Willie O'Dea (Limerick City, Fianna Fail)
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76. To ask the Tánaiste and Minister for Social Protection the cost of extending jobseeker's benefit to self-employed pay-related social insurance contributors; and if she will make a statement on the matter. [46086/15]

Dara Calleary (Mayo, Fianna Fail)
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107. To ask the Tánaiste and Minister for Social Protection the cost of extending social protection supports to the self-employed and permitting such persons to opt into the existing class A structure, paying the rate corresponding to their income level. [46422/15]

Joan Burton (Dublin West, Labour)
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I propose to take Questions Nos. 76 and 107 together.

Self –employed persons who earn €5,000 or more in a contribution year are liable for PRSI at the class S rate of 4%, subject to a minimum payment of €500. These contributions entitle them to access social insurance benefits, including State pension (contributory), widow/widower or surviving civil partner's (contributory) pension, guardians payment (contributory), maternity benefit and adoptive benefit. In contrast, a combined employer and employee rate of 14.75% is paid in respect of class A employees, who can then access the full range of social insurance benefits, including jobseeker's benefit.

The most recent Actuarial Review of the Social Insurance Fund published in 2012 found that the effective annual rate of contribution for those on national average earnings, needed to provide the core full-rate State Pension (Contributory), (which is the main benefit currently available to self-employed contributors), is approximately 15%. This compares favourably with the 4% rate currently paid by the self-employed. The Review also found that:

- An incremental increase in contribution rates from approximately 15% to 16% would be required if Jobseekers Benefit in addition to core State Pension (Contributory) is provided.

- The average contribution rate required for the core State Pension (Contributory) plus the Invalidity Pension is estimated to be in the region of 17%.

Using a number of assumptions based on the existing population of contributors and beneficiaries, the report estimated the full year incremental costs of extending Jobseekers Benefit and Invalidity Pension to the self-employed, stated in 2016 terms, to be €76m and €93m respectively. This was based on the assumption that the incidence rate of benefit is the same as that applying to the overall population and assuming the extended scheme reaches full “maturity” in terms of the numbers of additional beneficiaries with immediate effect. Access to these benefits, and accordingly the costs associated with these benefits, would not arise in Year 1 as entitlement to such benefits can only be established on the basis of contributions paid in prior years.

In its 2013 report, the Advisory Group on Tax and Social Welfare considered issues related to extending social insurance coverage to the self-employed 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 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. It found that almost 9 out of every 10 self-employed persons who claimed the means tested jobseekers allowance during the three-year period from 2009-2011 received payment.

The Group did, however, find that extending social insurance for the self-employed was warranted in cases relating to long term sickness or injuries, through the invalidity pension and partial capacity benefit schemes. In this regard the Group recommended that the rate of contribution for class S should be increased by at least 1.5 percentage points, payable on a compulsory basis only.

The Advisory Group also examined the extension of social insurance benefits to the self-employed on an optional basis. It considered that allowing people a facility to opt in or out at their own discretion could lead to the selection of bad risks. The whole principle of social insurance is social solidarity where everybody pays in and, if needed, cover is available. Allowing people to opt in or out could result in a negation of the social solidarity and contributory principles which underline the social insurance system.

It is not possible to estimate the costs associated with those self-employed who might opt to pay Class A PRSI on a voluntary basis. While I am anxious to expand the level of social insurance entitlement for the self-employed, any such change would have to be funded by an appropriate level of contribution.