Willie O'Dea (Limerick City, Fianna Fail)
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98. To ask the Minister for Social Protection if she will provide an update on the solvency of the Social Insurance Fund; if she will protect all benefits accruing from the fund; if she will consider covering persons in self-employment under this fund; and if she will make a statement on the matter. [30816/14]

Joan Burton (Dublin West, Labour)
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Social insurance spending has traditionally been funded on a tripartite basis – with contributions coming from the Exchequer, employers and employees. Legally, the Exchequer is the residual financier of the Social Insurance Fund (SIF) and Exchequer contributions were the norm for over 40 years. For example, in 1967, the State contribution was 38% of SIF expenditure; and almost 29% in 1985. However, no Exchequer contribution was required over the period 1997 to 2007 inclusive when 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. This resulted in the requirement for an Exchequer subvention in 2010 as the accumulated surplus was exhausted and this requirement will continue (in the absence of revenue raising measures). The Revised Estimates provides for a subvention of €0.69 billion from voted expenditure to fund the deficit on the SIF in 2014. The Actuarial Review of the Social Insurance Fund as at 31 December, 2010, highlighted the growing deficit in the Fund and the prospect that it will, in the absence of measures to address the deficit, accelerate further in the future, driven primarily by pension costs. It is estimated that in excess of €900m additional provision will be required over the next 5 years to fund increases in the numbers of recipients of the State pension (contributory) scheme. The Programme for Government commitment is to retain core weekly social welfare rates of payment. This Government has successfully achieved this objective over the last three Budgets.

As the Deputy is aware persons in self-employment who pay class S PRSI are entitled to access a range of long-term social insurance benefits which are funded from the SIF, including State pension (contributory).

In September 2013, I published the report of the Advisory Group on Tax and Social Welfare on Extending Social Insurance Coverage for the self-employed. The Group was asked to examine and report on issues involved in extending social insurance coverage for self-employed people in order to establish whether or not such cover is technically feasible and financially sustainable, with the requirement that any proposals for change must be cost neutral.

The Group found that the current system of means tested jobseeker’s allowance payments adequately provides cover to self-employed people for the risks associated with unemployment. In this context, the Group noted that almost 9 out of every 10 self-employed people who claimed the means tested jobseeker’s allowance during the three-year period from 2009 to 2011 received payment. Consequently, the Group was not convinced that there was a need for the extension of social insurance for the self-employed to provide cover for jobseeker’s benefit.

The Group found that extending social insurance for the self-employed was warranted in cases related to long term sickness or injuries. To this end, the Group recommended that class S benefits should be extended to provide cover for people who are permanently incapable of work, because of a long-term illness or incapacity, through the invalidity pension and the partial capacity benefit schemes. The Group further recommended that the extension of social insurance in this regard should be on a compulsory basis and that the rate of contribution for class S should be increased by at least 1.5 percentage points.

This recommendation will require further consideration in conjunction with the findings of the most recent Actuarial Review of the Social Insurance Fund which indicated that the self-employed achieve better value for money compared to the employed when the comparison includes both employer and employee contributions in respect of the employed person.

My colleagues in Government and I will reflect on the findings of the Advisory Group on this issue and will further consider the recommendations contained in the report taking into account future developments in terms of the budgetary and fiscal situation.