Dáil Éireann - Volume 483 - 26 November, 1997

Other Questions. - Social Insurance Fund.

21. Mr. Bell asked the Minister for Social, Community and Family Affairs the reason there has been a reduction in the Estimates in the social insurance fund from £12 million to £6.3 million; and if he will make a statement on this reduction. [20796/97]

Mr. D. Ahern: Subhead B of my Department's Estimates provides for the Exchequer subvention to the social insurance fund. The subvention is the amount by which expenditure from the fund is greater than its income. The fund expenditure and income estimates underlying the 1998 Estimate — Abridged Version — and the forecast outturn for 1997 are contained in a tabular statement which I will circulate in the Official Report.

The reduction of £5.7m in the subvention in 1998 is due to the expectation that fund income will increase by slightly more than fund liabilities, on a pre-budget basis. Income, which is made up almost entirely of PRSI contributions, is expected to increase by £94.9 million, due mainly to increased employment and higher earnings. The liabilities of the fund are expected to increase by £89.2 million, due mainly to the full year costs of the 1997 budget improvements and to a projected increase in numbers of recipients on some schemes, mainly contributory pensions.

[875]

[876]

Subhead

1997 Forecast Outturn

1998 Estimate

Change 1997 over 1998

£000

£000

%

Sickness Benefit

178,400

188,700

6

Disability Pension

200,700

204,600

2

Maternity Benefit

34,600

41,800

21

Health and Safety Benefit

140

200

43

Adoptive Benefit

100

100

Treatment Benefit

28,200

30,300

7

Old Age (Contributory) Pension

327,000

335,400

3

Retirement Pension

338,800

358,100

6

Unemployment Benefit

212,800

217,700

2

Widow(er)s/Orphans

379,800

401,000

6

Deserted Wife's Benefit

74,700

70,900

-5

Death Grant

1,000

1,000

Occupational Injuries

47,800

50,600

6

Redundancy and Insolvency Payments

16,000

16,300

2

Equal Treatment

7,000

2,000

-71

Total Benefits

1,847,040

1,918,700

4

Administration

95,160

102,800

8

(A) Total Expenditure

1,942,200

2,021,500

4

Income

Income from PRSI Contributions

1,920,000

2,015,000

5

Investments

250

100

-60

Rent

15

15

Reciprocal Arrangements

85

85

(B) Total Income

1,920,350

2,015,200

5

Excess of Expenditure over Income (A-B)

21,850

6,300

-71

Deduct:—

Opening Overdraw

9,850

0

100

Subhead B

12,000

6,300

-48

Mr. Bell: Will the reduction of £5.7 million interfere with the administration of this important scheme? Will the Minister indicate where that £5.5 million will be transferred? Will it be used for the benefit of the people who made contributions to the fund or will it be used under some other heading?

Mr. D. Ahern: There has been a sizeable increase in contributions to the fund in recent years, and again this year the amount is ahead of target. The issue of how this matter will be addressed will be subject to negotiations between the Minister for Finance and myself. No services are being cut. The reduction in the subhead is primarily due to the increase in PRSI income, which is obvious from the Estimates. PRSI rates have been reduced considerably in recent years and that was taken into account.

Proinsias De Rossa: Will the Minister clarify we are not talking about a cut in the PRSI fund but about a reduction in the Government subvention to the fund? We are talking about the make-up of the difference between income and expenditure, and because the income is greater than expected the subvention is reduced. Does the Minister foresee in the coming year that PRSI income will exceed expenditure and, if so, in what way will the excess money be used?

Mr. D. Ahern: The indications are there will be little difference between income and expenditure, but I would be loath to speculate until I see the ultimate figures. If there is a surplus, the Government will decide how it is spent. The matter will be primarily a source of negotiation between the Minister for Finance and myself.

Proinsias De Rossa: The use of the surplus is prescribed by law under social insurance fund legislation. Will the Minister indicate that, given the increasing demands on the fund for pensions and so on in future years, the money will not be used other than for social insurance fund purposes? Will he agree it is important we maintain the tripartite support for social insurance, that is, employers' and employees' contributions and Government subvention, a system which guarantees benefits to the people who pay into the fund?

Mr. D. Ahern: I accept fully what the Deputy has said. The actuarial review instigated by him when Minister, which I recently launched, contains very interesting information on our liability [877] as a nation over the next 60 years in terms of pensions. It would be a retrograde step if that was jeopardised by targeting the social insurance fund and I will ensure that does not happen.