Written answers

Thursday, 28 January 2016

Department of Social Protection

Redundancy Payments

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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57. To ask the Tánaiste and Minister for Social Protection to report on the management of the redundancy scheme fund for the period 1967 to 2015, during which time it was known as the Redundancy Fund from 1967 to 1984 and the Redundancy and Employer’s Insolvency Fund from 1984 to 1991, after which the Redundancy and Employer’s Insolvency Fund merged with other funds within the Social Insurance Fund from 1991 to date; if the fund was in surplus on 31 December 2013; and if she will make a statement on the matter. [3874/16]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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58. To ask the Tánaiste and Minister for Social Protection to report on the income, into the costs borne by, the year-end surplus or deficit of, and the cumulative reserve built up; and whether the cumulative reserves have been used for the purposes set out in the redundancy legislation from 1967 to date and the employer insolvency legislation from 1984 to date; under the redundancy scheme fund by year; and if she will make a statement on the matter. [3875/16]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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59. To ask the Tánaiste and Minister for Social Protection if the redundancy scheme fund has been managed at all times in a manner that is accountable, transparent and subject to independent third-party scrutiny; and if she will make a statement on the matter. [3876/16]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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60. To ask the Tánaiste and Minister for Social Protection if the operation of the redundancy scheme fund is a vital measure to provide mitigation, by way of rebates on the statutory payment made to employees for enterprises, especially small and medium-sized enterprises, as providers of employment, as revenue collectors for the Exchequer, as a vital component of the economy and as creators of wealth; and if she will make a statement on the matter. [3877/16]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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61. To ask the Tánaiste and Minister for Social Protection her assessment of the redundancy scheme fund as a governance stabilising measure for the employment market, especially in the small and medium-sized enterprise sector here; and if she will make a statement on the matter. [3878/16]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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62. To ask the Tánaiste and Minister for Social Protection if she has acted effectively as the trustee for the stewardship of the redundancy scheme fund; if she has effectively and prudently managed the fund and its surpluses; and if she will make a statement on the matter. [3879/16]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I propose to take Questions Nos. 57 to 62, inclusive, together.

The purpose of the redundancy payments scheme is to compensate workers, under the Redundancy Payments Acts, for the loss of their jobs by reason of redundancy. Compensation is based on the worker’s length of reckonable service and reckonable weekly remuneration, subject to a ceiling of €600 per week.

It is the responsibility of the employer to pay statutory redundancy to its eligible employees. Where an employer can prove to the satisfaction of the Department that it is unable to pay the statutory redundancy to its eligible employees, the Department will make lump sum payments directly to the eligible employees from the Social Insurance Fund (SIF). Amounts paid under such circumstances are sought back from employers. In addition where employers become insolvent, certain other outstanding statutory entitlements (arrears of wages, holiday pay etc.) may be paid from the SIF. The Minister for Social Protection becomes a preferential creditor in the winding-up of companies in respect of monies paid from the SIF.

Under the provisions of Section 24(4) of the Social Welfare Act 1990 all moneys standing to the credit of the Redundancy and Employers’ Insolvency Fund on 30 April 1990 were transferred to the SIF on 1 May 1990.

The SIF was established by the Social Welfare Act 1952 (as amended) and operates under the terms of the Social Welfare Consolidation Act (SWCA) 2005. Under section 9 of that Act the SIF comprises of a current account which is managed and controlled by the Minister for Social Protection and an investment account which is managed and controlled by the Minister for Finance. The annual statutory accounts of the SIF are prepared in the form and manner approved by the Minister for Finance. There is a separate account prepared for the current account and the investment account. These accounts are audited by the C&AG and are laid on an annual basis before the Houses of the Oireachtas and are subject to PAC examination.

The income of the SIF derives mainly from Pay Related Social Insurance (PRSI) contributions. In addition to redundancy payment entitlements, social insurance benefits and occupational injury benefits are paid out of the SIF.

SWCA 2005 allows for PRSI to be paid into either the investment account or the current account of the SIF. It requires surplus funds in the current account not required for expenditure purposes to be transferred to the investment account for investment purposes. In accordance with section 9 (9) of SWCA 2005, the SIF has received a state subvention since 2010 in order to bridge the gap between its PRSI income and its social insurance related expenditure. As at the 31 December 2013 the SIF had no surplus funds on hand. A table is included below, which shows the SIF operating surplus/deficit for the period 2006-2014.

Significant and increasing amounts were paid out in redundancy rebates to employers from the SIF during the economic crisis. While the SIF is constituted primarily from employer contributions, the taxpayers’ contribution is also significant. One of the factors which influenced the Government’s decision in Budget 2013 to abolish the rebate was the increasing cost of rebates to often profitable companies. I acknowledge the contribution made by these enterprises in the creation of employment. However, the cost of making rebates is too significant to allow for its re-introduction. Therefore, I do not propose to restore the rebate for small or medium enterprises.

SIF Income and Expenditure 2006-2014

-SIF IncomeSIF ExpenditureOperating Surplus/DeficitCumulative Surplus at end of yearExchequer Subvention Requirement
Year€,000€,000€,000€,000€,000
20066,974,4116,325,554648,8573,049,141
20077,834,1477,250,990583,1573,632,298
20088,144,4108,399,739(255,329)3,376,969
20097,297,6019,784,225(2,486,624)890,345
20106,709,6819,460,835(2,751,154)1,477*(1,862,286)**
20117,543,8839,004,245(1,460,362)1,477(1,460,362)
20126,785,5578,869,567(2,084,010)1,477(2,084,010)
20137,317,5058,631,635(1,314,130)1,477(1,314,130)
20147,891,344 8,433,142(541,798)1,477(541,798)
*The 2010-2014 cumulative surplus represents the book value of the Departments HQ premises vested in the Minister for Social protection on behalf of the Fund.

** In this period Vote Subvention commenced in mid-2010.

2015 figures are not yet available but provisional estimates indicate Exchequer Subvention will be in the order of €130 million.

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