Paul Connaughton (Galway East, Fine Gael)
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Question 74: To ask the Minister for Social Protection if she will examine in its entirety the treatment of former self-employed people under the social welfare system, the lack of recognition of social welfare contributions made by them and their inability to access credits when a spouse is working; if her attention has been drawn to the fact that this is a problem being experienced by thousands of families all across the country and is the cause of hardship; if this merits an in-depth investigation by herself and her officials; and if she will make a statement on the matter. [24252/11]

Joan Burton (Dublin West, Labour)
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The social insurance system in Ireland is based on compulsory paid PRSI contributions on which entitlement to a range of contingency-based payments is 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 4% and are potentially eligible for a narrower range of benefits than employees who, together with their employers, are potentially liable for a total contribution of 14.75% 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 pension entitlements in respect of the period for which they are not liable for paid contributions.

Any changes to the current system of awarding credits 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 as well as requiring considerable changes to existing administration and control procedures.