Skip to main content

Parliamentary Question addressed to the Minister for Social Protection

5th October 2014 - Olivia Mitchell TD

To ask the Tánaiste and Minister for Social Protection if her Department have concluded their reflection of the recommendations of the Advisory Group on Tax and Social Welfare and the findings of the 2010 Actuarial Review regarding extending social insurance for the self-employed now that our budgetary and fiscal situation has improved; and if she will make a statement on the matter?

Reply

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 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.  
In this regard, the 2010 Actuarial Review of the Social Insurance Fund determined that the self-employed are obtaining better value for the level of their current social insurance contributions than employees, when the comparison includes both employer and employee contributions in respect of the employed person.  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%.

My colleagues in Government and I continue to reflect on the findings of the Advisory Group on this issue, in conjunction with the findings of the most recent Actuarial Review of the Social Insurance Fund, and will further consider the recommendations contained in the report taking into account future developments in terms of the budgetary and fiscal situation.      It is relevant that the Actuarial Review of the Social Insurance Fund also 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.