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Seanad Éireann debate -
Tuesday, 25 Jun 2013

Vol. 224 No. 4

Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013: Committee Stage (Resumed)

SECTION 12

Question again proposed: "That section 12 stand part of the Bill."

We are talking here about a mutual obligation, namely, the State supporting people who have, unfortunately, lost their job but the other side of that relationship is a commitment and an undertaking from the person on jobseeker's allowance that they will engage in a meaningful way when offers are made to them in regard to various opportunities for education, training and engaging with the different schemes that have been established by the Government, including participating in service to their community or service more generally through Tús.

For most people on the live register, the engagement is not only voluntary, but is actively sought. A small number of people choose not to engage, not to turn up to appointments and not to be available to discuss with social welfare officers how they might be assisted to get back to work. In the case of this small proportion of people we need to have sanctions available so if they decide to simply collect the money, but not engage with attempts by the Department on behalf of their fellow citizens and taxpayers to help them get back into education, training or work, then sanctions will be applied. This is a perfectly reasonable arrangement. The sanction is fairly limited. It is a reduction in the recipients' personal rate and does not affect the rate of their partner or rates which might be paid to any dependants. It is with regard to the personal rate. Is the Senator stating that if young people on the live register aged 21, 23, 29 or 35, who receive the various levels of payment to which they might be entitled as jobseekers, fail to show up and engage that the social welfare system should have no way of directing their attention to help them get back to work? This is what this is about and it is a necessary feature of a social welfare system.

The Senator asked what constitutes good cause with regard to a person failing to engage with the activation process without good cause. In this context, good cause includes any number of circumstances which the social welfare offices receive and accept if they are true. These could be an illness on the day, unforeseen circumstances such as a family funeral or other commitments the person might reasonably have which would prevent him or her coming to the social welfare office and discussing the situation. If, in such circumstances, the person contacts the Department, he or she will be facilitated with an appointment to have a discussion with the social welfare office at another time. The concept of good cause is not new to these provisions. It already exists under the penalty provisions relating to failure to attend appropriate training courses. We are simply applying it to the other elements of the activation process. Where a person is not satisfied with a decision by a deciding officer to impose a penalty for failure to engage without good cause, the person can appeal this decision to the social welfare appeals office.

As I explained to Senators previously, the new Intreo system is a much faster and improved service for people who have become unemployed. Once people have registered with the service and have had their photo taken and signature verified, there will be group engagement whereby groups of up to 20 people will be invited together to the social welfare office. The Department of Social Protection will explain and go through the services available. The Senator might be surprised by this, but many people are grateful for the Department setting out what opportunities may exist, which could involve going back to education or training or getting involved and participation in important community activities through community employment or Tús. After group engagement, the person will be invited for a specific one to one interview with a social welfare officer and the person's situation will be discussed in some detail.

In countries where people go back to work quickly, particularly in the Scandinavian countries, this reciprocal contact and effort on the part of both the individual and the public employment services is what helps people who have lost their employment to get back to work. For the small number - it is a small number - of people who fail to engage with the system we need to be able to have sanctions available that compel their attention so that they will engage with the system.

The purpose of this and the next number of sections have not escaped my attention and I do not have a difficulty with it, although sometimes, for whatever reason, the Minister seeks to put words in my mouth and takes the most extreme example of a situation to offer as justification for her position. She also seeks to misrepresent my personal view, again for whatever reason. There is nothing in what the Minister has said that goes against what I have said. Never at any stage did I say I had a difficulty with a sanction being put in place when a person refuses to engage at any level with the system, or when he or she does not turn up for interview. Of course there must be a level of sanction and we must ensure that a sanction is in place for those who are unemployed, especially long-term, who will not engage, in spite of the best efforts put in place by the State, the Department and the Minister, or for those who simply opt out.

The Minister spoke about the fact that people who are working and paying taxes are paying for people's social welfare. Equally, people who are out of work, who worked for a long number of years, paid into a social insurance fund, paid their PRSI and their taxes but now find themselves unemployed through no fault of their own. They are entitled to enjoy a level of support and need to be supported in respect of career paths, getting back to work, labour activation measures and so on.

However, there is an issue with just cause. The Minister stated that just cause is used in other areas of social welfare. We are inserting a new section here to impose a new sanction being put in place by the Government but it simply states "just cause". The Minister gave some good examples, such as a person who has to attend a funeral, or whatever. That is my point. We should be more prescriptive around what we mean in regard to just cause. The Minister also stated there was established practice, something that already happens, and I acknowledge that. However, from my experience, having been a councillor for seven years and having dealt with thousands of cases of people who have made applications for social welfare on different levels, the just cause element has not always been used fairly simply because it is not prescriptive enough.

I refer to labour activation measures and the supports and pathways which the Minister stated were being used by the Department. Of course there are people who will be happy with the courses offered to them and the opportunities being made available, but equally people are being offered courses which have no relevance to them. These will not help them or offer them a career path but will be just a course for the sake of doing a course. That is not good enough, but the sanction will be in place if those concerned do not sign up for such courses. I fully support the policy that a sanction needs to be in place for people who do not engage at any level but sometimes the balance can go the other way. Although I agree with the Minister that we need to have a balance of responsibility, I believe we have gone too far in the other direction in terms of having too much stick and sanction, without having a clear view, as Oireachtas Members who are being asked to pass this legislation, of what constitutes good cause. For that reason, I cannot support the section.

I will go through the steps the Department undertakes. I very much doubt that many private firms would do what public servants do to encourage people and offer them as many opportunities as are humanly possible to engage with the system. Let us bear in mind that if they do engage, within three weeks, they will have purged their contempt and can have their payments restored.

First, a letter addressed to the person with a written invitation to a group engagement session issues to customers. This letter includes a warning regarding the possible imposition of penalty rates for people who fail to attend. Second, if the customer does not show up at the group engagement session, he or she is requested in writing to call to the local branch office for an interview. Is that not reasonable? Third, during this interview, a verbal warning regarding possible imposition of penalty rates is given. A second written invitation to the interview and the group engagement issues to the customer. If the customer does not attend the rescheduled engagement, the penalty rate is applied.

Over the period, four contacts have been made with the individual, at any which time he or she can pick up the telephone, e-mail or call in person to the local office and give the reason for the failure to attend. This is not some heavy hand lying in wait to trap people. This is a process of encouraging people to engage with the system. When the penalty rate has been applied, at the same time a rescheduled interview is notified to the customer so that the Department is trying to encourage the person to come and talk to the officials in order to try to get a job. At that stage, if the customer comes in, the penalty rate is lifted. The customer has many opportunities to engage. If the customer fails to engage at this point, the penalty rate remains in place and a full review of entitlements is scheduled.

