Irish self-employed would pay more PRSI for greater benefits

Much of Ireland's self-employed workforce would be willing to pay more Pay Related Social Insurance (PRSI) in return for additional benefits, according to a survey by the Department for Social Protection (DSP).

Minister for Social Protection, Leo Varadkar, said: “The results of this survey will guide new policy developments in the short term, including Budget 2018, and the longer term.”

The DSP reported that 88% of respondents to its survey were willing to pay a higher PRSI rate in return for at least one additional social insurance benefit. The benefits considered most important were cover for long-term illness, short-term illness and unemployment.

The survey focussed on Class S PRSI contributors (largely self-employed workers and certain company directors) in August 2016, with the aim of understanding how the PRSI system is perceived by the self-employed.

As presented in last October’s budget (announced after the survey was conducted), the Government’s intention is to enhance the range of benefits accessible by the self-employed. Last month, self-employed people became eligible for the optical and dental scheme for the first time, while in December this year, they will gain access to the invalidity pension, without a means test, however there has been no increase in PRSI for these two benefits.

Currently, all self-employed persons aged between 16 and 66, earning above €5,000 a year are liable for compulsory PRSI at Class S, at a rate of 4%. This is the same as PAYE workers, but the self-employed start paying it sooner and aren’t entitled to PRSI credit. They are also excluded from benefits such as unemployment benefit and sick pay, but are entitled to a State pension and don’t have the added expense of employer’s PRSI, which is 10.75%.

Over 80% of participants of the study rated their range of social insurance benefits as "poor" or "very poor." The DSP also found that most respondents did not have private insurance cover to cater for the range of contingencies covered by the social insurance system.

Ireland's Social Security Minister is legally required to undertake an Actuarial Review of the Social Insurance Fund every five years. The Department said that the review, which is now underway and expected to be published in August 2017, will examine the cost of extending individual benefits to Class S PRSI contributors.

Varadkar said he "believes passionately that self-employed people deserve to be supported by Government and treated equally in terms of tax and social insurance."

Last updated: 12th May 2017