The object of the Bill is to extend the social services provided for the working population by adding to the existing schemes of health insurance, unemployment insurance, unemployment assistance, old age pensions and workmen's compensation, a scheme of pensions to widows and their dependent children and to orphans. In conformity with the general principle that extension of the social services is best pursued along the lines of compulsory contributory insurance, the scheme for which the Bill provides has been framed mainly on the idea that during the working life contributions can be and should be made to provide for the protection of the worker's surviving widow and children or orphans in the event of premature death.
It has not, however, been possible strictly to adhere to the contributory principle. In the first place, there is already in existence a number of widows and orphans, who are the survivors of men who, if the scheme had been earlier in force, would have been insured under it and in respect of whose insurance, pensions would have been payable. It would be very hard on persons in this class if, through a deficiency in the social legislation which is now to be remedied, they could never become entitled to the benefits of the scheme. Secondly, schemes of compulsory contributory insurance are suited, in the main, to the circumstances of the wage-earning classes. Starting with the idea that these are the classes for whom protection is needed, it is reasonable to require from the employers and the employees, a weekly contribution payable with the same regularity as the cash wages are paid.
It is true to say, however, that out of the whole population of workers in the Saorstát whose means are little more than sufficient to provide the ordinary necessities of life, there are a large number of persons who are not in receipt of cash wages at regular intervals. The small working farmer whose level of subsistence is comparable with that of the urban wage-earner, requires to the same extent at the least, to be protected against the loss, which his premature death might bring to his wife and children. No proper solution of the difficulty of applying a scheme of compulsory contributory insurance to persons of this class has yet become apparent. Their inclusion in the scheme is, however, considered imperative, and it has been decided to include in the Bill provision for the payment of non-contributory pensions to the existing and future widows and orphans of "small-holders" where the valuation of the holding does not exceed £8.
Under the contributory scheme certain conditions as to the number of contributions to be paid in order to qualify for pension are laid down. In some cases these conditions may not be satisfied. It would be inequitable to exclude the widows and orphans of such men entirely from benefit in view of the provisions made for the "small holder" class in respect of whom no contributions are payable. It is accordingly provided that non-contributory pensions may be paid to the widows and orphans of men who, though insured under the contributory scheme, fail to satisfy the qualifying conditions as to contributions.
The Bill accordingly provides for two separate classes of pensions: (1) Contributory, applying to all persons insured under the health insurance scheme. (2) Non-contributory, applying mainly to three classes: (a) Existing widows and orphans of persons who were in the wage earning class at the date of their death; (b) future widows and orphans of persons who, although at date of their death, fail to satisfy the qualifying condition for contributory pensions; (c) existing and future widows and orphans of persons who, at the date of death, were occupiers of agricultural small holdings not exceeding £8 in valuation.
As is usual in non-contributory schemes of this kind, certain conditions as to means will apply in the non-contributory scheme. Under the contributory scheme, however, the insured person has contributed towards the cost, and, if qualified, payment of the pension will be regarded as a right without the application of a means test. The dates at which the schemes will come into force are to be appointed under Clause 8 of the Bill and will be as soon after the passing of the Bill as the making of the necessary administrative arrangements will permit — probably January, 1936.
The scope of the contributory scheme is practically identical with that of the existing national health insurance scheme. Every person who is at present insured for health insurance will become insured for widows' and orphans' pensions and the beneficiaries will be the future widows and orphans left by these persons. The number of persons at present insured for health insurance is about 500,000—345,000 men and 155,000 women. Those members of the Defence Forces who are insured for health insurance will also be included in the contributory scheme. Certain classes were excepted from the provisions of the National Health Insurance Acts, on the grounds that the terms of their employment secured to them sickness and disablement benefits not less favourable than those provided under the Acts, for example, Government employees, employees of local authorities, salaried staffs of railway companies, etc. It does not follow, however, that any provision has been made for widows or orphans of such persons, and, accordingly, these classes will, if their rate of remuneration does not exceed £250 a year, be required to be insured for widows' and orphans' pensions although not for health insurance.
If in any of these excepted classes the Minister is satisfied that the terms of the employment provide protection for widows and orphans not less favourable than is provided by the Bill, he may by order exclude them from the scope of widows' and orphans' pensions insurance. Insured persons under the National Health Insurance Acts include voluntary contributors. These are persons who, having left insurable employment after not less than two years' insurance, elect to continue to be insured persons and to pay the whole health insurance contribution (both employer's and employee's portion). Existing voluntary contributors under the Health Acts can elect to continue to be voluntary contributors, but they must do so before contributions under the Pensions Bill begin to be payable and must pay the whole health and pensions contribution.
