Written answers

Thursday, 26 January 2012

Department of Social Protection

Social Welfare Code

5:00 pm

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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Question 117: To ask the Minister for Social Protection if she intends to extend full welfare benefits to self-employed persons on a par with PAYE employees; and if she will make a statement on the matter. [4654/12]

Photo of Joan BurtonJoan 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 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 may be noted that self-employed workers generally achieve better value for money by paying social insurance compared to employees. In terms of benefits the 2005 Actuarial Review of the Social Insurance Fund found that the self-employed contributor can expect to receive over 10 times what he contributes to the social insurance fund compared to the employee who only gets 3 times what he and his employer contribute – despite the fact that the range of benefits available to employees is greater.

Any changes to the PRSI system to extend the full range of social insurance benefits to self-employed persons 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 last 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.

In addition, the Actuarial Review of the Social Insurance Fund which is due to be completed in mid 2012 will, inter alia, examine this matter.

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