Social insurance fund has €1.9bn deficit this year

SEANAD REPORT:THE FUND set up to pay social insurance will have a deficit this year of €1.9 billion and €1.5 billion next year, Minister for Social Protection Joan Burton, has revealed.

The social insurance fund, into which every worker pays PRSI, is used to pay unemployment benefit, State pensions, maternity benefit and redundancy and insolvency payments. It had a surplus of €3.4 billion at the end of 2008. It will now have a cumulative deficit of the same amount by the end of next year.

Speaking during a debate on the Social Welfare Bill (2011), Ms Burton said the deficit was “very large” and could only be addressed in three ways. One was by borrowing to make up the deficit; the second, a cut to entitlements; and the third, raising the level of PRSI.

The Minister said the OECD had shown Ireland had the third lowest level of social insurance in the developed world, though it could be argued the universal social charge and some income tax were also social insurance payments.

Katherine Zappone (Independent) said the Minister had a “very systematic and diligent” approach to social welfare reform. However, she said changes in the VAT rate and to the one-parent family payment rule would disproportionately affect the poorest income groups in society.

Paschal Mooney (Fianna Fáil) said the welfare bill had gone up by almost 300 per cent in the previous decade but inflation had only gone up 30 per cent between 2002 and 2009 when his party was in charge. He said, in retrospect, the party could have been a “bit more Calvinist in our approach”.