Dáil Éireann - Volume 492 - 17 June, 1998

Written Answers. - Social Insurance.

61. Mr. Penrose asked the Minister for Social, Community and Family Affairs his views on the future of social insurance in view of the fact that there has been a dramatic growth in employment in recent years, many thousands of people are now paying PRSI for the first time or have resumed making payment after years out of the workforce and the additional revenue for the social insurance fund; if he will give a guarantee to those people that the range and level of social insurance benefits to which they are contributing from their pay packet will be maintained in the future; and if he will make a statement on the matter. [14454/98]

Minister for Social, Community and Family Affairs (Mr. D. Ahern): The social insurance system is central to the provision of social welfare services and to the economic and social life of the country. I am fully committed to the enhancement and future development of the system.

The social insurance system plays a key role in the provision of social protection in Irish society. People, when they are economically active, make contributions to the Social Insurance Fund according to their ability to pay and depending on the range of benefits and pensions for which they are covered. These payments fund the pensions of an earlier generation of contributors and also pay benefits to persons who are not working due to contingencies such as unemployment or illness. Contributors, accordingly, build up entitlements to various pensions and benefits which are paid to them as of right, without having to undergo a means test.

Social Insurance Fund expenditure, excluding administration costs, amounted to £1,820 million in 1997. Of this expenditure, approximately 69 per cent went to pay for retirement, old age, widow's-widower's and invalidity pensions.

[1212] The Government, in its programme, An Action Programme for the Millennium, is committed to the development of the social insurance system and to increasing the maximum personal rate of social insurance pensions to £100 per week by 2002. Significant progress in this direction was achieved in the 1998 budget. The budget provided for a general increase of £3 per week in all social insurance payments and an overall increase of £5 per week in the maximum personal rates of payment to all pensioners aged over 66 years. In percentage terms, the £3 rise represents increases ranging from 3.3 per cent to 4.4 per cent while the £5 rise represents increases ranging from 6.4 per cent to 7.0 per cent. The overall cost of these improvements in social insurance benefits is £90 million in a full year.

Changes, costing £50 million in a full year, were also introduced in relation to pay related social insurance contributions. The employee PRSI free allowance was increased by £20 per week to £100 per week. This directly benefits more than 1,000,000 workers while 60,000 workers earning between £80 and £100 per week are now exempted from making an employee PRSI contribution. The threshold for the lower rate of employer PRSI was also raised by £10 per week to £270 per week. The employer lower rate now applies to approximately 62 per cent of all employments in the industrial, commercial and services sectors. These pro employment measures are designed to facilitate entry and re-entry into the workforce by reducing PRSI contributions particularly in low paid employments.

The social insurance system is founded on long-term commitment by employers, employees, the self-employed and the State. It plays a major role in income redistribution and underpins solidarity not only between generations but also between those at work and those currently not at work.

Social insurance benefit levels, the range of benefits provided and the PRSI financing implications of these can only be considered in the context of the overall budgetary situation and the economic climate generally. I am fully committed to protecting the future of the social insurance system so that it can meet both its short-term and long-term commitments.