I move: "That the Bill be now read a Second Time".
The Bill has three main purposes. The first is to give legislative effect to the proposals to extend the social insurance system so as to include schemes of death grants, invalidity pension and retirement pension. The second purpose is to provide the legislative basis for the two new social assistance schemes of allowances for deserted wives and for incapacitated old people. The third purpose is to implement the proposals announced in the Budget for improvements in the existing social insurance and the social assistance schemes.
As is usual in relation to social welfare legislation, the Bill is based largely on the extension of the existing social insurance and social assistance schemes and consists mainly of amendments of the existing legislation. Some provisions of the Bill may, therefore, appear obscure and, in order to clarify them, I have had a very full explanatory memorandum circulated which I hope Deputies will find useful in their examination of the provisions of the Bill.
As Deputies will observe the Bill is divided into three parts, the first of which deals with general matters common to the Bill as a whole. Part II of the Bill deals with the new schemes of both social insurance and social assistance while Part III deals with the Budget improvements in both social insurance and social assistance schemes.
The first of the new schemes on the social insurance side in Part II of the Bill is the scheme of death grants. This scheme will make a grant of £25 payable on the death of an insured person or the husband, wife, widow or widower of an insured person, £15 on the death of an insured person's qualified child aged between five and 18 years, and £5 on the death of a younger qualified child. The contribution conditions for the grant are that the insured person had paid not less than 26 employment contributions and had 48 contributions paid or credited either in the last contribution year before the death or as a yearly average over his insurance life time. Only one grant will be paid on any one death, regardless of the number of insurances on which title could be established—for example where a man and his wife are both insured and one of them dies.
Insurance for death grant will apply to all those employments which are insurable for disability benefit and old age, contributory, pensions purposes at present. The scheme will commence on 1st October next and, being a completely new development in the social insurance system, it cannot be linked with any of the existing schemes in that system, and it does not supersede any of them in any way. The only contributions, therefore, which will contain an element towards death grant will be those paid after the scheme commences and it is only those contributions that will be accepted towards satisfying the contribution condition requiring 26 contributions to have been paid. It will not be possible, therefore, to satisfy the conditions in respect of any death occurring before the end of March, 1971, when 26 weeks will have elapsed from the commencement of the schemes.
Invalidity pension is being provided from 1st October also under the second new social insurance scheme. This pension will be payable to insured persons who are or become permanently incapable of work and whose insurance satisfies the contribution conditions. These conditions are that not less than 156 contributions have been paid and not less than 48 contributions have been paid or credited in the most recent contribution year. Insurance for invalidity pension will apply in the same types of employment as insurance for disability benefit does at present. Insured persons with the necessary insurance may under existing conditions continue to receive disability benefit as long as they are incapable of work, but they are required to submit medical evidence periodically and they are paid by cheques issued from the head office of the Department.
Under the pension scheme, it will be possible to dispense with medical certification or examination, except on rare occasions, and to pay pension at the post office of the pensioner's choice by weekly orders in pension order books. The insurance conditions for the pension will be the same as those now required to qualify for disability benefit on a long duration basis while the rates of pension £4 10s for the pensioner, £3 3s for an adult dependant, 18s for each of the first two qualified children and 13s for each additional qualified child, will be the same as the rates of disability benefit.
As the pension scheme is a development of disability benefit and indeed a replacement of it for certain categories, it is intended that any insurance under the Social Welfare Acts since 1953 which is reckonable for disability benefit purposes will count for invalidity pension. If that were not done, it would be at least three years from the commencement of the scheme before any person could have the 156 paid contributions necessary to satisfy the first condition for pension. Some persons have been receiving disability benefit for many years on foot of paid insurance which was wholly or partly under the former National Health Insurance Acts prior to 1953. Arrangements will be made to allow that insurance be used also to qualify for invalidity pension if necessary.
Regulations which I will make will define what constitutes being permanently incapable of work. These regulations have not yet been drafted but what I have in mind is that permanent incapacity would involve being totally incapable of work and the likelihood of being so incapable for an indefinite period and certainly for one of not less than 12 months.
The third new social insurance scheme is the retirement pension scheme also to be effective from 1st October next. This will provide pensions for insured persons aged 65 and over who have retired and whose insurance satisfies the contribution conditions laid down. These conditions are similar to those for old age, contributory, pension but are applicable at an age five years younger—the person must have entered insurance before reaching the age of 55 years, have not less than 156 employment contributions paid and have an average of 48 contributions paid or credited per contribution year up to age 65. The rates of pension will be basically the same as the rates of unemployment benefit— personal rate £4 10s, and additional £3 3s for a wife or dependent husband with 18s each for the first two qualified children and 13s for each subsequent child.
