IRELAND's social insurance policy may need improving, but it should neither be abolished nor radically altered, according to "Social Insurance: A Discussion Document".

Introducing the document at Government Buildings yesterday, the Minister for Social Welfare, Mr De Rossa, said it was intended to form the basis for an informed debate on the future of the system.

He said that the time was past for ad hoc changes to the social insurance scheme. Like other EU member-states, Ireland needs to take stock of its future needs including our ageing population.

The Minister rejected calls by employer bodies such as the Irish Small and Medium Enterprise Association to significantly reduce or remove PRSI.

"It would undermine the contributory-based system of partnership between employer, employee and the State, which is based on social solidarity between all three," he said.

It was possible to adjust the system to help the low paid, as had been done in the Budget, he said. It was also possible to provide "contributions holidays" for employers taking on extra staff, another feature of the Budget. "But to abolish one, or other contributions, is to fundamentally alter the system."

The Minister pointed out that Irish contribution rates compare well with most other EU countries. A major exception is Britain, our main competitor. But he pointed out that British social insurance rates were much more numerous and the system more complex than here.

The figures also show that. while the average British employer pays two per cent less in social insurance than his Irish competitor, British employees pay over three per cent more.

Turning to the debate about the "demographic time bomb", Mr De Rossa said the problem would only become a "time bomb" if it was ignored. The first of a series of actuarial reviews was due to take place soon, to calculate the impact of ageing on the social insurance scheme.

Some countries in the EU have problems now and are having to take measures, such as extending the age of retirement, because they had not addressed the problem. Providing nursing care as part of pension entitlements was another development.

The discussion document says that in Germany, nursing care has been funded for pensioners by abolishing a public holiday. Mr De Rossa refused to speculate on how a similar scheme would he funded here.

"At the end of the day, if nobody wants to pay social insurance contributions, they will vote for those who want to abolish them." But he did not think this would go down well with anyone who had already paid PRSI and would face the prospect of no pension, or only a means tested system if contributions were abolished.