Joan Burton (Dublin West, Labour) | Oireachtas source

Self-employed persons are liable for PRSI at the class S rate of 4%. This entitles them to access valuable long-term benefits such as the contributory State pension and contributory widow's, widower's or surviving civil partner's pension. In September 2013, I published the report of the advisory group on tax and social welfare on extending social insurance coverage for the self-employed. The group was asked to examine and report on issues involved in extending social insurance coverage in order to establish whether such cover is technically feasible and financially sustainable, with the requirement that any proposals for change must be cost-neutral.

The group found that the current system of means-tested jobseeker’s allowance payments adequately provides cover to self-employed people for the risks associated with unemployment. In this context, the group noted that almost nine from every ten self-employed people who claimed the means tested jobseeker’s allowance during the three-year period from 2009 to 2011 received payment. Consequently, the group was not convinced there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker’s benefit. The group also found that extending social insurance for the self-employed was warranted in cases related to long term sickness or injuries. To this end, the group recommended that class S benefits should be extended to provide cover for people who are permanently incapable of work because of a long-term illness or incapacity through the invalidity pension and the partial capacity benefit schemes. The group further recommended that the extension of social insurance in this regard should be on a compulsory basis and that the rate of contribution for class S should be increased by at least 1.5 percentage points.

This recommendation will require further consideration in conjunction with the findings of the most recent actuarial review of the social insurance fund, which indicated that the self-employed achieve better value for money compared to the employed when the comparison includes both employer and employee contributions. The self-employed pay 4% but employer employee contributions for somebody in employment amount to 14.75%. My colleagues in the Government and I will reflect on the findings of the advisory group and we are considering the recommendations, taking into account the economic position.

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