The Irish Times view on social insurance change: scoping the options

More entitlements in return for somewhat higher payments may well be the way forward here

The ability of the State to borrow at rock bottom interest rates has protected the public finances significantly through the pandemic and allowed the Government to mount an unprecedented, and appropriate, programme of support. However some financial damage remains, with the national debt shooting higher and a big hole in the social insurance fund, out of which many State benefits are paid.

Social insurance is a fundamental part of Ireland’s economy, offering significant entitlements and benefits in return for contributions, and supporting people through their working lives, and afterwards. However new questions have been raised by the pandemic, which has led to the fund lapsing into a deficit expected to amount to €3.8 billion this year,

Payments out of the fund should fall as the pandemic eases and inflows should pick up. But the longer-term outlook for the fund was already challenging pre-pandemic, as the population ages. Now senior civil servants preparing pre-budget papers for the Government argue that PRSI payments from employers, employees and the self-employed should rise significantly from 2023 on to safeguard future benefits,

This opens up two questions. The first is whether the fund should be supported by more payments from contributors or the general exchequer. Given the other pressures on the exchequer, the former seems preferable. The second question then is who pays more and how much do they pay. The civil service papers outline one possible way forward, but this is a political choice – and not an easy one.


The civil servants argue that there is scope to increase payments in Ireland, given that they tend to be higher in other EU countries. This is true up to a point – and employer contributions are particularly low here. But comparisons here are difficult, as the benefits on offer vary so much from country to country; higher contributions elsewhere often lead to entitlements for improved pensions or healthcare access.

More entitlements in return for somewhat higher payments may well be the way forward here, with areas like sick pay and unemployment supports likely to improve post-pandemic. A lot of work is involved in scoping out the options, work which will fall to the commission on taxation and welfare which can have a key role in shaping the agenda.