Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I am glad to be back in the Seanad again today. As colleagues will be aware, in recent weeks we discussed the long-awaited auto-enrolment Bill. It is an historic piece of work that will benefit 800,000 workers who currently have no occupational pension and I very much look forward to that Bill's enactment in the coming weeks. Today, I bring forward another landmark reform of our social welfare system in the form of pay-related benefit. At the moment, under the current jobseeker's system, if a person who has worked hard for 20 or 30 years suddenly loses their job, they will receive the same rate of unemployment payment as a person who has never worked a day in their life. That is simply not fair. We must reward the people who have worked hard, paid their PRSI and contributed to our economy. That is what pay-related benefit is about. None of us ever know what is around the corner. This is about supporting workers who lose their jobs by ensuring they do not suffer a sudden cliff-edge drop in income. The reality is that people enter into financial commitments that are commensurate with their income. I saw that at first hand when I worked in the credit union. I saw people who had good jobs, who worked hard all their lives and when they lost their job unexpectedly, their income plummeted and they were not able to meet essential commitments like their mortgage repayments. Such a situation puts families under huge stress. Pay-related benefit is about giving those people an extra safety net. If you have worked hard and paid your dues, when you hit a stumbling block there will be an extra cushion there for you in recognition of the contributions you have made.

This legislation has been drafted following an extensive consultation process, the responses to which were strongly supportive of the principle of linking benefit payments to previous earnings. It is important to say pay-related benefit is the norm across EU member states. Under this scheme, the weekly rate of payment for people who have at least five years of paid PRSI contributions will be set at 60% of previous gross earnings, subject to a maximum of €450 for the first three months. After that, the rate will reduce to 55% of earnings, subject to a maximum of €375 for the following three months. A further three months will be paid at the rate of 50%, up to a maximum payment of €300. For persons who have between two and five years of paid contributions, the rate will be set at 50% of previous gross earnings, subject to a maximum of €300 per week, for up to six months. This means that workers on average incomes will receive €450 for the first three months of unemployment, which represents half of their prior earnings. These figures compare with the current jobseeker's benefit personal rate of €232. Most people when they lose their job get back to work within less than six months. By tapering the payments down gradually over time, it ensures there is no disincentive for getting back to work.

The Bill sets out the legislative framework for the new scheme. It also contains regulation-making powers that will allow the full details of aspects of the scheme to be developed in regulations. It is intended that pay-related benefit will be for employees who become fully unemployed from the date the scheme is introduced. Those working on an atypical basis, for example part-time or casual workers, will continue to be eligible for the existing jobseeker's benefit scheme or appropriate schemes such as the working family payment. Self-employed people will also continue to be catered for under the current jobseeker's benefit self-employed scheme. My intention with this legislation is to get the train on the tracks by getting a pay-related benefit system up and running. That will be a seismic shift and reform of our social welfare system in Ireland. Over time, I believe future governments will be able to build on this. Pay-related benefit will evolve. I have no doubt about that. For example, we should have pay-related maternity benefit, which I think is the logical next step.

As Minister, my priority was to get the principle of a pay-related benefit agreed by the Government and to get this legislation before the Oireachtas. I did not want to let perfection get in the way of the good. If I had tried to introduce a Rolls-Royce, all-singing, all-dancing pay-related benefit system that covers every base, that legislation would not be seen for years and it certainly would not be before the Seanad today or delivered within the lifetime of this Government. What this legislation does is establish the principle of pay-related benefit in Ireland. Full-time workers who lose their job will be the first to benefit but, over time, we can build on and expand this. I believe we are opening the door today for that progress in the future.

I will now move on to the pay related social insurance, PRSI, provisions in the Bill. The PRSI system plays a fundamental and supportive role in our society. The Bill provides for the implementation of a programme of gradual and incremental increases in PRSI from 2024 to 2028. These increases, agreed by the Government in the context of the analysis of the actuarial review of the Social Insurance Fund and the Commission on Pensions, will support the retention of the State pension age at 66, help to address the long-term sustainability challenges facing the Social Insurance Fund and provide for the new jobseeker's pay-related benefit. All classes of PRSI - employee, employer and self-employed - will increase by 0.1% from October 2024; by a further 0.1% in October 2025; by 0.15% in October 2026 and again in October 2027; and by 0.2% in October 2028. To put this in context, a 0.1% increase works out at around 90 cent per week for a worker on average earnings and around the same for the employer.

I am proud that this Government made the decision to retain the State pension age at 66. However, we cannot bury our heads in the sand - keeping the pension age at 66 needs to be paid for and this will be done by small, incremental increases in PRSI over time. This Bill sets out that roadmap. On average, a pensioner receives €380,000 from the State pension. That is a significant amount. For an extra 90 cent a week, a worker today will know that they have the safety net of pay-related benefit if that is needed, and they will also know they will have a State pension pot of approximately €380,000 when they turn 66. Most people would agree that is very good value.

I am conscious of the pressure some small businesses face. In recognition of those challenges, the Bill provides for an increase in the employer PRSI threshold from €441 to €496 per week from 1 October 2024.This will ensure that employers with employees earning the weekly equivalent of the national minimum wage will pay the lower rate of employer PRSI rate of 8.8%.

I firmly believe that the introduction of a pay-related benefit system in Ireland will be a lasting legacy for this Oireachtas to leave behind. We all know friends and family who lost their jobs out of the blue after many years of hard work. This is about recognising the contribution those people have made and giving them an extra helping hand when they need it most. As already stated, I recognise that there is more to do, but today we are opening the door for more progress in the future. If we can get this legislation passed, I have no doubt but that pay-related benefit in Ireland will evolve and grow over time.

I commend the Bill to the House. I look forward to hearing Senators’ contributions.