Barry Andrews (Dún Laoghaire, Fianna Fail)

I am taking this Adjournment matter on behalf of the Minister for Social and Family Affairs. Spouses who are actively engaged in a commercial partnership, including the operation of a farm, as opposed to simply being the joint owners of a property, are treated as individual self-employed contributors and are thus liable to social insurance contributions. On foot of a programme for Government commitment, an information leaflet, entitled "Working with your spouse: how it affects your social welfare contributions and entitlements", was developed between the Department of Social and Family Affairs and the Revenue Commissioners to set out the social welfare and tax implications of families co-working in a shared business. It was published on 25 June 2008.

The leaflet clarifies that spouses who operate in a commercial partnership may be brought into the social insurance system, subject to certain criteria. In this way, both spouses incur a liability to pay self-employed PRSI and build up entitlement towards a contributory State pension and other social welfare benefits. Following the above campaign, more than 1,000 applications for commercial partnership status were received, of which 579 applications have been finalised, including 508 that were approved. Applications for pension or benefit are submitted and processed in the usual way.

To qualify for a contributory State pension, several conditions must be satisfied. A person must have at least 260 paid social insurance contributions, with a yearly average of at least ten contributions paid or credited since entry into the social insurance scheme. Applicants must have entered into social insurance before attaining the age of 56 years. In addition, subsection 110(1) of the Social Welfare Consolidation Act 2005 provides that a self-employed contributor shall not be regarded as satisfying the qualifying conditions for a contributory State pension unless he or she has paid self-employment contributions in respect of at least one contribution year before attaining the pensionable age of 66 years and all self-employment contributions payable by him or her have been paid. The above condition in respect of one year's paid self-employed contributions before reaching age 66 has been in existence since 5 April 1995.

A State pension is a valuable benefit and it is important that the conditions applied ensure that those qualifying for payment have an adequate and sustained history of contributions to the social insurance fund over their working lives. Approximately 268 applications for a contributory State pension have been received under this scheme. Following a review of these pension claims, it was discovered that several individuals who had been in receipt of a pension did not satisfy the condition whereby they were required to have paid at least one year's self-employment contributions before reaching age 66. As they did not satisfy this condition, they have been notified that their claims have been disallowed from the date of pension award. To date, 97 claims for contributory State pension which were in payment have been disallowed and 16 customers have had their rates reduced. However, following the provision of additional information by some customers and further investigation in conjunction with Revenue, ten of the 97 cases above have had their payments reinstated. A further 46 customers have failed to satisfy the qualifying conditions and accordingly their claims have been refused. One further case is currently under investigation. Overpayments will be determined in the above cases and the customers will be notified and requested to repay the amounts involved. However, a recovery officer may reduce or cancel an overpayment based on the circumstance of an individual case, in line with the governing legislation.

There are 121 additional applications for commercial partnerships currently being processed by the scope section of the Department where the persons concerned have not paid any self-employment contributions prior to reaching age 66. If a favourable partnership decision is reached these persons may incur a PRSI liability for the years in question. These customers will not satisfy the condition that they paid self-employment contributions prior to reaching age 66. Last week the Department contacted all applicants to advise them of the position and to ascertain whether they wish the Department to continue its investigation or if they wish to withdraw their application.

While the publication of the leaflet to which I referred clarified existing procedures in regard to the recognition of commercial partnerships between husbands and wives for social insurance purposes, including retrospective payment of social insurance, it did not involve a change in existing policy or administration. In particular, the clarification of the position did not alter people's potential entitlements, and all applicants for the contributory State pension must continue to satisfy the eligibility conditions contained in legislation.

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