I brought forward the idea of a penalty being applied for people who do not engage with the system, as they will be the beneficiaries of engaging with the system. Since I introduced this process in April 2011, a total of 2,841 penalty rates have been applied. The feedback on the ground is that most ordinary people feel this is a good idea. I would be particularly concerned about some younger people who might drift away and feel they do not have a future whereas if they talk to somebody about the educational opportunities open to them, they can actually complete or renew their education for their own sake and that of their family. They hopefully will get employment, but, if not, as Members will recall in the budget, I extended the number of community employment places by 10,000. The Tús local employment service gives people an opportunity to engage in work. I meet people all the time who have taken part in community employment schemes, who tell me how delighted they are to be working in the community sector and their hope that something will come from it. I think it is fantastic for a person to be facilitated by these schemes. It saddens me when I hear people say they sent out 200 CVs but never got an answer. People in human resource management will know that if one sends out a common CV, one is unlikely to get an answer but if one goes to a jobs club, which the Department funds all around the country, the outcome is better. I opened one recently in Kilkenny, the area in which I think the Senator lives. The people who had become involved in the jobs club gave us very positive feedback

People involved in the jobs club were cut off from work, with some of them made redundant after working for 15 years through no fault of their own, as the business had just gone down. The club led to people feeling engaged and talking to other people, getting into a network and being helped back to work. Their comments were very profound, and such an initiative is the job of the Department. We are trying to bring such projects about. People may feel they are busy doing their own thing but one must work to get back into employment. Unless there are family connections or other networks, it takes much effort to get back to work and we want to help people in doing that.

If people are getting significant benefits from the State, I do not apologise for feeling I have an obligation to taxpayers and people who fund the tax and social welfare system. There is a small number of people that we can ask to pay attention and if they do not engage in the process, they will lose some of their money.

I am with the Minister on this issue and the proposals in the Bill are realistic. The majority of unemployed people want to engage with the system and Senator Cullinane referred to people who have worked their entire lives. They would be the first people in to see how they can get assistance and training in order to help them back to work quickly. Unfortunately, a small section of the community has no interest in work and they will milk the social welfare system for all it is worth, making little or no effort to engage with either training and education or assistance in seeking employment. There should be sanctions for people who will not engage.

I heard a frightening statistic recently arising from a sixth class teacher in a primary school conducting a survey on what people would like to do when they completed their education. The main ambition of 75% of those in the class was to sign on for social welfare and draw the dole. We must break such a mindset and get people thinking about work and making a contribution to communities and society. They must know that there is no such thing as hand-outs for life. Unfortunately, in my part of the world I know two, three or four generations of people who have never worked, and they have suffered very little loss of income during the downturn. Conversely, the people who have worked all their lives, with a large mortgage and while putting their kids through education, have suffered and really lost out in recent years.

This is a reforming Minister but we are spending over €20 billion every year on social welfare. We must examine every aspect to see how we can get value for the taxpayer and people providing the funding on an ongoing basis. If there are abuses of the system, they must be stamped out, but above all we must encourage people to engage with the system and explore opportunities for work, education and other training. This will enable people to make a contribution to society, and I support the Minister in this regard. There are sufficient safeguards for people who find themselves in a difficult position because of family or other commitments, and they will not be penalised if there is a genuine reason not to engage at a certain time. They may have to engage at a future date. I support this section.

I support the Minister in this matter. Most people in the country want people who draw social welfare to be answerable to somebody in the Department. I understand what Senator Cullinane has said and sometimes courses may not suit people or an unemployed person may feel that he or she is being forced to take part in an unsuitable course. As with Senator Cullinane, I have been dealing with social welfare officers for nearly 17 years, which is a long time. I know a social welfare officer can be approached and told that a course really does not suit a person, and the officer will give a chance to see if another, more suitable course arises.

They are not heartless people. We are giving the impression here that social welfare officers are heartless. They are not heartless, they listen to people and they have been engaging. The introduction of the Intreo offices, which I hope will be rolled out throughout the country, has been fantastic. One can walk off the street every Tuesday afternoon into the Intreo office in Killarney and go upstairs where one will be met by three people, one from FÁS, as we knew it, another from the Department of Social Protection and another lady who sits down with the individual to see what course best suits them.

This will cut out working in the black market. Some people do not want to go on these courses because they are working in the black market, so this is another way of stamping this out. The appeals system is open to people if they feel they are being unfairly treated. I do not think this will cause many problems for people because the majority of them want to work and will do anything to get back into the jobs market. In particular, as Senator Cullinane said, people who have worked all their lives are the first people at the door looking for a job. They do not want to be at home and drawing social welfare so they will engage with anything that can help them. I will be supporting this section.

The Minister is welcome to the House. I support everything said by Senator Moloney. I know that most people who lost construction jobs as a result of the crash genuinely want to work and want to do anything it takes to get a job. I spoke to the Minister for Education and Skills in the House last week about a situation in my area where a young fellow who was on the dole for two years decided to study at night two subjects he failed in the leaving certificate. He studied at home and went to the UK to do an examination for one day to pass the two examinations that would qualify him for a course in engineering. He wanted to apply for the back to education allowance but was told that he would not receive it because he was not out of mainstream education long enough just because he went away to do one examination for one day. In effect, we are saying that we are not going to give that individual the back to education allowance but just leave him on the dole. I know that the one-stop-shop scenario is supposed to be a catch-all and a system that works and I fully support it but there needs to be less bureaucracy attached to it. The case I cited is a clear example of where people should have the power to use their discretion. This guy wants to educate himself further and get a job, which he will eventually get if he is allowed to do it. I spoke to a social welfare officer yesterday who told me that it is a tick-box scenario. One must tick the boxes to qualify. This is just an example of where it is nonsense. I hope the Minister tells social welfare officers that they have a degree of discretion because, at the end of the day, we are not going to lose money on that.

I wanted to wait until everyone else had spoken because they are not directly related. I have a query regarding section 12(1)(a) regarding the substitution of "available for employment and" for "available for employment". Could the Minister explain the reason for that? Could she also tell us the criteria used by the Department to deem a person available for employment? This revisits questions I raised about the acting profession. I know the Minister has acknowledged a letter I sent to her because I indicated on Second Stage that I would write to her about this. Anecdotal evidence suggests that social welfare officers are not being flexible when it comes to those in the acting profession who are resting between positions. They are sometimes deemed not to be available for employment. It has also been brought to my attention that there are courses run for the film industry which engage not only actors but also those in the technical professions in the film industry.

This is being run by the Irish Film Board which has transferred that function from FÁS. It comes under the remit of the Department of Education and Science but the social protection dimension to the equation is that even though these courses are of short duration, I understand the Department of Social Protection will not pay them unemployment assistance during that period. I am not sure whether they are available or eligible for jobseeker's allowance. There are many questions relating to that issue but they all concern the one profession. If the Minister can shed any light on it I would be grateful but I await her more detailed reply in writing to the request I have raised.

To which subsection is the Senator referring?

Section 12(1)(a).

By substituting "available for employment and"-----

----for "available for employment,".

It is just a technical adjustment.

I am curious to know if the word "and" led to something else, because it has been dropped in the proposal. What was the reason for it?

It is in regard to the language and the actual script in terms of the Bill but I will get a more detailed reply for the Senator from the Parliamentary Counsel.

It is just technical.

It is technical. On the issue raised by Senator John Kelly-----

Sorry, will the Minister also address the questions I raised about the acting profession?

The social welfare officers hear a great variety of explanations as to reasons people might be otherwise engaged as in the example given by Senator John Kelly. I am aware that people from many parts of the world are signing on as well as Irish people. For example, social welfare offices facilitate people if they wish to take a short holiday. I do not understand the exact circumstances that apply to the case raised by Senator Kelly but I know that people who wish to go on short holidays are facilitated, provided they get the advice and information. If the Senator provides the details I will ask the official in charge of the area the precise policy. By and large, within the social welfare offices we have a number of staff, as described by Senator Marie Moloney, some of whom are former community welfare officers and some are from the former FÁS, who are involved in the activation, interview, case management approach. There is a high level of flexibility to encourage people back. In many cases people may be working with the local employment service, if there is one in their area. The people involved in those services are, by and large, very generous and thoughtful in assisting people to make their arrangements. I am informed that section 12(1)(a) is consequential on the deletion of subparagraph (iv) which was a condition for jobseeker's benefit, that is, the day of employment, and that is no longer required. It is a technical change to make clear what is involved.