Persons who, in the future, cease to be compulsorily insured on leaving insurable employment, can, if they have had not less than two years' insurance, elect to be voluntary contributors under the Health Insurance Acts. If they so elect, they become insured also for pensions purposes and are required to pay the full pensions contributions, in addition to the full health contribution. The option to become a voluntary contributor is extended to persons in employments excepted under the Health Acts but insurable under the Bill. Subject to the fulfilment of the qualifying conditions, widows of persons insured under the contributory scheme will receive pensions of 10/- a week up to age 70, when they will become entitled to old age pensions without any means test.
In addition, children's allowances will be payable for children under 14, or under 16, if they are under fulltime instruction at school. The allowances will be 5/- a week for the eldest child and 3/- a week for each of the other children. If the widow remarries, her own pension will cease, but the children's allowances will continue until the statutory age is reached. A widow of an insured person who is over 70 when her husband dies becomes entitled to an old age pension without any restriction as to means. Orphans' pensions at the rate of 7/6 a week are payable under the contributory scheme for each orphan of a man or of a widow, who was insured under the scheme. An orphan is defined as a child both of whose parents are dead.
Contributions will be at the rate of 8d. per week for a man (of which 4d. will be paid by the employer and 4d. by the employee) and 4d. per week for a woman, all payable by the employer. Contributions will cease to be payable on the attainment of 70 years of age. The contributions will be payable as one with the National Health Insurance contribution, by means of stamps affixed to cards. The values of the stamps ordinarily used will be: Men, 1/4 per week, of which 8d. will be in respect of health insurance and 8d. in respect of pensions insurance, and women, 11d. per week, of which 7d. will be in respect of health insurance and 4d. in respect of pensions insurance.
The arrangement for the payment and collection of contributions under the Health Acts will apply automatically to contributions under the scheme. The same contribution card will be used for health and pensions purposes and the employer will be required to affix to the employee's card a stamp representing the combined health and pensions contribution for each week for which a contribution is payable. The stamped cards will be surrendered as at present to the Unified Society by the members concerned. Special provision for payment of contributions will be necessary in respect of soldiers and persons in excepted employments who are insurable for pensions. In the case of soldiers, the Minister for Defence will pay direct to the pensions fund contributions at the rate of 8d. per week in respect of each insured soldier, subject to a deduction not exceeding 4d. per week from each insured soldier's pay.
In the case of persons in excepted employments, pension contributions only (and not health and pensions contributions) are payable. Power is taken to modify the regulations made under the Insurance Acts for the collection of contributions, and the power will probably be used to allow of direct cash payment of contributions by the employers of excepted persons. Persons engaged in agricultural employment which is insurable under the Health Acts are included in the scope of the contributory pensions scheme. As the rates of wages obtaining in agricultural employment are in the main lower than those of other wage-earning classes, it has been considered desirable to include in the Bill special provisions for dealing with them which can be reviewed if necessary at a later date. For a period of five years from the date of commencement of the scheme, the rates of contributions of such persons will be half the ordinary rates, i.e., 4d. for a man instead of 8d., and 2d. for a woman instead of 4d., and the rates of pensions payable in respect of their insurance will be: widow's pension, 8/- a week; children's allowances, 4/- for the eldest and 2/6 a week for each other child; and orphan's pension, 6/- a week.
The qualifying conditions for contributory pensions involve a minimum period of insurance and payment of a minimum number of contributions before a claim to a pension is established. The person in respect of whose insurance the pension is claimed must have been at least two years in insurance, and must have paid at least 104 contributions. If more than four years have elapsed since the date of last entry into insurance, an average of 26 contributions must have been paid in each of the last three contribution years. If the person was over 70 at the date of death, the contribution test is to be applied to the period before the attainment of age 70 during which contributions were payable. When an insured person attains the age of 70 he remains an insured person until he dies, although contributions have ceased.
