John Deasy (Waterford, Fine Gael)
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Question 179: To ask the Minister for Social and Family Affairs his views on allowing sole traders who employ their spouses to pay social insurance contributions; and if he will make a statement on the matter. [36026/06]

Séamus Brennan (Dublin South, Fianna Fail)
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Family members who work together are generally not insurable under the Social Welfare Acts. Spouses of employed or self-employed contributors are specifically excepted from PRSI liability in respect of their working activity with their spouse. However, there is scope within the provisions of social welfare legislation to enable spouses who are partners in an enterprise, or who work together in a legally incorporated business, to be insurable and to accrue entitlement to certain benefits and pensions.

At the heart of the issue lies the fact that current social welfare provisions recognise that family members regularly support each other without having any intention of entering into formal contractual arrangements. Employment under a contract of service as an employee or as a contract for services as a self-employed person is, by its very nature and necessity, a formal agreement between two or more parties. All contracts bring with them rights and responsibilities that, in this instance, include compliance legislation relating to PRSI, taxes and employment rights. Evidence of a commercial partnership between spouses or the incorporation of a family business as a limited company will establish liability for Class S contributions — providing that income is above the annual threshold of €3,174. These provisions apply to couples engaged in retailing and other self-employed activities.

I would point out that the exception of spouses from PRSI liability in relation to a shared occupation does not preclude them from accessing the voluntary contributions scheme. Access to this scheme requires a minimum number of 260 paid contributions. Where a person has been previously insured as an employee or as a self-employed person, is no longer compulsory insured and is under 66 years of age, he or she can opt to pay voluntary social insurance contributions. These contributions will maintain social insurance cover for pensions such as Retirement, State (Contributory) and Widow's or Widowers' (Contributory) as well as for the Guardian's Payment (Contributory) and the Bereavement Grant — depending on the rate at which the voluntary contribution has been paid. Voluntary contributions maintain the pension coverage at the level equivalent to that when the person was last compulsorily insured. The amount to be paid as a voluntary contribution is at a percentage of annual income. For those who were previously self-employed, the voluntary contribution is paid at a fixed amount of €253 per annum.

I am satisfied that, under the existing social welfare provisions, where formal employment or partnership relationships are intended between spouses or assisting relatives, the legislation provides the scope necessary to allow parties to enter into arrangements that will enable them to gain access to social insurance coverage.