I asked a question on the definition of "available for employment" as per-----

The Senator asked that question in respect of people working in the film area.

I have not had a reply on that issue as yet as the Senator raised it on the last occasion. When I get it I will-----

I am curious to know the actual definition that is used in general and what it means to be "available for employment"?

As part of "available for employment and genuinely seeking work", I am going back to the Senator's example in respective of the acting profession. Suppose somebody is an actor, it is customary for such people to take part-time work elsewhere in, say, teaching or any type of work. If an actor has long spells of unemployment because he or she is unable to get work, it may be possible from time to time to suggest that, perhaps, he or she should seek other work if the acting career is not taking off.

On the other hand, there is sympathy shown to a person who is routinely employed but is out of work between shows or rehearsals, although sympathy varies from office to office unless an actor can say that he or she is waiting for the next show to commence, say for a period of two weeks, and can give specific details. There is generally an amount of sympathy given in locations that have theatres and people involved in acting and the arts.

I shall outline what happens when suitable employment becomes available. Under the current activation mode if an actor has not worked for a long time but something suitable comes up then he or she will be greatly encouraged to take up the offer or, as I said earlier, return to education or some other activity.

Different occupations share the same experience. For example, when a school closes, lollipop ladies or men and canteen workers must sign on for the duration of the summer. It is impractical for them to seek alternative work during the period but they can sign on. In addition, seeking employment can be made quite difficult for them due to the type of work available. One cannot take a job for just six or eight weeks in the summer, return to school and then do the same for holidays at Easter and Christmas. There must be flexibility in certain cases when it comes to being available for work and I cite the lollipop ladies and canteen workers in schools as an example.

The issue that Senator Moloney has raised is an issue that has developed for all social welfare systems. Some employers want highly flexible labour contracts where a person is offered a very minimum number of hours yet he or she must remain available to the employer. In effect, the employer must pay for the actual hours worked on his or her premises and social welfare pays the balance. Inevitably, as people return to work, much of the work they will first encounter may be part time, contractual and atypical. What if large sectors were to become part-time employers where employers just paid people for the exact hours worked but did not give them enough hours yet social welfare had to pay the rest? We would have an enormously increased social welfare bill and employment would be extremely precarious.

Some employers are moving to zero hour based contracts. In my view, people need a living wage. We have a minimum wage in Ireland which is set at a relatively high level when compared with other European countries. What if a person only gets eight hours work at the minimum wage or continuously earns €2 or €3 above the minimum wage? Everybody can understand that during periods of downturn, like the one that we are experiencing now, some of these developments are inevitable. If zero-based contracts became the norm then the social welfare system would become extremely difficult to fund because not enough people at work would have enough hours to generate a sufficient income to be financially independent. One would then have continuing and enormous deficits in the social welfare system.

In London, the concept of a London living wage has been promoted. The aim is to have a decent rate of pay but sufficient hours to ensure that people have an income.

Senator Moloney commented on how difficult it is for workers such as lollipop ladies and canteen staff in schools to find more weeks of work. Obviously schools, because of funding issues, must let such staff go during the summer holidays and those staff must sign on for social welfare.

Certainly, in most areas that issue was resolved some time ago and for those who are let go from their jobs during the summer, social welfare covers the balance. However, in a way this means that social welfare is carrying the cost of their downtime. This year, for instance, the Department of Social Protection will pay more than €220 million in family income supplement, that is, to people with children who work a number of hours but whose income still is too low and who need a top-up. Members should recall the Department is trying to design a social welfare system in which work is always worthwhile and in which no one states a preference to take social welfare payments rather than work. However, as we return to recovery, many of the initial jobs are likely to be part-time and the statistics show this. We certainly must work at trying to provide people with sufficient hours to have a living wage, which is quite important.

Question put and declared carried.
Sections 13 and 14 agreed to.
SECTION 15

I move amendment No. 9:

In page 30, between lines 18 and 19, to insert the following:

“ ‘days’ refers to working days for the purposes of this Act.”.

I welcome the Minister to the House. This first amendment is a simple and straightforward amendment, which has been tabled by Senator van Turnhout and me, to clarify the meaning of "days" within this section of the Act. We simply seek to ensure the social welfare recipient is fairly treated by having adequate time to deal with such a serious matter that could easily affect his or her standard of living in a negative way. It also is to give adequate time to the Minister.

I thank Senators Zappone and van Turnhout. On this amendment, it basically is introducing a facility for a notice of attachment for the recovery of social welfare overpayments in respect of, and I stress this point, people who have substantial overpayments outstanding but who no longer are in receipt of social welfare benefit, assistance or any other payment from which the overpayment could be recovered directly by the Department or who have other sources of incomes, such as earnings, deposits or debts due. Where there is a reason to believe that a third party, including a financial institution, has an amount of money due to an overpaid person, the Minister can direct it to recover the overpayment. The reason for this is that we have a problem in the Department, as I explained in the context of the Second Stage debate, whereby successive reports of the Comptroller and Auditor General have stated the Department should have mechanisms in place to recover amounts that are overpaid through error, fraud, misstatements or mistakes. Consequently, we can do that and did that by way of amendment in last year's legislation to recover it from social welfare payments. The purpose of this provision is to attach it to other payments, such as in the case of someone who is employed.

This process is based on the Revenue process of recovery and it will be set out in regulations. The Revenue regulations are extremely detailed and I stress this is a last resort because when approached about overpayments, many people make reasonable arrangements with the Department of Social Production and with the Revenue Commissioners to refund or repay such overpayments.

In total, the Department has overpayments outstanding, which we should be able to recover, of approximately €350 million. The timeframes specified are similar to the timeframes that are applied by the Revenue Commissioners, which are considered reasonable, especially having regard to the fact that there will have been communication with the overpaid person on a number of occasions prior to any notice of attachment being initiated or undertaken. For instance, if someone is deemed to have an overpayment, there is a process for the Department of Social Protection, as there is with the Revenue Commissioners, where the overpayment is identified and the person is notified that there is an overpayment. The person has a right to appeal the overpayment and to maintain that they do not owe the money and that a mistake has been made. In practice, the Revenue Commissioners and the Department rarely make a mistake with the numbers. We have all handled situations where a person was hopeful a mistake had been made but that was not the case. However, the individual concerned has the right of appeal. Once an overpayment is determined, a person can enter into negotiations with the Department on how to arrange for the repayment. That negotiation can take some time. In response to Senator Zappone, until we achieve the power set out in the Bill, the only alternative the Department has is to take civil court proceedings. One can understand that the process is extremely cumbersome and expensive. Accordingly, we have decided to copy the procedures of the Revenue Commissioners so as to be able to make attachment orders to recover the earnings.