This point on which there had been some doubt is made clear by the amendment of the National Health Insurance Acts in Clause 66 of the Bill. Insurance for the purpose of the National Health Insurance Acts and contributions paid under these Acts before the scheme begins will count towards satisfying the qualifying conditions. In the case of excepted persons for whom contributions under the Health Acts were not payable, contributions under these Acts are deemed to have been paid before the commencement of the scheme if the person was then or within the prescribed period, which will probably be 12 months, before the commencement of the scheme in the excepted employment. These provisions make it possible for widows and orphans of insured persons or persons who have been in excepted employment and who die soon after the commencement of the scheme to qualify for contributory pensions.
With regard to the non-contributory scheme, I should draw attention to the fact that no contributions have been paid or are to be paid in respect of these pensions, and consequently the entire cost must in the final resort be borne by the State. It is desirable, therefore, that payments should be limited to necessitous cases, and that widows and orphans who either are in a position to provide for themselves or are already so provided for should not be entitled to these free pensions. The Bill accordingly imposes two main limitations on the title to non-contributory pensions. Firstly, pensions are only payable subject to a test as to the means of the applicant. Secondly, widows under 60 years of age who have no dependent children will not be entitled to pensions. Dependent children are children under 14 years of age, or under 16 if they are receiving fulltime school instruction.
The persons to whom non-contributory pensions will be payable may be classified as follows:—(1) Widows and orphans of men who have died before the date upon which contributions under the Bill become payable, and who were insured persons under the National Health Insurance Acts when they died. This provision covers also the existing survivors of men who were over 70 when they died, if on the attainment of that age they were insured persons; (ii) widows and orphans of men who had died before contributions under the scheme became payable, and who when they died were engaged in an excepted employment which would have been insurable if the scheme had been in force when they died. This provision covers also the existing survivors of persons in excepted employment who were over 70 when they died, if, when they attained age 70 they were in an excepted employment which is made insurable under the pensions scheme; (iii) the future widows and orphans of men who become insured under the contributory schemes, but who when they die have failed to satisfy the qualifying conditions as to contributions; (iv) the future widows and orphans of men who on the date when contributions under the contributory scheme become payable were not liable for the payment of contributions because they were over the age of 70, provided that when such men attained the age of 70 they were either insured under the Health Acts or would have been insured under the Contributory Pensions Scheme if it had then been in force; (v) the present and future widows and orphans of agricultural "small-holders" the valuation of whose holding does not exceed £8. It is a necessary condition in this case for the payment of a widow's pension that the widow shall continue to reside on the small-holding.
The rates of pension payable under the non-contributory scheme will vary according to the locality in which the pensioner resides, and also according to the means possessed by the pensioner. The maximum rates of pensions are as follows:—(i) Widow's allowance.—(a) Resident in a county borough — 7/6 per week; (b) resident in an urban area — 6/- per week; (c) resident in a rural area — 5/- per week. (ii) Children's allowance. — (a) Resident in a county borough — 3/6 a week for the eldest child under 14 (or 16 as the case may be), and 1/6 per week for each other child; (b) resident in an urban area—2/6 a week for the eldest and 1/- per week for each other child; (c) resident in a rural area — 2/- per week for the eldest and 1/- per week for each other child. (iii) Orphan's Pension.—Resident in a county borough—4/- per week; resident in an urban area — 3/6 per week; resident in a rural area — 2/6 per week. These maximum rates are reduced to 3/-, 2/-, and 2/- respectively if the orphan is in an institution or is boarded out by a local authority.
Provision is made to discourage cases of migration from rural areas to urban areas or county boroughs in order to qualify for pensions at the higher rates. As already indicated, non-contributory pensions are only payable subject to a test of the means of the recipient. The Bill provides that no pension will be payable when the net weekly means of the claimant are equal to or exceed the maximum rate of pension payable to the claimant. If the net weekly means are less than the maximum pension payable the maximum rate of pension will be reduced by 1/- for every complete shilling of the net weekly means.
The First Schedule to the Bill describes the manner in which the annual means are to be ascertained and their division into carned means and unearned means. The annual means of a widow include the annual means of any children in respect of whom allowances are claimable and the annual earned means include the annual earned means of such children. The weekly means and the weekly earned means are the weekly equivalents of the respective annual means. In calculating the net weekly means from the weekly means certain exemptions are allowed. These exemptions are as follows:—Residence in a county borough — An exemption of 5/- from the weekly means together with an additional exemption from the earned weekly means of 2/6 for each child with a maximum exemption in respect of children of 7/6. Residence in an urban area — An exemption of 4/- from the weekly means together with an additional exemption from earned weekly means of 2/3 for each child with a maximum exemption of 6/9 in respect of children. Residence in a rural area—An exemption of 3/- from the weekly means together with an additional exemption from earned weekly means of 2/- for each child with a maximum exemption of 6/- in respect of children.
