Willie O'Dea (Limerick City, Fianna Fail)
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380. To ask the Minister for Social Protection the projected deficit on the social insurance fund in 2013; her plans for closing the deficit; and if she will make a statement on the matter. [27122/13]

Joan Burton (Dublin West, Labour)
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The Social Insurance Fund “SIF” is a pay-as-you-go social insurance scheme that is financed by contributions from employees, employers, the self-employed and by a contribution or 'subvention' from the Exchequer when the cost of the benefits paid from the Fund exceeds the contribution income. The Exchequer is the residual financier of the Fund and such subventions were the norm for over 40 years. For example, in 1967, the State contribution was 38% of SIF expenditure and almost 29% in 1985.

From 1997 to 2007 inclusive, social insurance income exceeded Fund expenditure. In 2008, the current operating balance of the SIF moved into deficit with expenditure exceeding income by €255m. This deficit accelerated in 2009 when it reached €2.49 billion and further rose to €2.75 billion in 2010. In addition, the surplus carried forward from previous years was eliminated during 2010, giving rise to the need for Exchequer subvention for the first time since 1996. The Provisional Outturn for 2013 provides for a deficit of nearly €1.5 billion.

I have already indicated my concern about the deficit in the SIF. One of my key goals is to reform the system of social protection and to put it on a sounder financial footing for the future. Measures taken in recent Budgets have started the process of addressing the SIF deficit through reductions in expenditure on social insurance benefits or through implementation of measures to increase income to the Fund.

In Budget 2013, the Minister for Finance indicated that the income base on which PRSI is charged will be broadened. The exemption from PRSI on earned and unearned self-employed income of modified rate employees who pay PRSI at Classes B, C and D (a minority of the civil and public sector), is being abolished this year. The exemption from PRSI applying to self-employed unearned income of employees (all Classes) and those with occupational pensions under 66 years, which is available where they have unearned income only, will be abolished in 2014.

The payment of PRSI at 4% as a result of the abolition of these exemptions will not provide entitlement to social insurance benefits. These measures are estimated to yield €32m additional income for the Social Insurance Fund in a full year.

Any further proposals to address the sustainability of the Fund will have to be considered in a budgetary context.