Joan Burton (Dublin West, Labour)
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Question 54: To ask the Minister for Social and Family Affairs the implications for the social insurance fund of proposals to cut the main PRSI rate from 4% to 2% and the self employed rate from 3% to 2%; the way it is intended that the shortfall will be made up; and if he will make a statement on the matter. [15186/07]

Séamus Brennan (Dublin South, Fianna Fail)
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Approximately 76 per cent of workers pay PRSI Class A and Class H at the rate of 4 per cent. A further 11 per cent of workers pay social insurance contributions at the Class S rate. These contributions which are subject to various thresholds, allowances and ceilings, accrue entitlement to a range of benefits and pensions under various social insurance schemes. The current employee PRSI ceiling stands at €48,800 per annum.

A decrease in the employee PRSI rate from 4% to 2% for employments insured at PRSI Class A and Class H would, on its own, cost the Social Insurance Fund some €720 million in a full year. A decrease in the self-employed PRSI rate (Class S) from 3% to 2% is estimated to cost approximately €220 million per annum. Options for additional income to the Fund could include changes in the ceiling on contributions. In this regard, abolition of the ceiling for employees would yield some €295 million.

Legislation provides that the Exchequer is the residual financier of the Fund and Exchequer contributions to cover any shortfall in contributions were the norm for over forty years. However no Exchequer contribution has been required since 1996 as the fund has been in surplus on foot of contributions from employers and workers. Any shortfall in the cost of benefits paid would in the normal way be addressed by exchequer subvention.