Self-employed say ‘we’ll pay more PRSI to get greater benefits’

Three in four self-employed people would pay more for extra PRSI benefits, such as sick pay and unemployment benefit, a new survey has found.

At present, the self-employed pay PRSI at a rate of 4 per cent, the same rate as PAYE workers, but start paying it sooner, as they are not entitled to a 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 levied at a hefty rate of 10.75 per cent.

According to the survey, conducted for the Department of Social Protection, some 74 per cent of self-employed respondents said they would be interested in a system of voluntary extra contributions to access more benefits. It also found that 88 per cent of self-employed would pay a headline rate higher than 4 per cent in return for a specific extra benefit. Their top choices for extra benefits would be cover for long-term illness, short-term illness or unemployment. At present, the vast majority (80 per cent) of respondents consider the benefits they can access under PRSI as "poor" or "very poor".

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

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As signalled in last October’s budget, the Government’s intention is to enhance the range of benefits accessible by the self-employed. Last month, for example, self-employed people became eligible for the optical and dental scheme for the first time ever, while later this year, self-employed will get access to the invalidity pension, without a means test. There has been no increase in PRSI for these two benefits.

The survey comes as the Government undertakes an actuarial review of the Social Insurance Fund, which is expected to be published by August 2017. In addition to examining options relating to State pensions, the review will also consider PRSI contribution rates for the self-employed.