Brian O'Shea (Waterford, Labour)
Link to this: Individually | In context

Question 142: To ask the Minister for Social and Family Affairs his proposals to introduce credited contributions for class S contributors who become disabled and unable to continue in self-employment; and if he will make a statement on the matter. [9652/06]

Séamus Brennan (Dublin South, Fianna Fail)
Link to this: Individually | In context

The social insurance system in Ireland is generally based on compulsory paid PRSI contributions on which entitlement to a range of contingency-based payments are established. Workers are insured under the Social Welfare Acts as either employed or self-employed contributors. Employees and their employers generally pay contributions at PRSI class A, whereas self-employed workers generally pay class S contributions. The class and number of contributions paid by a worker will determine the range of benefits and pensions towards which contributors can build up entitlement. The class at which a contributor paid his or her last PRSI contribution determines entitlement to credited contributions.

Self-employed individuals pay class S contributions at a rate of 3% and are potentially eligible to a narrower range of benefits than employees who, together with their employers, are potentially liable for a total contribution of 14.05% under PRSI class A. Class S contributors are entitled to the following payments: widow's-widower's contributory pension; orphan's contributory allowance; old age contributory pension; maternity benefit; adoptive benefit; and bereavement grant.

PRSI credited contributions are an integral part of the social insurance system and are for the most part linked with having an underlying entitlement to a social welfare payment while being temporarily detached from the labour force or having an entitlement to statutory leave. The primary purpose of PRSI credits is to secure social welfare benefits and pensions of insured workers by covering gaps in insurance where workers are not in a position to pay PRSI, such as during periods of unemployment, illness or caring. The rules applying to credited contributions in general stipulate that the award of credits is limited to employed contributors, as opposed to self-employed contributors, reflecting differences between the nature of employment and self-employment. Rather than receiving credits that are not linked with a benefit, self-employed people who are no longer compulsorily insured are eligible to pay voluntary contributions. This enables contributors to maintain their contribution record in respect of the period they are not liable for paid contributions.

There are no immediate plans to extend short-term income support benefits or credited contributions to self-employed persons. Such an extension could have considerable cost implications in terms of creating entitlements to benefits in the future, necessitating a significant increase in the rate of class S contribution to fund it and would also require considerable changes to existing administration and control procedures. Self-employed workers who do not qualify for an insurance-based benefit may claim supplementary welfare allowance, which is subject to a means test.