John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Question 201: To ask the Minister for Social Protection her plans, if any, to provide some form of benefit or guaranteed income for self-employed persons who are now unemployed and have no income; if the benefits and pension entitlements enjoyed by the public sector will be extended to the private sector; if the guarantees outlined in the national pensions framework 2010 will be extended to all workers; and if she will make a statement on the matter. [38981/11]

Joan Burton (Dublin West, Labour)
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Self-employed persons are liable for PRSI at the Class S rate of 4% which entitles them to access long-term benefits such as State pension (contributory) and widow's, widower's or surviving civil partner's pension (contributory). Ordinary employees who have access to the full range of social insurance benefits, including jobseeker's benefit, pay Class A PRSI at the rate of 4%. In addition, their employers make a PRSI contribution of 10.75% in respect of their employees, resulting in the payment of a combined 14.75% rate per employee under full-rate PRSI Class A. (For employees earning less than €356 per week, the rate of employer's PRSI is 4.25%).

In this context it should be noted that self-employed workers generally achieve better value for money by paying social insurance compared with employees. The 2005 Actuarial Review of the Social Insurance Fund found that the fund favours the self-employed over the employed when both employer and employee contributions are included in respect of the employed person. For example a male married self-employed contributor earning gross average industrial wages had a value for money index of 10.3 compared with an index of 3.1 for an equivalent employee. In basic terms this means that, with regard to benefits, the self-employed contributor can expect to receive over 10 times what he contributes to the social insurance fund compared to the employee who, even with access to a broader range of benefits, only gets 3 times what he and his employer contribute. The analysis demonstrates that, despite the fact that they are eligible for a narrower range of benefits, self-employed persons can gain substantially more from the fund than employees.

Any changes to the PRSI system in order to provide access to short-term benefits such as jobseeker's benefit would have significant financial implications and would have to be considered in the context of a much more significant rise in the rate of contribution payable. I established the Advisory Group on Tax and Social Welfare earlier this year to meet the commitment made in the Programme for Government. The Advisory Group will, inter alia, examine and report on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable.

The Deputy should be aware that self-employed persons may establish eligibility to assistance-based payments including payments such as jobseeker's allowance. In general, assessment of means account will be taken of the level of earnings in the last twelve months in determining their expected income for the following year. In the current climate account is taken of the downward trend in the economy.

The National Pensions Framework (NPF) which was published in March 2010 provides for a range of reforms across all types of pension provision – private sector occupational schemes; voluntary or personal pensions, public sector pensions and the State pension. As such it impacts on a range of workers, including people who are self-employed. Elements of the NPF are specifically intended to assist those in the lower to middle income ranges to provide for pensions in order to improve their post retirement income. However, the NPF aims to deliver security, equity, choice and clarity for all and to ensure that State support for pensions is equitable and sustainable.

Pension arrangements for public servants are the responsibility of the Minister for Public Expenditure and Reform. You will be aware that the reform of public sector pensions is a key element of the wider public sector reform agenda and a commitment in the agreement with the EU/IMF/ECB. The Department of Public Expenditure and Reform has been working on the development of a new single pension scheme for new entrants to the public sector and legislation providing for this scheme was published in September 2011.