Question No:  248                                                                                                                                           Ref No:   46388/10    

To the Minister for Social Protection

To ask the Minister for Social Protection if he will he consider the introduction of a voluntary mechanism whereby self-employed persons can opt to pay a full PRSI contribution which would offer them financial protection in the event of them losing their employment; and if he will make a statement on the matter.  – Joe Carey.

*    For WRITTEN answer on Tuesday, 7th December, 2010.


Minister for Social Protection (Éamon Ó Cuív T.D.):

The range of benefits and pensions to which different groups of workers may establish entitlement reflects the risks associated with the nature of their work. This in turn reflects the rate of contribution payable. Self-employed workers are liable for PRSI at the Class S rate of 3%. They are consequently eligible for a narrower range of benefits than general employees who, together with their employers, pay a total social insurance contribution of 14.75% under the full-rate PRSI Class A.

Class S contributions provide cover for long-term benefits such as State pension (contributory) and widow’s/widower’s pension (contributory).  However they do not provide cover for short-term benefits such as jobseeker and illness benefits – these are only available to people covered by PRSI Classes A, E, H and P. PRSI coverage is related to the risks associated with employment or self-employment, the annualised system of contributions for self-employed people and the practicalities of administering and controlling access to short-term payment for self-employed people A system of separate arrangements for employed and self-employed workers within a social insurance context is common in other European social protection systems.

In certain cases, a self-employed person, who had insurable employment in the relevant tax year, currently 2008, and had paid sufficient Class A contributions, may qualify for a jobseeker’s benefit payment, provided all the conditions of the scheme are satisfied.

Self-employed workers who do not qualify for an insurance-based benefit may establish entitlement to assistance-based payments such as jobseeker’s allowance. They can apply for the means-tested jobseeker’s allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services.  In general their means will take account of the level of earnings in the last twelve months in determining their expected income for the following year. In the current climate account is taken of the downward trend in the economy and the process recognises the potential for significant upward or downward variations in income from one year to the next.

There are no immediate plans to extend cover for short-term benefits to this group of insured workers. Any such measure would have significant financial and policy implications and would have to be considered within a budgetary context.