Question to the Minister for Social Protection ( Ms. Joan Burton, TD)
To ask the Minister for Social Protection her plans to reform the social welfare system in order that self-employed persons may have access to necessary supports on a similar basis to persons in the PAYE system; and if she will make a statement on the matter. – Jerry Buttimer
For WRITTEN answer on Wednesday 6th November 2013
In 2011 I established the Advisory Group on Tax and Social Welfare to meet the commitment made in the Programme for Government. The Advisory Group is charged with, inter alia, examining and reporting on issues involved in providing social insurance cover for self-employed persons in order to establish whether or not such cover is technically feasible and financially sustainable. Any proposals for change must be cost neutral.
On 6 September 2013 I published the Group’s report on the issues involved in providing social insurance cover for self-employed persons. 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. 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 is in line with the estimated level of contributions needed to provide access for the self-employed to invalidity pension contained in the 2010 Actuarial Review of the Social Insurance Fund.
In the course of the Group’s deliberations, the Group identified a range of issues associated with the subject of social insurance for the self-employed that should be addressed and have made a number of recommendations in this regard. These include, among others, the means assessment for self-employed income in terms of accessing jobseeker’s allowance payments, credited PRSI contributions, self-employed access to activation and training schemes and the role that information campaigns might play in addressing information deficits, particularly with regard to entitlements to jobseeker’s allowance.
The question as to whether the present arrangements regarding social insurance for the self-employed are appropriate has increased in prominence over recent years. I welcome the Group’s finding that the current system of means tested jobseeker’s allowance payments adequately provides cover to self-employed people for the risks associated with unemployment.
The recommendation concerning long-term sickness or injuries is an important contribution to the policy debate regarding the range of benefits the self-employed might access through their social insurance contributions. In this regard, the 2010 Actuarial Review of the Social Insurance Fund, published last year, determined that the self-employed are obtaining better value for the level of their current social insurance contributions than employees (the Actuarial Review found that the effective annual rate of contributions needed to provide the core full-rate State pension (contributory), currently available to self-employed contributors, is approximately 15%).
This finding was noted by the Advisory Group in its recommendations. Consequently, the recommendations of the Advisory Group require further consideration in conjunction with the findings of the 2010 Actuarial Review relating to the level of contributions levied on Class S contributors and the current shortfall in this regard.
My colleagues in Government and I will now carefully 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.