The new pension will to a large extent replace disability and unemployment benefit for insured persons in the age group 65 to 70. It will be payable on pension conditions—by means of a pension order book payable weekly at a post office without the necessity of attending at an employment exchange to sign the unemployed register and without the necessity of submitting medical evidence of unfitness for work. Insurance for the new pension will apply to the same employments as for old age, contributory, pension and contributions under the Social Welfare Acts since 1953 which count for the purposes of the latter pension will be taken into account for the purposes of the new pension. This will enable retirement pensions to be payable immediately the scheme commences to persons who have retired. Regulations will define what is meant by retired. The drafting of these regulations has not yet been completed but the intention is that the definition will require a person to show that he has ceased permanently to be employed in insurable employment or work which, if not insurable, is of that nature and that he does not intend to resume such employment. It will, of course, be open to a person to withdraw his retirement and surrender his pension if he should wish to resume employment at any time between 65 and 70.
There are a few general points I should like to mention in connection with these new schemes. Firstly, persons drawing invalidity pension will be credited with contributions for each week of incapacity and these contributions will count for the purposes of the other pensions in the social insurance system. Similarly, persons drawing retirement pensions will be credited with contributions for each week of retirement and these contributions will count for old age and widow's, contributory, pension purposes. Next, arrangements will ensure that there will be no duplication of payment of pensions either as between the new pensions or with the existing pensions-a person may draw invalidity pension up to age 65 and may then draw either invalidity or retirement pension but not both. At age 70, a person must choose between old age, contributory, pension and whichever of the other pensions has been in payment. In very rare circumstances, a person will wish to draw either retirement pension or invalidity pension after reaching the age of 70 because he will not be entitled to old age, contributory, pension or the rate of that pension which would be payable to him would be less than the rate of retirement pension or invalidity pension payable.
Finally, the new schemes of death grant and retirement pension will be among the long term schemes in our social insurance system with the old age and widows', contributory, pensions schemes. I think that it is only proper, therefore, that persons should be allowed to maintain their rights to these new long term benefits also if they should cease to be compulsorily insured. Accordingly, the scope of the category of voluntary contributorship which at present covers old age and widows', contributory, pensions is being extended to cover death grant and retirement pension also not only for persons becoming voluntary contributors in future but also for existing voluntary contributors in that category.
Turning now to the new social assistance schemes the first of these in Part II of the Bill is the old age, care, allowance scheme. This will be an extension to persons outside the present field of pensioners under the various schemes of the Department, of the arrangement made two years ago and extended last year by which £2 15s a week is paid with pension to an incapacitated old age or widow pensioner, aged 70 years and over, who requires full-time care and attention which is given by a prescribed female relative and who would otherwise be living alone. The new scheme is designed to cover persons aged 70 and over who are similarly situated but whose means are too high to permit them to qualify for non-contributory old age pension. There will be an upper means limit for the allowance, £299 15s which has been fixed by adding the maximum means which a person with one qualified child could have and still qualify for old age pension to the yearly amount of the pension that will be payable in such a case. Means will be assessed for the purpose of this limit in the same way as for non-contributory old age pension. The conditions of the new scheme generally, for example, who will be prescribed as a female relative or what will constitute living alone, will be the same as those applicable in the existing schemes and like them will be set out in regulations. As Deputies will recall, the definition of female relative for this purpose was extended last year to cover not only daughters and step-daughters but also sisters, half-sisters, grand-daughters, daughters-in-law and nieces.
The new social assistance scheme of allowances for deserted wives is designed to deal with one aspect of the problem of deserted wives. Deputies are no doubt aware that this problem has aroused much interest during the past few years and the aspect of it which this Department is attempting to deal with is that of the hardship caused in the long term to the wife and children where the husband has deserted them and has failed to contribute to their maintenance. At present, cases of hardship may be taken care of by the home assistance authorities which can help meet the immediate needs but it is felt that the long-term situation should be dealt with on a more permanent basis. Under the new scheme of allowances it is proposed broadly to treat deserted wives as if they were widows claiming non-contributory pension. The same conditions as to the rates of payment, the calculation of means, the conditions of qualification of children, the methods of claiming and paying, will apply.
There is one point at which the conditions for a widow's pension are not adhered to and that is where the allowance will not be paid if the deserted wife is under the age of 50 years and has no qualified children. It was originally intended that the new allowance would cover only mothers of families which had been deserted, but it was then decided that it should also cover elderly deserted wives without dependent children or whose dependent children have grown up and who may find it difficult because of their age and other factors to obtain employment. The minimum age limit of 50 years has been imposed to meet this situation.
Deputies will observe that it is proposed to specify by regulation the circumstances in which a woman will be regarded as deserted. These regulations have not yet been finalised and I have a fairly open mind at this stage as to what the definition of desertion should be for the purposes of the scheme. It is clear to me, however, that the term "deserted wife" is emotive and that it has different meanings for different people.
