John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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The Minister of State, Deputy Brophy, is taking the matter in the absence of someone from the Department of Social Protection. His background of being self-employed is appropriate to answer this query. This matter stems from a constituent who is almost a neighbour of mine. He retired at the beginning of 2022. This query is also in the context of trying to encourage more people to make provision for private pensions and the auto-enrolment system being introduced by the Department. The matter centres on a specific point. The constituent in question and others who have approved retirement funds, ARFs, and who receive an annual income from those funds of €5,000 or less are not liable for PRSI on it. There is an exemption for self-employed PRSI on income under €5,000.

However, this was not brought to the attention of the individual and is not brought to the attention of others in a similar position. As we move forward, I suspect a great many people may potentially be caught in a similar situation. When my constituent contacted the Department of Social Protection, he was allowed, as we all know, a four-year refund, which is the maximum the Department and Government agencies allow. The problem is that he paid his 4% contribution for more than ten years. As a result, he has suffered the loss of six or seven years of PRSI contributions. When he contacted his insurance provider, he was directed to the Department. The Department quite rightly, understandably and efficiently refunded him four years of payments but he was left at a loss for the rest. There is a clear lack of communication that this anomaly exists, not least a lack of communication with the public who have invested in ARFs.

It is also unjust that people have been making contributions which they were not required to and were not forewarned about. I spoke directly with the Minister, Deputy Humphreys, about the issue earlier today. I realise that I may not have phrased the Topical Issue matter accurately when I submitted it this morning, but it does raise the question that there is a cohort of people who made contributions for which they will receive no benefit. They made PRSI contributions that they were not obliged to make and they will be at a loss because of them.

It is incumbent on the Department of Social Protection, in the first instance, to communicate this issue to the public when they are deciding to contribute to the approved retirement funds, ARFs, and the insurers to make that information clear to people when they are deciding to make provisions for their retirement. This anomaly exists and I suspect quite a few people will be surprised when they reach retirement age and discover that they should not have been paying a contribution for which they will receive no benefit.

Colm Brophy (Dublin South West, Fine Gael)
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I am aware the Deputy raised this matter directly with the Minister, Deputy Humphreys, at an earlier meeting. I am taking this Topical Issue matter on her behalf.

Social insurance coverage was extended to self-employed workers in 1988. Since then, self-employed workers whose income is €5,000 or more in a contribution year, are liable to pay a social insurance contribution at the class S rate of 4%, subject to a minimum annual payment of €500. Self-employed contributors are currently covered for a wide range of social insurance benefits, including the contributory State pension; the contributory widow's, widower's or surviving civil partner's pension; the contributory guardian's payment; maternity, adoptive and paternity benefits; the invalidity pension; the partial capacity benefit, if in receipt of the invalidity pension; the self-employed jobseeker's benefit; and the parent's benefit.

The scope to the charge of self-employment social insurance contributions and the underlying nature of self-employment are wider than those that apply to contributions payable by employed contributors. A person is defined as a self-employed contributor on the basis of income received rather than economic activity. Unearned income falls within the scope of self-employment for social insurance purposes, both for the purposes of paying self-employment contributions and for establishing possible entitlements.

Drawdowns from the approved retirement fund are chargeable to income tax and are reckonable emoluments for social insurance purposes. The social insurance class S charge is deducted at source by fund managers for people aged under 66 years, or if the recipient of the distribution is a modified class contributor, the charge is recorded as class K.

The Social Welfare Consolidation Act 2005 provides that an application for the return of contributions shall be made within four years of the last day of the contribution year in respect of which the contributions were paid. I know the Deputy acknowledged this in his contribution about the case he raised. This timeframe is in line with the Revenue time limit for the refund of taxes. As is the case with tax refunds, there is no discretion within the governing legislation to allow contributions to be returned outside this limit.

John Paul Phelan (Carlow-Kilkenny, Fine Gael)
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I know, as most people do, that Revenue has no wriggle room in terms of refunds beyond four years but, on the other hand, there is always wriggle room to chase up unpaid taxes. This is understandable but it should work both ways. I realise that in the context of this Topical Issue debate, we will not be able to change the four-year rule. I will endeavour to speak with the Minister and the Minister of State afterwards and ask them to ensure that this anomaly is flagged when people are considering contributing to the ARF, and that it will become mandatory for the insurer taking these contributions to notify those who will be in receipt of an annual income from this source of less than €5,000, that a PRSI contribution is not required.

I note from the Minister of State's response that self-employed contributors are entitled to receive a wide range of social insurance benefits. I know that PRSI contributions fall under all sorts of different categories, but several benefits that are available to other PRSI contributors, such as dental and other benefits, are not available to the self-employed.

I return to the original issue raised. The person I referred to was not self-employed. They worked in different pay as you earn, PAYE, jobs but for the purposes of calculations, they effectively became self-employed when they used part of their income for the ARF 12 years ago. This put them into a new category that they we not previously aware of. The Department should be to the fore in resolving that lack of clarity and information.

Colm Brophy (Dublin South West, Fine Gael)
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I hear very clearly what the Deputy said about clarity around the information. I will raise this with the Minister on behalf of the Deputy, as I know he did earlier. As I outlined, there are parameters within which this takes place, in particular, the four-year time limits, which is consistent with the process in other areas. The Deputy's key point on providing clarity of information and awareness to people is very important and I will continue to raise that with the Minister on his behalf.