Is "social insurance" a misnomer

Brendan Burgess

Brendan Burgess

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I was looking up the qualifying conditions for Jobseekers Benefit and, if I understand it correctly...

A person who earned €50,000 a year for 30 years, will be entitled to be paid €188 a week for 9 months or around €7,000 (In fact, they could get less if they get a redundancy payment)

A person who earned €16,000 a year for 2 years, will be entitled to €188 a week for 6 months or €5,000

So it's not really insurance. And it's not really pay related.

So the first person has paid a premium of roughly €60k ( 4% of 50k x 30) to get €7,000, while the second person has paid a premium of around €1,300 (4% of €16k x 2) to get €5,000.

If you include the employers' contribution, it's €210k premium for €7,000 and €4,500 for €5,000.

I know it's a broader issue e.g. the contributions also qualify people for some sick leave and pensions, but the whole thing seems wrong to me.

I think that the duration and amount of the claim should be linked to the duration and the amount of the contribution.
 
On reflection, the duration or "number of stamps" is probably irrelevant.

People should have a fund in their own name. Someone paying PRSI on €50k for 5 years would have the same fund and entitlements as someone paying PRSI on €25k for 10 years.

To qualify for Jobseekers Benefit, one would have to have a minimum fund. Otherwise, it's Jobseekers Allowance.

Brendan
 
That's the way it works in Singapore -

The fund the individual pays into 'Central Provident Fund' can be used for retirement, healthcare, education, housing, death benefits to the family, etc., and the savings earn a minimum 2.5% interest guaranteed by the Government.

Voluntary contributions can also be made into the CPF.
 
Delgirl

That is fascinating. It's much broader than I was suggesting, but makes huge sense.


The Singapore system also ties in with my view that a person should coordinate their plans for pension and housing.

Brendan
 
Brendan,

Prsi is but another Tax paid for out of ongoing Tax contributions by employees and self employed.

If you have paid your taxes as self or as employee ,I feel you are entitled to your Contributory OAP.
 
Brendan - Back in the day about 10 years ago it did work out a bit fairer as there was a cap on it on about 45k. There was more than nine months benefit as well
 
Page 37 states

The Irish welfare system does not differentiate significantly between social insurance and social assistance, or
between contributory and non-contributory state pensions. Accordingly, PRSI contributions do not bear a strong
link to welfare benefits, so that it is acceptable to combine (employee) PRSI with income tax and USC when
looking at personal income taxation in Ireland
Click to expand...
Between myself and my employer there's more PRSI payed for me in a year than I'll receive via the 9 month jobseeker's benefit. "Free" eye and dental checkups would come to less than a single weeks worth of PRSI. Unless I live to a very ripe old age, I've already paid more in than I'll ever get back via the OAP.

If a private company was operating this "insurance" scheme I'd say they'd be in trouble.
 
There is a lot in that report which would suggest that many people would be opposed to any social welfare reform
25
As shown in Figure 10, the high level of benefits provides strong income protection to those on welfare (third highest level of protection in the OECD).
This protection is most visible for those who lost employment during the crisis, but also to pensioners, whose poverty rates declined significantly over this period due to unchanged nominal pension rates and even rising real pension benefits since 2008.
Click to expand...

A married couple with 2 children on social welfare gets paid over 60% of the median household income which is the the third highest in the OECD. Only Denmark and Japan pay more. It's the same for a single person without children. A lone parent with two children is the 5th highest in the OECD.

Brendan
 
PRSI may also entitle you to statutory redundancy if you meet the required qualifications.

On taking voluntary redundancy I received approx €43,000 & my wife received €48,000.

If your total redundancy including any amount from the employer totals less than €200,000 then you can claim €188 for 36 weeks currently , when I retired if was for a longer period.
 
If the employer has the money, if not the Government coughs up so not sure what fund they pull it out of but essentially the tax payer pays.
 
In many countries the unemployment payment is linked to former wages.

Example: 50% of former wages for 12 months.
 
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