If these exemptions exceed the weekly means, the net weekly means are taken at nil, and the maximum pension is payable. If these exemptions are less than the weekly means, the net weekly means are taken as the difference, and for each shilling of net weekly means the maximum pension is reduced by 1/-. In the case of orphans the exemption from means is 3/- in all cases.
Widows' non-contributory pensions cease on re-marriage or on the attainment of age 70. On re-marriage the whole non-contributory pension, i.e., the widow's allowance and the children's allowances cease, while in the case of contributory pensions, re-marriage of the widow does not affect the children's allowances. As already stated, a non-contributory pension is granted only to a widow who is over the age of 60, or to a widow who, being under 60, has at least one dependent child. In the latter case the widow's allowance continues for a period of six months after the right to children's allowances ceases. If, at the end of the six months, the widow has not attained the age of 60, the widow's allowance also ceases. On the attainment of age 60 she may again become entitled to a non-contributory pension.
The administration of this scheme will be carried out by the National Health Insurance Section of the Department of Local Government and Public Health, to which all claims for pensions will be made. The Minister has power, with the sanction of the Minister for Finance, to appoint investigation officers for the purpose of investigating claims, means, etc., and deciding officers, who are to decide on the claims and make awards. Any claimant who is dissatisfied by the award or decision of a deciding officer may appeal to a referee or referees selected by the Minister from a panel of referees appointed by the Minister for Finance and the decision of the referee or referees will be final.
Books of Pension Orders of a type similar to those used for the payment of Old Age Pensions, will be issued, and the pensions will be payable weekly in advance at a post office selected by the pensioner. The Minister for Local Government and Public Health will have control of the Widows' and Orphans' Pensions Fund, to which will be carried all contributions payable under the scheme and out of which pensions will be paid. Moneys not immediately required for current expenditure will be paid over to the Minister for Finance for investment in the "Pensions Investment Account." An annual State Grant of £250,000 will be paid into this Account in each of the first ten years. Whenever the amount in the Pensions Fund is insufficient to meet current expenditure, the necessary sums will be paid into the Fund from the Investment Account. The Minister for Finance is given power to have an actuarial investigation made into the general financial operation of the scheme at such time or times as he may consider necessary.
Ordinarily, contributory pensions will not be paid when the pensioner is resident outside Saorstát Eireann. Power is, however, taken in the Bill to arrange for the payment of pensions to persons who are resident in another country, if that country has a contributory scheme of a similar nature, and if it provides for payment of pensions in Saorstát Eireann. Power is also taken to make reciprocal arrangements with such countries for the continuity of insurance and the maintenance of acquired rights. A non-contributory pension will not be granted unless the applicant has been resident in Saorstát Eireann for two years before the claim is made, and in no case will a non-contributory pension be payable outside Saorstát Eireann.
In order to safeguard the scheme against abuse, the Bill provides that the widow of a man who marries after the Bill was introduced and was over the age of 60 at the date of the marriage will not be entitled to a pension. Certain exceptions to this provision are set out in the clause. A widow's pension, whether contributory or non-contributory, will not be paid while a widow is undergoing imprisonment or is maintained at the public expense in a mental hospital. The widow's allowance and the children's allowances both cease, but the children, in such circumstances, are deemed to be orphans, and orphans' pensions (contributory or non-contributory) become payable to the guardian of the orphan or to such other person as the Minister may direct. Cases may arise where the child of a widow is removed from her custody by order of a court, or is sent to a reformatory or industrial school, or is deserted or abandoned. In such cases the widow cannot include the child in her claim for pension, and if the child is removed after the widow has been granted a pension, the pension will be reviewed. The child in such cases is deemed to be an orphan and an orphan's pension will be payable to the guardian of the orphan or to such other person as the Minister may direct.