Senators will recall that with overpayments from the Department of Social Protection, it is 15% of the principal individual social welfare payment of the person who has been overpaid. It does not relate to payments to a partner, spouse, dependent children or other dependants. The approach in this case will be similar. Once the legislation is passed, we will develop regulations which will set out the position in detail. I assure Senators that the procedure will be a very careful one. It is open to an individual to voluntarily make and enter into an arrangement with the Department. I do not propose to accept the amendment.

Could the Minister clarify whether it is open to the Department of Social Protection to accept an offer to deal with an overpayment? For example, I am aware of a lady who was drawing a non-contributory old age pension but who had shares that were not of value at the time she applied for a pension, but when the shares rose in value she did not inform the Department of the situation. She is now deceased and her family has been asked to pay back €115,000. Is it acceptable to the Department that a person could make an offer on an overpayment?

She obviously did not have Anglo Irish Bank shares.

All I can say is that approximately 11% of overpayments arise from what are called estate cases, in other words, after someone’s death when their will is being probated and their property is being distributed. It sometimes does emerge that people who claimed various payments from the Department may have had significant assets far in excess of the assets permitted by the means test. As Senator Moloney is aware, the means test for the non-contributory old-age pension is quite generous.

If memory serves, it is pretty significant. It will depend on the size of the estate and what it can bear. That is why it is important to bring to the attention of the Department if the means have changed, and that must be taken into account. It might be wise to have a word at local level with the senior manager in charge but will depend on the composition and extent of the estate and the circumstances.

I thank the Minister for her response. This amendment and the other amendments do not question the Minister's right to recover overpayment. It is a significant sum of money each year and it forms part of the reform agenda, which I accept. As was pointed out, that is a much better alternative to civil court proceedings.

The Minister stated that she was not accepting the amendment because a significant period of time will pass, with correspondence back and forth, prior to the decision to attach a notice. The Minister is rejecting the amendment because the number of days stipulated are not necessarily working days in light of the fact that a lengthy negotiation has already taken place. I can accept that.

There is one question in light of the Minister's response. She indicated that people have a right to appeal the overpayment.

They can appeal the assessment of the overpayment. That provision already exists in social welfare legislation.

People would therefore have the right to appeal the assessment of the overpayment.

This has been an issue in successive reports of the Comptroller and Auditor General. In recent years the annual amount for overpayment, some of which arises from fraud, some from mistakes, a small percentage as a result of errors by the Department and some from estate cases, is around €90 million. In the context of the very painful changes I have had to make as Minister and those made by the previous Government, Senators will appreciate this is a significant amount. I agree with the Comptroller and Auditor General that the Department should put in place serious systems to make sure as much is recovered as possible and that it is done reasonably, taking into consideration each individual's circumstances.

If an overpayment is calculated, the person is written to and advised that an overpayment has been calculated. Often an investigating officer is involved and the case will be discussed. Perhaps someone claims for more children than there really are and it comes to light. That person is advised that he or she has misclaimed child benefit for a period of time. Perhaps a partner lives with that person while she has been claiming lone parent allowance or, as Senator Moloney referred to, someone has retired and claimed a non-contributory pension without disclosing the full extent of his means to the Department. When that person's will goes to probate, the value of the estate emerges and it is clear he should not have qualified for the level of payment he received.

The amount of the overpayment is calculated in the same way as back duty would be calculate by the Revenue Commissioners based on the number of years and the amount per year.

The person is then told how this figure has been calculated, the assessment is made and he or she has a right of appeal. Appellants may set out any circumstances that support their view that an assessment is wrong. Once the appeals process has concluded, the next step is the issue of repayment. The simplest approach is for the person in question to make a voluntary arrangement with the Department to make the repayment in weekly, monthly or annual instalments, depending on circumstances.

Until the legislation was changed last year, the law prescribed that the maximum the Department could recover from a person with a social welfare income was €2 per week. We discussed the small number of people who abuse the social welfare system. However, some people simply gave two fingers to the Department by indicating that we could recover an outstanding amount of perhaps €20,000 at a rate of €2 per week. Senators can do the calculations but what is clear is that it would take a long period to recover such a large amount with such small instalments.

In the small number of cases where the Department wishes to recover overpayments arising from fraud, including significant amounts in some cases, we refer the matter to the Director of Public Prosecutions and Garda Síochána and these types of cases are now frequently prosecuted in court. A person may make a voluntary agreement with his or her local social welfare office to pay a reasonable amount, according to his or her circumstances. Where he or she does not enter into such an agreement, the Department, under this legislation, will have the power to make an attachment. We took such powers last year in respect of social welfare recipients. In the case of individuals who have received an overpayment, we have the power to make an attachment in respect of 15% of their income from social welfare. If a person is on the basic rate of €188 per week, the Department may deduct up to €28 per week, depending on circumstances. If, on the other hand, the person in question is not receiving an income from social welfare but is employed, the Department will obtain the same power as that available to the Revenue to recover the overpayment through an attachment of his or her earnings, bank account or assets.

As Senators may be aware, it has emerged in a number of the fraud cases the Department prosecuted through the courts that people had substantial amounts in their bank accounts. If a person comes before the courts having defrauded the State of, for example, €10,000 or €20,000, and he or she has a healthy bank balance with multiples of this amount on deposit, we should be able to recover the overpayment. The Bill gives us the power to do so. While I do not anticipate that this power will be used frequently, it is important that the Department is able to avail of it.

It is also important that social welfare officers have the power to stop people who are entering or leaving the country through our airports. In conversations on doorsteps, one used to hear that someone's brother who worked at Dublin, Cork or Shannon airport had observed people travelling back and forth from other countries to claim social welfare here. Thanks to the powers provided by the Oireachtas, social welfare officers now have the power to stop and question people. If a significant level of fraud is discovered, a case may be taken before the courts. This important power forms part of a suite of powers available to the Department in its efforts to inhibit fraud and abuse of the social welfare system and recover amounts that have been overpaid.

On occasion, an overpayment is made as a result of a genuine mistake, for example, where a person did not understand the rules. Nonetheless, arising from the reports of the Comptroller and Auditor General, the Department has a responsibility to recover such funds. The rules will be operated with care and the regulations will be based on those available to the Revenue Commissioners and the process I have described. The regulations under which the Revenue Commissioners operate are extremely detailed. Presuming that this legislation will be passed, the regulations will be drafted within two months of its enactment.

I will not take much time as I know we have many amendments to get through. I am a little concerned about an attachment on an account because, to the best of my understanding, if an attachment is placed on an account, it cannot be used. If that is the only money people have coming through or they cannot use the account with the attachment for daily living, how difficult is it to lift the attachment from the account? What do people have to do to have the attachment lifted?

In my experience, the voluntary arrangement works well, and if people are realistic, the Department is fair and reasonable. I have worked a few of those cases through with people.

Senator Moloney asked about cases where the estate of deceased persons is asked to refund significant amounts of money but are officials in the Department in a position to make a full and final settlement, perhaps in cutting a deal, where there has been an overpayment to a person and where the family inheriting the estate may not be in a position to repay the full amount? To get around the problems that tend to arise with people, and particularly older people, being overpaid when making an application for a non-contributory pension, for example, and later having changed circumstances not relayed to the Department, should there be a system in place where every year or second year people would get a note in the post asking if circumstances have changed or income has increased since the award of the payment? It comes as a terrible shock to families on occasions where a person dies and it is discovered that he or she was getting a certain level of incorrect benefit from the Department, and the amount has accumulated over 20 or 30 years. The family may be left with a large bill. Perhaps we should highlight in the media how people claiming non-contributory benefits must declare all income or else they run the risk of leaving a debt legacy to children.