There are some basic factors which I must bear in mind when dealing with this question of the definition of desertion. The first of these is that the allowance scheme is of the nature of a pension scheme and the governing consideration, that is, desertion, should be firmly established and be more or less permanent as, for example, widowhood is in the case of widow's pension. Secondly, I feel that desertion is primarily a domestic problem and that the allowance scheme should not be a possible factor inhibiting a reconciliation. For that reason, I am of the opinion that before title to the allowance could arise, the wife should have availed in so far as is possible for her, of whatever processes, legal or otherwise, are open to her, to effect a reconciliation or to oblige the husband to meet his responsibilities to support her and the family. I do not think that there can be desertion in the sense we are seeking to deal with, if the husband is contributing in any way towards the maintenance of the family.
These are considerations which I will have to take into account in defining desertion, and I look forward to hearing the views of Deputies on this difficult and delicate question. I am convinced, however, that it is essential at this stage to adopt a pragmatic approach and to get a reasonable scheme into operation as soon as possible. Accordingly, the legislation has been framed to permit the definition of desertion to be specified by regulations so as to give a certain flexibility to the scheme and allow it to be readily modified, where necessary, to effect improvements which experience may show are desirable. One final point I would like to mention in connection with the scheme is that payment of the allowance will be made by way of an allowance order book at the post office of the claimant's choice. However, arrangements have been made so that the order books will not be generally identifiable as being in respect of deserted wife's allowance.
Part III of the Bill deals mainly with the improvements in the existing schemes of social insurance and social assistance announced in the Budget Statement on 22nd April, 1970. The increases then announced in the field of social assistance will give an extra 10s a week to all existing non-contributory old age and blind pensioners making the maximum personal rate of old age and blind pension, £4 5s a week. The increase of 11s 6d in the weekly rate of widows non-contributory pension will eliminate the existing differential between that pension and the non-contributory old age pension thus making the maximum personal rate of widow's pension £4 5s a week also orphan's non-contributory pension will be increased by 7s 6d to £2 5s a week. The increases in the maximum rates of these pensions will enable the scale of means and rates of pension to be extended in each case so as to give additional rates at the bottom of the scales and thus make pensions payable to persons whose means are at present outside the limit for any pension.
The rates of unemployment assistance for persons in urban and rural areas are being increased by 10s 6d a week for the recipient making the maximum rate £3 12s for a single person and £6 8s for a married couple living in an urban area. Outside urban areas the corresponding rates will be £3 6s for a single person and £6 for a married couple. These increases of unemployment assistance at the maximum will have the effect of automatically extending the means limit for qualifications for unemployment assistance.
The upper age limit for orphans and qualified children under the social assistance schemes which I have mentioned is being raised to 18 years. The rates of payment for qualified children are also being increased by 2s 6d in each case making the overall payment 15s for each of the first and second child and 10s for each additional child. Thus a widow with four children will get an overall increase of £1 1s 6d in her non-contributory pension making it £6 15s. These improvements will all come into operation on the first pay day for the particular scheme next August.
Under the Budget proposals the rate of children's allowance for the third and each subsequent qualified child in each family under the general scheme of children's allowances will be increased from £2 to £2 5s a month. The rate for the first and second qualified child will remain unchanged. As announced in the Budget Statement, adjustments of the tax free allowances under the income tax code in respect of the third and subsequent child in families will offset the increases in the rates of children's allowances for families which are liable for income tax. These adjustments are designed to ensure that it is the larger families not liable for income tax which will gain from the increases in children's allowances—a four child family in such circumstances will get £6 10s a month as against £6 at present and a six child family will get £11 a month as against £10 at present. These increased rates will be effective from October next.
The Budget improvements in the various social insurance benefits and pensions will come into operation at the beginning of October also. They will provide an extra 17s 6d a week for recipients of old age contributory pension thus making the maximum rate £5 a week for a pensioner personally and £8 10s in all for a married couple. Recipients of disability benefit and unemployment benefit will get an additional 15s a week. There will also be a slight adjustment in the payment for an adult dependant to facilitate decimalisation and the new rates of unemployment and disability benefit will be £4 10s a week for a single person and £7 13s for a married couple. The rate of maternity allowance is also being brought up to £4 10s a week. The basic rate of widow's contributory pension will be increased to £4 10s a week also regardless of whether or not the widow has any qualified children. The orphan's contributory allowance is being raised to £3. The rates of payment in respect of qualified children are being raised by 2s 6d a week in each case while the upper age limit for orphans and qualified children is being raised to 18 years.
