Joan Burton (Dublin West, Labour)

As Senator Landy stated self-employed persons are liable for PRSI at the class S rate of 4%. This entitles them to access long-term benefits such as the 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 a combined rate of 14.75% per employee under full-rate PRSI class A. For employees earning less than €356 per week, the rate of employer's PRSI is 4.25%. It may be noted that self-employed workers generally achieve better value for money by paying social insurance compared to employees.

The 2005 actuarial review of the social insurance fund found that a self-employed contributor can expect to receive more than ten times what he or she contributes to the social insurance fund compared to the employee who, on average, receives only three times what he and his employer contributes. This is despite the fact that the range of benefits available to employees is greater. In this context Senator Landy should note that the market cost of an inflation linked annuity with €12,000 per year in initial benefits is in excess of €300,000 without any associated survivor's benefits. The figure of €12,000 is the approximate value of the State pension to which self-employed people gain access by virtue of the PRSI currently paid. Any changes to the PRSI system to extend the full range of social insurance benefits, including jobseeker's benefit, to self-employed people would have significant financial implications and would have to be considered in the context of a much more significant rise in the rate of contributions payable.

I established the advisory group on tax and social welfare last year to meet the commitment made in the programme for Government. The advisory group will examine and report on issues involved in providing social insurance cover for self-employed persons to establish whether such cover is technically feasible and financially sustainable. In addition, the actuarial review of the social insurance fund, which is due to be completed in 2012, will examine this matter. This will be most helpful in the discussion.

Self-employed workers may establish eligibility to assistance-based payments such as jobseeker's allowance. They can apply for the means-tested jobseeker's allowance if their business ceases or if they are on a low income as a result of a downturn in demand for their services. In general, their means will take into account the level of earnings in the previous 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 unemployed claimant of jobseeker's allowance, the means of a husband, wife, civil partner or cohabitant will be taken into account in deciding on entitlement to a payment.

I thank Senator Landy for raising this important issue. I know how concerned he is about it. I await the views of the advisory group on social welfare on this matter.