The Minister has power to pay a widow's pension to some other person for the widow's benefit, or to pay any child's allowance to a person other than the widow, for the benefit of the child. An orphan's pension will be payable to the guardian of the orphan or to some other person appointed by the Minister for the benefit of the child. If a person who has claimed a pension receives outdoor relief pending the payment of the pension, which would not have been given if the pension were being paid, or if relief at a lower rate would have been given, the Minister will have power to repay to the public assistance authority granting the relief, the amount of such relief, or the excess payments of relief, and deduct the amount so paid from the pension. Similarly, if a person who has claimed a pension receives unemployment assistance pending the payment of the pension which would not have been given if the pension were being paid, the Minister will have power to repay to the Minister for Industry and Commerce the amount of such assistance and deduct the amount so paid from the pension.
Certain amendments in the National Health Insurance Acts and the Old Age Pensions Acts are required, and these are contained in Part VIII of the Bill. Section 13 of the National Health Insurance Act, 1918, is amended to provide that a person who attains the age of 70 while he is insured under the Health Insurance Acts, remains an insured person thereafter until he dies. This section also grants to insured persons who cease to be employed and who were members of an approved society or the Unified Society, a period of free insurance after the termination of employment, known as the "Free Year." For the purposes of qualifying for pensions, this period of free insurance is now granted to persons who were not members of a society.
Cases have arisen where persons have applied for membership of the Unified Society and have produced contribution cards relating to previous periods of insurable employment. Under the provisions of the Health Insurance Acts, a person who was not a member of a Society, and who ceased insurable employment even for a week, was not entitled to a "Free Year" and was consequently regarded as a new entrant into insurance on subsequently becoming insurably employed. Periods of insurable employment separated by short periods of unemployment could not be linked up. In order to preserve continuity of insurance in the cases of such of these persons as are genuinely persons whose normal occupation is insurable, the "Free Year" is now deemed to apply.
The Old Age Pensions Acts are amended so as to remove the means test under those Acts in the case of a widow who reaches age 70 while in receipt of a contributory widow's pension, or in the case of a widow who is over age 70 when her husband dies, who if she was under 70 would be qualified for a widow's contributory pension.
Statement of numbers of widows and orphans and estimates of costs. — In making these estimates considerable difficulty has been experienced, as full materials were not always available on which to base calculations. The following figures have therefore been arrived at with some reserve, but may be regarded as sufficiently accurate to give an approximate indication as to number and cost.
Taking first the contributory scheme, it is estimated that in the first year the number of beneficiaries will be 700 widows and 1,200 children, including orphans. These figures will rise gradually as insured persons die leaving widows and orphans, until ultimately there will be 23,000 widows and 18,500 children in receipt of pensions or allowances. The cost in the first year will be £30,000, rising ultimately to £800,000 per year.
Under the non-contributory scheme the persons covered fall into various classes. Firstly, there is the class now existing of widows with dependent children and of orphans of persons who had insurable status at their deaths. It is estimated that there are 6,700 widows and 16,700 children and orphans in this class and that the cost of pensions will be £180,000 in the first year; gradually decreasing year by year as the widows remarry, die, or attain the age of 70, and as the children and orphans reach the statutory age. Secondly, there are the now existing widows between 60 and 70 years of age who have no dependents, and whose husbands had insurable status at their death. The number of these widows is 8,600, and the cost of pensions in the first year will be £125,000, gradually decreasing year by year as in the first class.
The third class comprises the now existing widows, with dependent children, and the orphans of small holders. It is estimated that this class will include 4,000 widows and 10,460 children and orphans, and the cost in the first and each subsequent year will be £94,500. Lastly, there are the existing widows between 60 and 70 years of age, who have no dependents, and whose husbands were small holders. Of these there are 4,750 and the cost in the first year and each subsequent year will be £62,000.
Taking these four classes together, it is estimated that the non-contributory pensions will cover 24,110 widows and 27,160 children and orphans, and the cost of the first year will be £461,500. This figure, added to the first year's cost of contributory pensions, brings the total figure for pensions in the first year to £491,500. As the years progress the general effect will be that the cost of non-contributory pensions will decrease, and the cost of contributory pensions increase, until eventually a position of comparative stability is reached in which the total annual cost will be £956,500, of which £800,000 will be for contributory and £156,500 for non-contributory pensions.
The contribution income in the first year is estimated at £402,000, rising gradually to £426,000. To this will be added an annual State subvention of £250,000, which it is estimated will be sufficient to cover the cost of benefits and administration during the first ten years. The financial position will then be actuarially examined and further consideration given to the future arrangements necessary for the operation of the Act.