Joe Costello (Dublin Central, Labour)
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Question 315: To ask the Minister for Social and Family Affairs the purpose of pay related social insurance at the present time; if the money accruing to the Government from the employer and employee PRSI contributions are ring fenced for social insurance purposes; the other purposes for which the moneys are used; and if he will make a statement on the matter. [13847/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Irish social insurance system is based on two fundamental principles. The contributory principle whereby there is a direct link between contributions paid and entitlement to a varying range of, short-term and long-term, benefits and pensions that are payable as a right – if and when particular contingencies arise. These benefits and pensions, unlike social assistance payments, are not subject to means testing. The solidarity principle sets out that contributions paid by insured persons are not actuarially linked to benefits but are instead redistributed to support contributors who are more vulnerable. In this way, contributions are an expression of solidarity between both earning groups and generations.

The PRSI system draws together a relationship between the employment or self-employment status and the rate of contribution payable and benefits or pensions receivable as a result of these contributions. In common with many social insurance systems throughout the world, the system is not actuarially based but funded through a pay-as-you-go approach, with the Exchequer acting as a residual financier to contributions from employees and employers.

The monies collected from employment contributions paid by employed contributors and their employers, by self-employment contributions, by optional contributions and by voluntary contributions, are paid into the Social Insurance Fund (SIF) and used to fund benefits and pensions. The SIF consists of a current account managed by the Minister for Social and Family Affairs and an investment account managed by the Minister for Finance. The Comptroller and Auditor-General examines and certifies the accounts of the SIF and provides a report to the Oireachtas.

Payments made under the Redundancy Payments Acts and the Insolvency Payments Scheme, administered by the Department of Enterprise, Trade and Employment, are also made from the SIF.