Joan Burton (Dublin West, Labour) | Oireachtas source

I thank Deputy Butler because his is a very sensible suggestion. The 2010 actuarial review of the social insurance fund, which I published last year, determined that the self-employed are obtaining better value for the level of their current social insurance companies than are those in employment, where they and their employer pay a combined contribution of 14.75%. The actuarial review went so far as to say that the effective annual rate of contribution needed to provide the core full-rate State pension currently available to self-employed contributors is approximately 15%.

The advisory group's proposal was to move to an area of cover for self-employed people that it considered was very important in respect of long-term or permanent incapacity or illness, and to cover them for this, for a small amount extra. There are private insurance schemes available, income protection schemes to cover long-term personal illness and invalidity but, as I am sure Deputy Butler knows, and as most small business people know, while they are in the private sector these are extraordinarily expensive. The advisory group's proposal would have given this kind of cover for long-term invalidity and illness, which happens to a percentage of people who cannot work again, either for themselves or as employees. This would have given them a route back, and through the partial capacity benefit scheme that I brought in since becoming Minister, as part of the reform of social welfare, it would have given them an opportunity to become involved part-time, depending on the level of capacity.

I agree with Deputy Butler that the committee's proposal of 1.5% was modest. Perhaps it is slightly ahead of its time and the organisations to which Deputy Butler refers would on reflection and study, and perhaps through talking to self employed people, review whether this really is good value for money. The principle of social insurance is that the whole population concerned is covered and contributes. That allows what we hope is a small number of people affected to be in effect covered by a community rating principle. On the other hand, if one goes for private cover that is done on a slightly different rate and the private institutions charge handsomely for it. Some self-employed people can certainly afford that but I am aware that many of the self employed people about whom Deputy Butler speaks would not be in a position to buy that kind of very expensive scheme for themselves.

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