Certain rates of unemployment benefit which are payable where unemployment continues for more than 156 days are the same as the maximum rates of unemployment assistance in urban areas. As unemployment assistance rates are being increased from the beginning of August next, these particular rates of unemployment benefit are also being increased from then.
To meet the extra expenditure on the increased rates of benefits and pensions and the cost of the new social insurance schemes dealt with in Part II of the Bill, an increase in the social insurance contributions payable by employers and employees is necessary. The increase proposed from the beginning of October next in the rates of social insurance contributions is 5s 5d where all the insurance benefits including the new schemes are covered, with lesser increases where the benefits covered are restricted. The various rates of contribution are also set out in decimal currency terms to be effective from 15th February, 1971. The overall weekly employment contribution payable in respect of men in ordinary industrial or commercial employment from October will be 33s 8d made up of 30s 6d in respect of social insurance, 2s 2d in respect of occupational injuries insurance and 1s in respect of redundancy payments. Of this, the employer will pay 18s 3d and the employee 15s 5d. In the case of women in such employment, the overall weekly contribution will be 31s 5d made up of 29s 1d for social insurance, 1s 7d for occupational injuries insurance and 9d for redundancy. Of this the employer will pay 17s 1d and the employee 14s 4d. The increase in the lower rate of voluntary contribution covering widow's pensions only will be 1s 1d making it 6s 4d. The increase in the higher rates of voluntary contribution which at present covers old age and widows contributory pensions and, in future, will cover also death grant and retirement pension will be 5s 5d making it 16s 3d. A table showing the present and proposed rates of contribution appears in the explanatory memorandum.
In line with the improvements in the social insurance system generally in the Bill, the benefits payable under the occupational injuries benefits scheme are also being improved. The increases proposed are 15s in the rates of the main weekly benefits and allowances with proportionate increases of other payments. These changes will not involve any charge on the Exchequer as all benefits under the scheme are met out of the Occupational Injuries Fund which is financed by contributions paid by employers only. A minor adjustment of the contribution necessary on conversion of the contribution to decimal currency terms in February, 1971, is all that is required to meet the extra cost of the increased benefits.
Due to improved facilities for printing insurance stamps and pension order books, it is possible this year to bring the improvements in the social insurance schemes into operation from the beginning of October, which is three months earlier than in previous years. The time lag between the increases in rates of payment on the social assistance and social insurance sides is, therefore, reduced to two months— August and September. During that period however cases will still arise where non-contributory pension would temporarily be more favourable than the corresponding contributory pension. It was never the intention that the statutory provisions permitting a person to opt for non-contributory pension, if it were more favourable than the contributory pension should operate where the advantage would only be temporary, as the Departmental machinery is not geared for short-term switching from one pension to the other and back again. There is a provision in the Bill therefore to prevent such switching during the two months period in cases where the advantage would be a temporary one only. The right of a pensioner to switch where the advantage would be permanent will not be affected, and this is of importance in relation to the present Bill where the allowance for adult dependants of old age contributory pensioners is not being increased and any advantage that might accrue to such an adult dependant by opting for non-contributory pension would not be limited to the period August/September.
The Bill includes a provision to make a minor modification of the means test for non-contributory old age and widows' pensions. At present a person who is paying rent for a labourer's cottage is not assessed with any means from the cottage for pension purposes but a person who is paying an annuity in respect of the purchase of a labourer's cottage has the value of the cottage assessed against him although the annuity payment may be the same amount as the rent would be. To remove this anomaly, the Bill proposes to have the value of the cottage disregarded while it is being purchased by way of an annuity.
I do not think it necessary at this stage to go into the Bill in any greater detail as I feel sure that the explanatory memorandum will have given Deputies a good picture of the effects of the provisions of the Bill. To assist Deputies further, however, I will summarise the yearly cost of the various proposals in the Bill. There is £2,982,000 for non-contributory old age and blind pension, £645,000 for widows and orphans pension, £1,284,000 for unemployment assistance and £1,188,00 for children's allowance together with £310,000 for the new scheme of deserted wife's allowance and old age, care, allowance. The total cost on the social assistance side is, therefore, £6,409,000 in a full year, all of which will fall on the Exchequer. Against this there will be an offset of some £100,000 by way of increased income tax due to the adjustment of tax free allowances for children in that code. The gross cost to the social insurance fund of the new schemes and the improvements in existing schemes on the social insurance side will be £9,815,000 in a full year. Allowing for increased contribution income to the fund of £7,698,000 from the increases in contribution rates, the amount of the cost to be borne by the Exchequer will be £2,117,000 in a full year.
These are very substantial amounts but they arise out of very substantial improvements in the services administered by my Department. I have much pleasure, therefore, in recommending the Bill to Dáil Éireann and I ask for speedy and favourable consideration of it.