Workers pay price if bosses slip up on social insurance
Imagine running into problems getting your State pension, maternity benefit or dole because your boss never paid your social insurance? It's easier for this to happen than you think.
Your employer has a duty to pay social insurance contributions on your behalf. These contributions make up your social insurance record – which in turn determines whether or not you're entitled to the contributory State pension, maternity benefit, sick pay, the dole, and other social welfare benefits.
Over the last few years, it has become clear that some companies haven't paid social insurance contributions on behalf of their staff. Pensions Ombudsman Paul Kenny has also come across cases where employers have not paid social insurance for their workers.
"We have investigated cases where companies deducted money from workers' wages for pensions – but never paid that money over to the workers' pension," said Kenny. "In the process, we have also discovered that some of those employers have not paid social insurance contributions."
The repercussions of such slip-ups can be enormous for workers. "When your social insurance contributions have not been paid, your social insurance record is not complete," said Kenny. "So if you become unemployed, you may not be able to claim dole. If you become disabled and cannot work, you may not be able to claim disability allowance. You also stand to have State contributory pension reduced when you reach retirement."
There are two types of State pension: a contributory pension, which is not means-tested; and a non-contributory pension, which is.
To be eligible for the contributory pension, you must have paid 520 social insurance contributions since you started working. You must also have built up a yearly average of social insurance contributions over your working life. You could fall short of these targets if your boss hasn't paid the right social insurance.
So what can you do to make sure you don't lose out on the State pension or other social welfare benefits because your employer hasn't played by the rules?
First, check that your employer is paying social insurance contributions on your behalf while you are still working with the company – particularly if you are in casual employment (as this is often where things can slide). Insist on a pay slip as this will tell you if tax and social insurance (referred to as PRSI) are being deducted from your wages – and how much. You should also receive a P60 at the end of each tax year which will tell you how much you have earned, and how much tax and social insurance you have paid.
Remember, although most employees must pay social insurance, there are some exceptions. In certain circumstances, foreign workers who are posted to Ireland do not have to pay PRSI. Those employed by their spouse or civil partner may also be exempt from PRSI – depending on the nature of the family business.
Another way you can check if the right PRSI has been paid for you is to get a copy of your social insurance record. You can request this online from www.welfare.ie or you can write to the Client Eligiblity Services (CES) section of the Department of Social Protection in Buncrana, Co Donegal.
This record will break down the social insurance contributions you have paid each year. So, if there is no record for a given year and you know that you worked then, you should be able to gauge the number of social insurance contributions which have not been paid on your behalf – and which employer is to blame.
You should contact the Department's CES section if you find that social insurance contributions are missing from your record. CES will then examine your case and if necessary, refer it to a social welfare inspector for investigation – including instances where the employer in question has gone out of business or has passed away.
"Where the inspector is satisfied, following the investigation, that contributions are due for the missing period, CES will update the person's record," said a spokeswoman for the Department of Social Protection.
It could take you some time to find out that your employer hasn't paid the right social insurance contributions – indeed, you might only find out about this after being turned down for your State pension. It isn't too late to resolve the problem at that stage, however.
When you are turned down for the contributory State pension – or get a smaller pension that you expect, you should get a letter from a deciding officer in the Department of Social Protection which outlines why your claim has been rejected – or why you are not getting the full pension. You can ask the deciding officer to review his decision if you believe you have been wrongly refused the State pension – or have been awarded a lower pension than you are entitled to.
An employer's failure to pay your social insurance contributions is one reason you may have been wrongly turned down for the State pension – or qualify for a lower rate. It is important, however, that you bring your employer's misdemeanour to the attention of the department's deciding officer – otherwise he is unlikely to know that your boss didn't pay the right social insurance for you. The deciding officer may then refer your case to the department's CES section or a social welfare inspector.
"Where additional contributions are due, the person's record will be updated," said a spokeswoman for the Department. "A deciding officer will then re-examine the person's pension elibility."
You can make an appeal to the Social Welfare Appeals Office if the deciding officer doesn't find in your favour after reviewing your case. You must, however, make your appeal within 21 days of the deciding officer's decision – otherwise, your appeal may not be heard.
Sunday Indo Business