Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I thank the Deputy for raising this issue, which I am taking on behalf of the Tánaiste and Minister for Social Protection.

Self-employed persons pay PRSI at the class S rate of 4%, subject to a minimum annual payment of €500. This 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 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 8.5%.

Self-employed workers may access social welfare supports by establishing eligibility to assistance-based payments such as jobseeker's allowance and disability allowance. In the case of jobseeker's allowance, they 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 assessing means from self-employment, income from the previous 12 months is used as an indicator of likely future earnings. Given the variety of self-employment situations, the means assessment procedures are applied in a flexible manner to ensure that circumstances that would be likely to lead to a significant variation, either upward or downward, in the level of a person's income from one year to the next are taken into consideration. It is recognised that the downturn in the economy had an impact on many self-employed persons and the consequent reduction in their income and activity levels. This may be reflected in any assessment of their means from self-employment for jobseeker's allowance purposes. As in the case of a non-self-employed claimant for jobseeker's allowance or disability allowance, the means of husband, wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

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 for self-employed people 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 out of 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 that there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker's benefit.

The group found, however, 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 in respect of the employed person. My colleagues in government and I will reflect on the findings of the advisory group on this issue and will further consider the recommendations contained in the report and that will take account of future developments in the budgetary and fiscal position.

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