It is always open to a person to speak to somebody in the Department and reach a deal and on most occasions people find the Department very reasonable, depending on what are their overall economic circumstances. My advice is that if an overpayment has arisen, the person should speak to somebody in the Department to make a reasonable arrangement. If a reasonable arrangement is made on a voluntary basis, there is no need for an attachment, and the process may be as simple as creating a standing order. One could make a reasonable payment based on the guidance of 15% of an individual's personal income, leaving aside dependants.

Senator Mullins made observations regarding older people and we write on a continual basis to people in receipt of all kinds of different benefits in order to check if the address is valid and whether the person in question is still at the address. We also look to confirm that they are still entitled to the payment. Citizens Information and many organisations supporting older people also disseminate an amount of information about entitlements. I agree that if somebody is in doubt, he or she should call the Department or speak to an official and ask for a review. Our means tests are very generous in comparison with other countries and certainly in comparison with the United Kingdom and the recent changes implemented there. If somebody is unsure about an issue, they should check with Citizens Information or with the Department.

In reply to the Senator's other question, it is possible to reach an agreement with the Department and the settlement would be based on resources available and the financial circumstances of the person in question. The sum in question is €92 million per year and if honest mistakes happen, they should be rectified as quickly as possible in an amenable way. The Revenue Commissioners has an easier system because if people are in work, they simply adjust tax credits for the following year to reflect the change in circumstances. If we are dealing with a social welfare payment, it is also possible to do something similar. The Committee of Public Accounts and the Comptroller and Auditor General have certainly referenced this in reports over the past couple of years.

What about the lifting of the attachment? Is it easily done?

It is always possible to come to a voluntary arrangement, meaning there would not be an attachment.

What happens if there is an attachment?

There can be a reasonable voluntary arrangement.

It could be lifted in that case.

I thank the Minister for her response. Senator van Turnhout and I are not opposing the section, as we see it as important. Our amendments come from a concern to ensure that transparent and fair procedures are operating. The Minister has indicated an appeal for the assessment is allowed and this is stipulated in law but I have another question. The Minister has indicated that this is especially relevant where there are significant overpayments but will this process also apply where the overpayments are not as significant? The Minister also mentioned people who are employed, as distinct from unemployed people. The process will apply to both and our concerns relate to transparent procedures. The process will apply to both employed and unemployed people.

Last year, the Seanad and the Dáil passed into law legislation applying to people in receipt of social welfare payments of any kind with an overpayment to allow for the recovery of up to 15% from the principal payment. I stress that this may apply to up to €28 per week from somebody in receipt of a personal payment of €188 per week. That is to allow for recovery, as opposed to previous arrangements, which allowed a maximum of €2 per week. That is unless, as occurs with many people, a voluntary arrangement is made. If the voluntary arrangement is reasonable and acceptable to both sides, I advise people to take it up.

The legislation we are examining today relates to people who are not receiving a social welfare income but who are in work or who have other assets, means or a business. It is to recover money from them in the same way that money is recovered from people on social welfare. The legislation we are now considering does not apply to people on social welfare but rather people who may have extensive savings, as happens in a number of cases and particularly if there is a case of fraud involved. If, for example, somebody was taking three social welfare payments by collecting money in two or three social welfare offices - this would probably be identity fraud - it would be a serious problem. One could imagine the results if these people could get €10,000 or €12,000 per year undetected for three or five years, and the amounts would build up. Recently we have detected people who have done this over a much longer period.

When we were discussing photos, I mentioned information technology with the new photo personal service cards.

If somebody is collecting a social welfare payment in the Killarney office, IT will then ask whether this could be the same person who is collecting money from Ballinasloe and the office in Tallaght. IT will have discovered that it is the same individual. In that case, an investigating officer will examine the case, which may be prosecuted. It is really important that we build up a system where we recover the overpayments quite quickly. This section applies to people who are no longer being paid social welfare and are at work or have means through some other mechanism and arranges recovery from those means. We can send the Senator a copy. Once the legislation is passed, officials will be working on the regulations so we should have them available by the end of the summer and will be putting a copy in the library of the Houses.

Can I ask Senators Zappone and van Turnhout if amendment No. 9 is being pressed?

I should add one further point. The actual overpayment recovery arrangements in this section will come into effect by way of a commencement order that will be made after the enactment of this legislation and its signing by the President as soon as the necessary administrative arrangements and the guidelines to which I refer are put in place. We will issue public notices through our information systems like citizens' information boards. I anticipate that all going well, I will sign the commencement order towards the end of the summer or the beginning of the autumn.

Amendment, by leave, withdrawn.

I am advised that amendment No. 10 is out of order as it involves a potential charge on the Exchequer.

We submitted a new amendment on the basis of that to the Bills Office but it did not come back so I am not sure what the problem was. We were told and resubmitted an amendment on the basis of that ruling although we could not really understand how a definition of overpayment would involve a charge on the Exchequer. I have a question about that.

I must deal with the amendment before me, which was ruled out of order, but Senator Zappone flagged her desire to have the matter pursued by an appropriate amendment. Could I suggest that she and Senator van Turnhout attempt to introduce an appropriate amendment on Report Stage?

We disagree with the ruling that the amendment is out of order because we reworded our amendment and submitted it. Perhaps we will be allowed to comment more generally on section 12 in respect of that issue?

The Senator will appreciate that I must disagree with her opinion.

I just wanted it noted for the record. It makes it very difficult to debate social welfare issues if even when we are talking about overpayments, we are being told that it is a charge on the State. It is very difficult for us as a Senate to do it.

The Senator could consult further with the authorities to see if her amendment could be taken on Report Stage.

Amendment No. 10 not moved.

I move amendment No. 11:

In page 32, line 10, to delete "person." and substitute the following:

"person;

(h) any other debts owed by the overpaid person.".

This amendment refers to the circumstances of the person who is overpaid and adds what we think is a significant circumstance the Department should take account of prior to making arrangements regarding how the person will repay the amount owed. We think it is a circumstance that is overlooked in the Bill. Obviously, it does list a number of circumstances in (a) through (g) that are taken into account, such as the individual's personal and family circumstances and his or her net income or earnings. However, we believe that weight should also be given to people's financial circumstances, particularly when they are over-indebted. The circumstance would impact significantly on a person's ability to repay the debt owed to the State and at a level that is still enables the person to secure an adequate income. This is why we put forward the amendment.

As I said, in many ways the provision here is a last resort because the attachment powers will be only exercised where the person who has been overpaid has failed to discharge or engage with the Department on an outstanding overpayment. One must satisfy that a reasonable capacity to repay exists, namely: that the person has sufficient earnings or money held on deposit so that reparation can be made in full or in part; a final demand has issued to the person concerned advising them of the consequence of not repaying; the overpaid person is given the opportunity to make any representations so that any factors associated with the recovery of the overpayment can be duly considered; the overpaid person has been formally notified of the intention to issue a notice of attachment should he or she fail to respond within a defined time period; and there are no alternative recovery options available.

In respect of other debts owed by the overpaid person, there is already provision to take account of the person's overall financial circumstances and within this framework, any other debts owed by the overpaid person can and will be fully considered. Underpinning these new provisions is the principle of the capacity of the overpaid person to repay.

