Written answers

Thursday, 20 December 2012

Department of Social Protection

Social Welfare Code

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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To ask the Minister for Social Protection the problems that would be encountered in means testing all social welfare payments; the steps she is taking to overcome these problems and when we may expect a means tested system of payments. [57519/12]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I understand that the Deputy is referring to the extension of means testing to all social welfare payments, including social insurance benefits and pensions. The primary component of the Irish system of social protection is a social insurance system whereby entitlement to contingency-based benefits is secured largely on the basis of earnings related paid contributions to the Social Insurance Fund (SIF). There is also a subsidiary system of social assistance for those who do not qualify for social insurance payments whereby entitlement for broadly similar contingency-based payments is made on the basis of an assessment of the person’s means.

Similar systems exist across the EU, usually with highly comprehensive benefits that are often pay-related. Social insurance systems are generally based on the ‘contributory principle’ (contributions are directly linked to benefits) and the ‘solidarity principle’ (low earners ‘do better’ on an actuarial basis from their contributions), and these two fundamental principles have different weighting across national insurance systems.

The Irish social insurance system is now relatively comprehensive following the extension of coverage over the period 1988 to 1995 to the self-employed, part-time workers and new civil and public servants. In addition, arrangements were put in place to disregard, for pension purposes, periods spent caring or homemaking.

In general, the social insurance system maintains a relationship between labour force status, earnings from work, contributions made and, finally, entitlement to benefits in the event of certain specified contingencies (such as illness, unemployment or old age). People who pay social insurance do so on the basis that they are building up entitlements which are not subject to a means test in the event of their making a claim, for example because of unemployment, illness or retirement. In that respect, social insurance operates in the same manner as other types of insurance, such as home insurance or motor insurance. I consider that an adequately funded social insurance system is an essential pillar of social protection in Ireland and should remain so in light of its social and administrative benefits.

In addition, there are a range of other payments made on a non-means tested basis, such as child benefit, household benefits package and the respite care grant. Budget 2013 did not extend means testing to any of these payments.

Any consideration of means testing all payments made by the Department would have to have regard to a wide range of factors including the significant administrative resources which would be required, the impact it would have on willingness to pay social insurance and the impacts on poverty and existing occupational pension arrangements for employees which in many cases are integrated with the pensions available from the social insurance system.


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