Billy Kelleher (Cork North Central, Fianna Fail)
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456. To ask the Minister for Employment Affairs and Social Protection the estimated cost to the Exchequer of a proposal (details supplied). [20103/18]

Regina Doherty (Meath East, Fine Gael)
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Self-employed workers 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 annual payment of €500. This provides them with access to the following benefits: State pension (contributory) and widow’s, widower’s or surviving civil partner’s pension (contributory), guardian’s payment (contributory), maternity benefit, adoptive benefit, paternity benefit, treatment benefit (from March 2017) and invalidity pension, which was extended to the self-employed from December 2017.

This compares favourably with employees who, in general, are liable to the Class A rate of 4%. In addition their employers are liable to PRSI at the rate of 8.6% on weekly earnings up to and including €376 or at the rate of 10.85% where weekly earnings exceed €376. Accordingly the combined rate of PRSI rate paid in respect of Class A employees is 12.6% or 14.85%, depending on the level of weekly earnings. These Class A employees are entitled to the full range of social insurance benefits.

The issue of extending additional social insurance benefits to the self-employed paying Class S PRSI was considered in the Actuarial Review of the Social Insurance fund (SIF) as at 31 December, 2015, which was published on 18 October 2017.

The review found that the combined cost of introducing the invalidity, illness, jobseeker’s and carer’s benefits for Class S contributions is estimated to be €118 million in 2018, rising steadily to €223 million in 2020. By 2025 the projected cost is €413 million and, over the period of the review the cost would rise to €1.3 billion in 2071. These costs assume that the cost of extending invalidity pension to the self-employed builds up steeply for the first 10 years after introduction after which time the scheme is almost at maturity or a steady state.

For the shorter term schemes, illness and jobseeker’s benefits, it is estimated that they will reach maturity after 2 years. Projected expenditure on jobseeker’s benefit assumes the same incidence rate as prevail in the employed (PRSI Class A) population. While the review assumed that entitlement to the extended schemes would commence in January 2018, a commencement date of January 2019 would have similar results. Detailed costings of the extension of invalidity pension (entitlement was extended in December 2017) and illness, jobseeker’s and carer’s benefits are contained in the following table.

I hope this clarifies the matter.