For these reasons, I do not propose to accept the amendment. The principal part of the amendment concerns whether social welfare officers will take the person's general financial situation, such as other debts, into account. The answer most definitely is "Yes".

I thank the Minister for that explanation. Perhaps it is because I am still relatively new but if the answer is "Yes", I am still not clear why the Minister would not accept spelling it out. Is she telling me it is implicit rather than explicit? Why would she not accept spelling out that other debts owed by the overpaid person will be taken into account? Are there other sections where it is spelled out explicitly?

There is quite an amount of detail in the section. In addition, officials will spend a couple of months writing up fairly detailed guidelines modelled on Revenue's approach to this area. I can assure the Senator that circumstances will be taken into account. The only other mechanism open to the Department at the moment is the much more cumbersome route of going to court. This will be a much easier process than taking somebody to court and will provide a much greater capacity to, hopefully, broker an agreement between the Department and the individual as to what constitutes a reasonable effort to repay the amounts due. The Department will be reasonable.

So the Minister is assuring us that it will become very clear in the regulations that the financial circumstances will be taken into account? Is that what she is saying?

Yes. Part of amendment No. 15a states that prior to giving a notice under section 343D(1), the Minister, in determining the circumstances of the overpaid people, will take into account the following: their personal and family circumstances; any statutory deductions that may affect their earnings or income; the amount of the overpayment; the period of time for which the overpayment is outstanding; the amount of net income or earnings of the overpaid person, which is a very important point; the employment circumstances of the overpaid person; and the amount of debt due to the overpaid person. That is a very comprehensive list setting out how a person's likely financial circumstances are taken into account in assessing the overpayment.

Is the amendment being withdrawn?

We reserve the right to bring it back on Report Stage.

Exactly. We will let it go for now because I hear all that is being said.

When I looked at the Members I thought the Minister had included it, that instead of the amount of debt due to the overpaid person that she meant to include the amount of debt owed to the overpaid person. I cannot quite understand the circumstances in which debt would be due to the overpaid person.

Another interesting revelation in the Seanad.

The most common debt due to an individual is where a person has a deposit in a bank, the bank is holding the person's money and that money is owed to the individual. It is implicitly moneys on deposit with institutions such as banks but it could be held by other people. If they have such moneys, they would be taken into account in the broad consideration of their capacity to repay. I am not suggesting that anybody would ever arrange that, it is in case that would happen, but it is to ensure we can take a reasonable view of what is the person's capacity to repay.

I appreciate that but I ask the Minister to consider the amendment between now and Report Stage. Given that the Minister is explicit in all the other circumstances, why not be explicit about the debts owed by the overpaid person?

Amendment, by leave, withdrawn.

I move amendment No. 12:

In page 32, between lines 23 and 24, to insert the following:

"(2) The Minister shall, in deciding to give a notice under subsection (3), establish a fair and transparent procedure for examination of any

representations made by an overpaid person and ensure that-

(a ) due consideration is given to any response received from the overpaid person under subsection (1);

(b ) due process is followed;

(c ) the rules of natural justice are applied; and

(d ) the right of the overpaid person to be heard is vindicated.".

This amendment relates to our concern in regard to transparent procedures. In this case when the Minister examines representations made to her by the person who was overpaid, the Bill states that the Minister shall give due consideration to any response received from the overpaid person before he or she decides to give notice. The process for considering these matters by the Minister is not outlined. Instead it would seem that this decision is entirely at the discretion of the Minister, or whomever is the Minister of the day. Consequently we offer the amendment because it is not clear to us that there is a fair and transparent procedure in place for examining these issues.

Section 343D, the follow-on section, sets out the procedures. Guidelines will be drafted, based on the Revenue guidelines which will set out, as does section 343D, the broad procedures on page 32 of the Bill, as amended by the Dáil.

The amendment refers to that section. The Minister's response is that further regulations will be developed based on Revenue guidelines. Our amendment seeks in the context of those procedures being spelled out that due process is followed, the rules of natural justice are applied, and the right of the overpaid person to be heard is vindicated. The Minister said the procedures would be spelled out. Those are the elements of the procedures about which we are concerned.

The procedures are set out fairly broadly in section 343D and will be augmented by regulations which will be published and laid before the House once the Bill is enacted. It will take about two months to prepare them.

We will not press it now.

Amendment, by leave, withdrawn.

I move amendment No. 13:

In page 33, line 13, after "196" to insert "whichever is the lesser amount".

This amendment relates to the rate of reduction that one will seek to recover from the person who is overpaid, having taken into account their circumstances, as provided for in the Bill. The Minister has discretion to choose between a rate that cannot exceed 15% of the net weekly income or an amount that would cause the person to become eligible for supplementary welfare allowance. We think the rate determined should be the lesser of the two amounts. That is a fair way forward. The Minister needs to have the powers for recovery but not at the expense of the person's ability due to inadequate income.

Section 343E(3) sets out the parallel situation to the 15%. It reads:

The Minister, in determining the rate of periodical deductions under subsection (2), and in addition to considering the matters under section 343C shall not -

(a ) without the prior written agreement of the overpaid person, determine a rate that exceeds 15 per cent of the net weekly emoluments to which the person concerned is or becomes entitled,

In voluntary arrangements, people can decide how much they wish to pay. Sometimes people want to clear the debt quickly and may have the resources to do that and they do it. For example, older people who may have savings may decide to come in and clear the debt quickly. If that is not the case, which I anticipate in many situations, the Minister shall not determine a rate that exceeds 15% of the net weekly emoluments. The same principle applies to reductions in social welfare. It is the net weekly emoluments, payments of taxes, universal social charge, PRSI, that is taken into account. I think that is a reasonable basis on which to determine the rate. We had a detailed look at the issue to determine how we could strike a balance that was fair between the Department recovering moneys that are owed and taking into account the circumstances of the individual. I repeat, this is for circumstances where it has not been possible to make a voluntary agreement. The best option would be to make a voluntary agreement between the Department and the individual because that is by far the easiest procedure for everybody.

Is the amendment being pressed?

I thank the Minister. We appreciate the reasons she has given especially when she said that it is possible at times where there is agreement to get more than 15%. Therefore, I can understand the reason the Minister would not accept our amendment, which proposes to add "whichever is the lesser amount", because there are times when it could be more.

We do not want a situation where the recovery of the amount is so onerous that the person would go on social welfare. If the person is in employment or has a business the object is not to destabilise that in any way but to reach a reasonable arrangement to recover the amounts.

That has been a very helpful exchange.

Amendment, by leave, withdrawn.
Section 15 agreed to.
Section 16 agreed to.
SECTION 17

Amendment No. 14 was tabled by Senator Mooney but it has been ruled out of order. I am sure that he appreciates the ruling.

I do. I advise the Minister that I will redraft my amendment and will resubmit a more acceptable version on Report Stage. My amendment will be along similar lines but the wording will conform with the requirement.

Amendment No. 14 not moved.
Section 17 agreed to.
Sections 18 to 21, inclusive agreed to.
SECTION 22

Amendments Nos. 15 and 17 are related and may be discussed together by agreement.

I move amendment No. 15:

In page 42, to delete line 4 and substitute the following:

“ “ ‘An Chomhairle na Pinsean’, or in the English language, ‘Pensions Council’ means the body established by section 26B;”.”.

