John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

I thank the Deputies for raising this important issue. Self-employed individuals who have fallen on hard times or who are without work for some time may establish entitlement to assistance-based payments.

Those who have been previously self-employed can apply for the means-tested jobseeker's allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services. In general, their means will take account of the level of earnings in the last 12 months in determining their expected income for the following year and, in the current climate, account is taken of the downward trend in the economy. As in the case of a non-self-employed claimant for assistance-based payments, the means of husband or wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

As for social insurance benefits, 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 pension, contributory, and widow's, widower's or surviving civil partner's pension, contributory. Ordinary employees who have access to the full range of social insurance benefits pay class A PRSI at the rate of 4%. In addition, their employers make a PRSI contribution of 10.75% in respect of such employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI class A. I note that for employees earning less than €356 per week, the rate of employer's PRSI is 4.25%.

The issue of providing access to short-term benefits to the self-employed was examined in the recently published third actuarial review of the Social Insurance Fund, as at 31 December 2010. The report on the review was completed by consultants KPMG in June 2012 and laid before each House of the Oireachtas on 24 August 2012. The review covers a 55-year period from 2011 to 2066 and builds on the findings of the 2000 and 2005 actuarial reviews of the fund. The scope of the 2010 review was to update the results of the 2005 review, taking account of the policy, economic and demographic changes with particular reference to income and expenditure projections, as well as break-even contribution rates. The review also considered the effects of the various policy options, existing Government commitments and planned reforms. One of the issues examined in the review was the long-term cost implications to the Social Insurance Fund, SIF, and the break-even contributions rates required to provide invalidity pensions to the self-employed and to provide jobseeker's benefit for self-employed workers. The report found that the effective annual rate of contribution or the required contribution as a percentage of salary needed to provide the core full-rate State pension, contributory, which is the benefit currently available to self-employed contributors, is approximately 15%. This compares favourably with the 4% rate currently paid by the self-employed. An incremental increase in contribution rates from approximately 15% to 16% would be required were jobseeker's benefit, in addition to core State pension, contributory, to be provided. The average contribution rate required for the core State pension, contributory, plus jobseeker's benefit and the invalidity pension is estimated to be approximately 17.3%.

Last year the Minister for Social Protection established an advisory group on tax and social welfare and one issue currently under consideration by the group is that of providing social insurance cover for self-employed persons to establish whether such cover is technically feasible and financially sustainable.

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