheme requires a minimum number of 260 paid contributions. Where a person has been previously insured as an employee or a self-employed person, is no longer compulsorily insured and is under 66 of age, he or she can opt to pay a voluntary social insurance contribution.

Voluntary contributions will maintain social insurance cover for pensions such as retirement, State, widow's and widower's pensions, guardian's payment and the bereavement grant, depending on the rate at which voluntary contributions have been paid. These contributions maintain pension coverage at the level equivalent to that for which the person was last compulsorily insured.

Additional information not given on the floor of the House.

The amount to be paid as a voluntary contribution is a percentage of annual income. For those who were previously self-employed, the voluntary contribution is paid at a fixed amount of €253 per annum.

The requirement to have 260 paid contributions to gain access to the voluntary contribution scheme ensures that the requisite number of paid contributions is in place to establish a contributory pension entitlement. While some spouses may not be able to accrue the paid contributions through farming, large numbers are now engaged in off-farm employment which enables them to accumulate the requisite number of paid contributions.

Under the existing social welfare provisions, where formal employment or partnership relationships are intended between spouses or assisting relatives, the legislation provides the scope necessary to allow parties to enter into arrangements that will enable them to gain access to social insurance coverage. On the voluntary contributions scheme, the requirement to have 260 paid contributions to gain access to the scheme is appropriate. I am always willing to consider possible improvements.

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