I will be brief because I know the matter has been discussed at Dáil level. We believe, certainly when it comes to Government agencies, that we should use the Irish language equivalent first and not the English language version, where possible. That is why my colleagues and I have opted for "An Chomhairle na Pinsean" instead of the "Pensions Council", and similarly for amendment No. 17. We should give the Irish language its proper place. It is our first language and for that reason we should refer to all State bodies in the first language and not in English.

I understand the point of view shared by the Senators and confess to tabling similar amendments. However, I am not in a position to accept the amendment. The amendment proposes that the premier title be "An Chomhairle na Pinsean". The English version is being used again because, in this particular case, it will be easier for the majority of the public to recognise and identify the organisation. The Irish name of the organisation will be used in context. The name "Pensions Council" reflects the purpose and composition of the body which is to give stakeholders with relevant expertise a forum to provide pensions policy advice to myself and the Department.

Amendment put and declared lost.
Section 22 agreed to.
Sections 23 to 25, inclusive, agreed to.
SECTION 26

I move amendment No. 16:

In page 42, lines 19 to 21, to delete all words from and including “, in” in line 19 down to and including “Pinsean.” in line 21 and substitute “as An tÚdarais Pinsean or, in the English language, the Pensions Authority.”.

The amendment is similar to the previous one so I shall not speak again.

Amendment put and declared lost.
Section 26 agreed to.
Sections 27 and 28 agreed to.
SECTION 29

I move amendment No. 17:

In page 43, lines 21 to 23, to delete all words from and including “, in” in line 21 down to and including “section.” in line 23 and substitute the following:

“as An Chomhairle Pinsean or, in the English language, the Pensions Council to perform the functions assigned to it by this section.”.

Amendment put and declared lost.

Amendments Nos. 18 and 22 are related and may be discussed together by agreement.

I move amendment No. 18:

In page 43, between lines 26 and 27, to insert the following:

“(3) The Pensions Council shall advise the Minister as to how pension fund costs can be reduced.”.

My amendment is self-evident. It refers to advice the Minister can be given by the Pensions Council on how pension fund costs can be reduced. We dealt with its context and background on Second Stage. The Minister has some sympathy with its aim. There is continuing public disquiet over the manner in which pension funds are administered, particularly the high cost charges imposed on various pension funds. Perhaps she will address the issue before we discuss amendment No. 22.

The Senator will be aware that I published the first comprehensive Government report on charges attached to pension provision in Ireland last October. The purpose of the pension charges report was to gather information on the level of pension charges levied in Ireland, to assess whether charges are reasonable and transparent, to report on the findings and to make recommendations. The report obtained information from occupational pension scheme trustees, pension providers, pension advisers and investment managers. It highlighted a wide range of issues related to pension charges and identified a number of serious problems. While it was fully recognised that the provision of pension schemes cannot be cost free, it was clear that there are major challenges to be addressed in two main areas: reasonableness and transparency of charges.

With regard to reasonableness, the report concluded that there is a considerable variation in the range of charges imposed. Some schemes and individuals appear to be paying excessive fees. Smaller occupational schemes and individual pension arrangements appear to be comparatively expensive.

With regard to transparency, the report concluded that there are deficiencies and inconsistencies in current practice and that a culture of providing clear information in a simple manner is not evident. A move towards greater clarity and transparency of pension charges is needed, in particular so that consumer can understand that a modest charge can have a very large impact on the final pension. In recent years people, many of whom are public servants, who invested in an additional voluntary contribution, AVC, were often very shocked, and continue to be shocked, when they see the value that the AVC achieves as they approach retirement and wish to avail of it.

The report discusses the optimum means of capturing all charges. It assesses the different measures, including reduction in yield and total expenses ratio. These were the two approaches used to capture the data. There have also been discussions about alternative ways to capture charges data. Total expense ratios are relevant to investment management costs and incorporate the additional operational costs of investment funds, such as fund administration and audit fees. However, commission costs such as administration and distribution costs can also impact on pension charging structures. These costs are not reflected in total expenses ratios. It is important that any comparator provides full and complete information on all the charges to achieve full transparency for the consumer. The report recommends monitoring developments in the area.

Following the publication of the report last October, I invited interested parties to submit comments and observations regarding the report within a three month period and 19 submissions were received during the consultation period. Last April, having regard to the submissions made on the report, the Government approved the implementation of the recommendations in the report. I am now proceeding with the implementation of the recommendations contained in the report.

Each of the Department of Social Protection, the Pensions Board and the Central Bank has a core role to play in enhancing transparency and understanding of such charges.

In order to initiate actions that follow up on the recommendations of the report, these organisations will continue to co-operate and co-ordinate activity. The primary change to occupational pension provision, which I am introducing in the Bill, is to give effect to the recommendations of the critical review undertaken by the Pensions Board and the Pensions Ombudsman as part of the public service reform plan. In this regard, section 29 of the Bill provides for the establishment of a pensions council, as we just discussed, to advise the Minister for Social Protection of policy matters on its own initiative or on request by the Minister. I look forward to the new pensions council bringing a fresh perspective to the formulation of pension policy.

The first task I am giving to the new council will be to monitor the implementation of the recommendations in the report on pension charges and to advise me of what further actions are needed. This will be the first job for the new council. It is very important that we have a clear structure of charges. At the moment people in small pension funds and individual pension funds can incur significant charges. The second task for the council will be to examine transparency. People should get regular reports and be able to access regularly the total charges for their particular pension structure. I refer to a variety of charges such as fund charges, administration charges and commission charges. People must be empowered through information to able to compare and contrast what is available or business journalists could further communicate what schemes and structures are particularly expensive and advise consumers of the facts.

I thank the Minister for her comprehensive reply. As she is aware, charges are excessive. In fact, the main bugbear is that the pension industry has been getting away with unacceptable practices for too long. I could not say at the moment what private pension charges I am incurring because I do not know. That is one of the reasons the second amendment has been tabled, as it would ensure that the total expense ratio of a pension scheme shall be a maximum of 2% of the scheme funds in any one year. My understanding is that in some cases it goes as high as 4% but, on average, it is approximately 1.5% to 2%. I am keen to put that on record. I am grateful to the Minister for indicating that one of the first tasks of the new pension board will be to inform people of the facts. The reason we tabled the amendment was to ensure that there would be that advice on a continual basis.

When the Minister is making recommendations I urge her to ensure there would be an obligation on pension funds to inform people every step of the way. I do not just refer to charges; I am talking about where they invest their money and the justification for the investment. I remember at the height of the building boom Irish pension funds in the main exclusively invested equity-based funds in Irish banks. They did not even bother informing themselves. They could not care less. The fund managers were so lazy. In fact they did nothing during the boom time. One did not need much expertise because the banks were flying. They did not even bother researching what other equity markets were delivering or what other options there could be for investors. In many cases we saw what happened as a result of the downturn. Pension funds went through the floor because most of the money invested was in Irish equities and banks. In some cases there were links between pension funds and banks and brokers were also linked to banks. I believe the latter practice still exists. There is a murky area involved in pension funds and I am pleased to hear the Minister intends to address it. I wish her well in that regard because she is dealing with sophistry. The Pensions Board bears a heavy responsibility to protect consumer interests. If the Minister did nothing else but that, it would be a big achievement.

