Noel Ahern (Dublin North West, Fianna Fail)
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Question 176: To ask the Minister for Social Protection if he will report on the social insurance fund; the date on which it was set up; the estimated figures for annual income inflows, outpayments and current financial position; the contributions that goes into the fund in relation to contributions from the various PRSI paying categories; the social welfare benefits and schemes which are funded from the fund; the way this list compares with the original intent; if far greater demands are placed on the fund now in relation to the number of schemes funded; and if he will make a statement on the matter. [38441/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Social Insurance Fund (SIF) was established in 1953 following the introduction of the Social Welfare (Insurance) Act of 1952. The main accomplishment of the 1952 Act was the replacement of separate schemes for unemployment, widow's and orphan's pensions, and national health; with a single co-ordinated social insurance scheme.

Over the years the social insurance system has developed and improved, both in terms of the types of employments covered and benefits available. Over the course of this development the social insurance system has been based on two fundamental principles - the contributory principle whereby there is a direct link between contributions paid and entitlement to a varying range of benefits and pensions that are payable as a right and the solidarity principle whereby contributions paid by insured persons are not actuarially linked to benefits but are instead redistributed to support contributors who are more vulnerable. It is an expression of solidarity between both earning groups and generations. All current social welfare benefit payments are made from the SIF. Payments made under the redundancy payments acts and the insolvency payments scheme are also made from the fund.

In 2009 contributions by employers provided 72.5% of fund income, with employees contributing 21.4%, self-employed contributing 4.3%, and investment income and other receipts amounting to 1.8% of income. Current estimates indicate that 2010 Fund income will be of the order of €6,610 million with expenditure of €9,460 million. An Exchequer subvention to the Fund of €1,970 million is anticipated for 2010. This will be over €400 million greater than provided for in the estimate, due to lower than expected PRSI receipts.

In this context it is important to note that traditionally, social insurance spending has been funded on a tripartite basis – with contributions coming from the Exchequer, employers and employees. Legally, the Exchequer is the residual financier of the fund and exchequer contributions were the norm for over forty years – for example, in 1967, the State contribution was 38% of SIF expenditure and almost 29% in 1985. However, no Exchequer contribution was required between 1996 and 2009 as the fund was in surplus on foot of contributions from employers and workers.

The 2005 Actuarial Review of the Social Insurance Fund, which covered the period from 2006 to 2061, highlighted that progressive action is required if future costs, including pensions, are to be met. This will involve finding an appropriate balance between the three strands of the tripartite funding system.

Table 1 provides data on the total number of contributors to the SIF together with a breakdown of this figure by PRSI Class type and sets out the benefit coverage relevant to each class. Table 2 provides information on financing of the fund in 2008 and 2009. Table 1 – Contributors by class 2008

Table 2 – Financing of the Social Insurance Fund, 2008 and 2009

Noel Ahern (Dublin North West, Fianna Fail)
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Question 177: To ask the Minister for Social Protection all categories currently on a reduced rate, or in receipt of exemptions or partial payment status in respect of payment of PRSI employees or employers contributions; an estimate of cost of each exemption; and if he will make a statement on the matter. [38442/10]

Noel Ahern (Dublin North West, Fianna Fail)
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Question 178: To ask the Minister for Social Protection the estimated annual take from increases in PRSI contribution rates as follows, a one percentage point increase in employers rate, a one percentage point increase in each individual employees category that is self employed, full rate contribution, reduced rate contribution; a one percentage point increase as in the latter plus extension in upper limit to €150,000 [38443/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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I propose to take Questions Nos. 177 and 178 together.

All self-employed persons with income in excess of €3,174 per annum pay PRSI at a rate of 3% of all income or €253, whichever is greater. There is no upper income ceiling in relation to self-employed PRSI.

Within the time available, the following table sets out the estimated yields in relation to some potential changes in PRSI rates:

PRSI is paid at various rates by different groups of workers, and their employers, across the economy. The only specific exemptions from PRSI relate to an employer's PRSI exemption scheme which has now closed to new entrants and the current employer job (PRSI) incentive scheme.

Up to May 1st 2009, an Employer's PRSI exemption scheme was aligned directly with the back to work allowance (employee) scheme. The scheme exempted employers from their share of the PRSI contribution in respect of recipients of the back to work allowance for the first two years of their employment. A total of 777 cases were approved in 2008 and 213 cases approved in 2009. Given that this scheme was closed to new applications from May 1st, 2009 and that the duration of the exemption is two years, there will be no cases under this scheme from May 1st, 2011. PRSI income forgone in relation to these residual cases is not available. The new employer job (PRSI) incentive scheme was launched on 20 June 2010. Under the scheme, if an employer takes on an additional member of staff in 2010 that has been unemployed for 6 months or more, they will be exempted from paying employers' PRSI for 12 months. The job must be new and additional, be for at least 30 hours a week, and last for at least six months. To date exemptions have been awarded in respect of 791 employees. It is estimated that the full year income forgone as a result of these exemptions will be €1.8m.