Joan Burton (Dublin West, Labour)

I am very aware of the very difficult financial position of some self-employed people. However, there must be a balance between contributions made and benefits received. Self-employed persons are liable for PRSI at the class S rate of 4%, which entitles them to access long-term benefits such as State contributory pension and widow's, widower's or surviving civil partner's contributory pension. Ordinary employees, who have access to the full range of social insurance benefits including jobseeker's benefit, pay class A PRSI at the rate of 4%. In addition, their employers make a PRSI contribution of 10.75% in respect of their employees, resulting in the payment of a combined 14.75% rate per employee under full rate PRSI class A. For employees earning less than €356 per week, the rate of employer's PRSI is 4.25%.

In this context, it may be noted that self-employed workers generally achieve better value for money from social insurance compared to employees. The 2005 actuarial review of the social insurance fund found that a self-employed contributor can expect to receive over ten times what he contributes, compared to an employee, who on average receives only three times what he and his employer contribute, despite the fact that the range of benefits available to employees is greater.

The contributory State pension increased at a greater rate than inflation or earnings growth in the period up to 2010, while annuities offer CPI-linked increases. The market cost of an inflation-linked annuity with €12,000 a year in initial benefits is greater than €300,000, without any associated survivors' benefits.

Additional information not given on the floor of the House

Any changes to the PRSI system in order to provide access to short-term benefits such as jobseeker's benefit would have significant financial implications and would have to be considered in the context of a much more significant rise in the rate of contribution payable.

I established the advisory group on tax and social welfare earlier this year to meet the commitment made in the programme for Government. The group will, inter alia, examine and report on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable. I look forward to receiving its report.

The Deputy should be aware that self-employed persons may establish eligibility to assistance-based payments, including jobseeker's allowance. In general, in assessing means, account will be taken of the level of earnings in the last 12 months in determining expected income for the following year. In the current climate, account is taken of the downward trend in the economy.

See this speech in context