We have an existing Pensions Board, which was established in the early 1990s. While it does have consumer interests, representatives of trade unions and employers on the board, there is a large complement of people from various sectors of the pensions industry. I am anxious for the new council to have a strong consumer orientation. Younger people are, by and large, entering into defined contribution schemes and they need to know when they are going to pay and whether they will be able to look up information on their account, whether it is a fund or an AVC, on a website and see what exactly they are being charged. That is critical.

The report also highlights some practices that emerged which can result in additional charges being made. For instance, a practice emerged of what is called rebrokering where, understandably, from time to time the people managing the investment fund of the pension would decide, perhaps, to change some of the investments of the fund. Extensive rebrokering could give rise in certain circumstances to further additional charges. The report explains that in some detail. That is something that ought to be advised. Our pension coverage in this country is poor. It is less than 50%. The contributory retirement pension and the non-contributory retirement pension are very high by the standards of most European countries. They are in the top three to five even after all that we have been through in economic terms. For many retired people the total package is worth approximately €14,000. That is not a huge income to provide for the kind of retirement a lot of people anticipate.

One of the things I have spoken about, in particular as the economy recovers, is that we might have a supplementary pension, such as auto-enrolment or a mandatory provision. The OECD recommended it. I do not think we would be able to do that at the moment because, as we have heard, lots of people are struggling with debt. We must wait until the economy recovers a bit. Countries such as Australia, New Zealand, and more recently the United Kingdom have increased the level of pension provision through, in the case of the United Kingdom and New Zealand, the development of an auto-enrolment system. If that, for instance, enabled people to provide a supplementary pension that brought the pension level up to double the retirement pension plus the supplementary pension, it would give people an income in retirement of €24,000. For many, that would enable them to live to a standard of decency in retirement.

The other pension-related issue is that the tax reliefs and capacity to invest, as Senator Mooney said in property was so large, upfront, that people were often blinded to the charges because the tax relief was so attractive. Pension tax relief is paid as one invests but one then pays tax at the end and if what emerges is a reduced sum and then one takes the tax on the pension product one must have one’s eyes wide open as one provides a pension.

I wish to put on record that it is also incumbent on the Minister and her colleagues in government to ensure that the key issue is about improving coverage. It has already been put on record that a large number of people do not contribute to a pension.

One aspect of it is that employers are obliged by law to offer employees access to a pension but 43% of those interviewed by researchers acting on behalf of the Pensions Board had never been offered access and, of those, 93% had never asked an employer about access to a pension. The key is about improving coverage. We believe this should be done through a combination of incentives and compulsion. The Minister referred to New Zealand. Among OECD countries, only Ireland and New Zealand do not have compulsory pension saving. It may come down to that.

What choice will the Minister have? The pension fund that was set up by Charlie McCreevy has now been dismantled and any residual legacy will be gone. Admittedly, and hopefully, it will be invested in productive areas that will stimulate the economy. I support that in principle but the pension timebomb has now become more rather than less acute, which the Minister knows better than most, because she deals with the statistics on a regular basis. This is a challenge for Government to see how it will get more people engaged in saving for a pension, particularly young people, because the younger an investor is, the greater the returns. I spoke earlier about the sophistry involved in many of the pension funds and their investments. I have no involvement in the company but Acorn Life based in Galway is returning very good growth for those interested.

Amendment, by leave, withdrawn.

Amendments Nos. 19 and 20 are related and will be taken together.

I move amendment No. 19:

In page 43, to delete line 29 and substitute the following:

"(b) not fewer than 9 and not more than 12 ordinary members, not less than one third of which shall be female and two thirds male, or not less than one third male and two thirds female.".

Both amendments have two sentiments behind them and are in respect of the Pensions Board and the new pensions council. The first relates to a gender balance on the board and an increase in members from nine to 12 ordinary members. We are appointing ordinary members to boards so we should, where possible, seek to have a proper gender balance. We had a good discussion with the Minister for the Environment, Community and Local Government not long ago on gender quotas for general elections. I hope to see similar quotas in place for local elections, although that was not the case on that occasion and we will continue work towards it. In the case of appointees to boards, it is important we get a representative view from across society and, unfortunately, we do not have gender balance on many boards. That is unfortunate so where we can, we should put in place gender quotas, and that is what we seek to do in amendment No. 19.

Amendment No. 20 allows for a minimum number of people to represent those who would be affected by changes. We are talking about older people, those with disabilities, women and vulnerable groups. We should be able to get the view from advocates of those groups who are dependent on pensions. They are experts in many cases.

The Department of Social Protection has only three boards and representation of women on those boards is exceptionally strong. The Department contributes extensively to the Government meeting the overall requirement of 40% in gender representation of either gender. We will advertise the positions on the pensions council under the Public Appointments Service as vacancies on the Citizens Information Board have been advertised. We are looking for people with relevant skills and some people with specialist knowledge, experience or expertise to enable them to carry out their functions. I anticipate these would be the sort of people who would have the relevant experience the Senator indicated.

It is not necessary, however, to provide in law for particular stakeholder representation. The Pensions Board has always met Government policy on gender balance on State boards and this will be a priority consideration. The new pensions council will not be a paid body so there will be savings of up to €100,000 by the replacement of paid board members with unpaid representatives.

We will seek a board with a good balance, particularly those who are interested in achieving the sort of outcomes referred to by Senator Mooney, namely: transparency; value for money in pensions; and strong information about the necessity for people to have a supplementary pension, that simply relying on the State pension, good as it is in Ireland compared to other jurisdictions, particularly Britain, should be discouraged to allow people when they retire to enjoy a standard of living that allows for comfort and decency.

Question put: "That the words proposed to be deleted stand."

Will the Senators claiming a division please rise.

Senators David Cullinane and Trevor Ó Clochartaigh rose.

As fewer than five Senators rose the question is declared carried. In accordance with Standing Order 61 the names of the Senators dissenting will be recorded in the Journal of the Proceedings of the Seanad.

Question declared carried.
Amendment declared lost.

As it is now 6 p.m. I am required to put the following question: "That section 29 stand part of the Bill, and in respect of each of the sections undisposed of, the section is hereby agreed to in committee, the Schedule and Title are hereby agreed to in committee and the Bill is reported to the House without amendment."

Question put:
The Committee divided: Tá, 24; Níl, 4.

  • Bacik, Ivana.
  • Bradford, Paul.
  • Brennan, Terry.
  • Coghlan, Eamonn.
  • Coghlan, Paul.
  • Comiskey, Michael.
  • Conway, Martin.
  • Cummins, Maurice.
  • D'Arcy, Jim.
  • Gilroy, John.
  • Henry, Imelda.
  • Higgins, Lorraine.
  • Kelly, John.
  • Mac Conghail, Fiach.
  • Moloney, Marie.
  • Moran, Mary.
  • Mulcahy, Tony.
  • Mullins, Michael.
  • Noone, Catherine.
  • O'Donnell, Marie-Louise.
  • O'Neill, Pat.
  • Sheahan, Tom.
  • van Turnhout, Jillian.
  • Zappone, Katherine.

Níl

  • Cullinane, David.
  • Mooney, Paschal.
  • Ó Clochartaigh, Trevor.
  • Wilson, Diarmuid.
Tellers: Tá, Senators Paul Coghlan and Marie Moloney; Níl, Senators David Cullinane and Diarmuid Wilson.
Question declared carried.

When is it proposed to take Report Stage?

Report Stage ordered for Thursday, 27 June 2013.
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