Seanad debates

Wednesday, 15 June 2016

Commencement Matters

Social Insurance Rates

10:30 am

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank Senator Burke for raising this very important matter, which has been raised with me on a number of occasions and which I know is of real importance to councillors and to Senators.

PRSI class K contributions are paid by a number of different categories of contributor. Since 1 January 2011, public officeholders pay PRSI at the class K rate of 4% on their income as officeholders, provided that income exceeds €5,200 per annum. All public officeholders are liable to pay the contribution regardless of their age. Public officeholders include the President, members of both Houses of the Oireachtas, members of the Judiciary, the Attorney General, the Comptroller and Auditor General, and city and county councillors. Payment of class K PRSI does not contribute towards the establishment of a social insurance entitlement - in short, a person gets no benefits from it. Prior to the introduction of the class K contribution, all public officeholders were exempt from PRSI on their income as public officeholders. Then, as now, they could establish and protect their social insurance entitlements based on their non-officeholder activities, or through the payment of voluntary contributions. When the class K PRSI charge on the income of public officeholders was introduced in 2011, it was done on the basis that public officeholders had been identified as a group that were not paying PRSI on their income as officeholders. The charge was therefore introduced as a measure of solidarity, allowing them to contribute to social insurance at a time when extensive curtailment of social insurance entitlements to other public and private sector employees was introduced.

Since the introduction of the class K contribution for public officeholders, further measures to charge class K PRSI have been introduced. Since 2013, class K PRSI at 4% is charged on the non-employment income of certain Civil Service and public sector workers who pay modified rates of PRSI, classed as B, C and D, where they also have income from a trade or profession. Payment of class K PRSI by this group does not give cover for a range of benefits and pensions, such as the State pension, jobseeker's benefit and illness benefit. In 2014, employees and pensioners under the age of 66 whose only other source of income is unearned became liable to pay class K PRSI at 4% on that unearned income where they are paying tax on that income.

I am currently examining whether changes are required to the basis upon which class K is charged, particularly regarding the position of local authority members.Most councillors already have cover under the PRSI system through their other employment or activities. A minority of full-time councillors do not have cover. Any changes to the current class K arrangements will need to have regard to the social insurance and occupational position of the officeholders generally and I will have to consult with other relevant Ministers in this regard.

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