SELECT COMMITTEE ON SOCIAL AND FAMILY AFFAIRS debate -
Tuesday, 5 Apr 2005

Bilateral Convention on Social Security: Motion.

Chairman

The motion before us reads:

That Dáil Éireann approves the terms of the Convention on Social Security between the Government of Ireland and the Government of the United Kingdom of Great Britain and Northern Ireland which was signed at Dublin on 14 December 2004 and was laid before Dáil Éireann on 3 March 2005.

As members are aware, a motion was passed by the Dáil on 22 March last without debate concerning the approval by Dáil Éireann of this social security convention which was signed in Dublin last December. We have been circulated with a briefing document supplied by the Department of Social and Family Affairs. The rather lengthy text of the convention was circulated yesterday by the clerk to the committee.

I welcome Mr. Tim Quirke and Ms Joan Gordon. They are no strangers to the committee as they have been here before to advise and to explain the various matters concerning EU conventions and so on. We are very pleased they are present to explain the main points relating to the Irish-UK social security convention. They will advise on any matters that may arise.

The motion has been referred to this select committee in accordance with paragraph 1 of the Orders of Reference and the committee shall, not later than 19 April 2005, send a message to the Dáil in the manner prescribed in Standing Order 85 and Standing Order 84(2) shall accordingly apply. I invite the officials to make a brief statement outlining the various matters of concern. My colleagues will then ask questions of the officials who have always been most helpful in the past.

Mr. Tim Quirke

I thank the Chairman for this opportunity to outline the main features of the convention on social security between Ireland and the UK. Existing bilateral conventions with the UK date back as far as 1960. There have been a number of them. Most of the provisions of these earlier conventions have been superseded by EU regulations which became applicable once Ireland and the United Kingdom joined the EU in 1973. However, these earlier agreements continued to apply to people who moved between Ireland and the Isle of Man.

Some years ago both Governments decided to consolidate the terms of these earlier conventions and to modify them to take account of any legislative changes in their social security systems and, in particular, to extend their scope to people who were not covered by EU regulations. The main purpose of the convention is to provide social security protection to workers and their families moving between Ireland and the Isle of Man and the islands of Guernsey and Jersey. The convention was signed in Dublin on 14 December 2004. It provides for similar protection to that provided under the EU regulations. These include both short-term and long-term benefits. It provides mainly that periods of insurance or employment in one state may be taken into account, where necessary, by the other state for the person to qualify for a benefit or a pension.

In the case of Ireland, the short-term benefits covered include disability benefit, unemployment benefit, maternity benefit and occupational injury benefits. The long-term benefits covered include invalidity pension, old age contributory pension, retirement pension, widow's and widower's contributory pensions, orphan's pension and the bereavement grant. These are all PRSI based schemes. Only social insurance benefits are covered, not social assistance schemes.

In addition to protecting the benefit and pension entitlements, the convention also contains provisions to allow workers in one state who are sent temporarily by an employer to work in the territory of the other state to remain attached to the social security system of the first state for a limited period. The period provided for under Article 8 is three years. This provision is intended to avoid gaps in workers' insurance records, which may arise as a result of relatively short assignments abroad, and also to avoid all the difficulties this can cause for both the workers concerned and the social security institutions. There are similar arrangements under the EU regulations in respect of the posting of workers but the period in that regard is only one year. This may be, in certain circumstances, extended for 12 months. The convention is a little more generous vis-à-vis the EU regulations.

It is estimated that a few hundred people per annum will benefit from the convention. Our note sets out a number of examples ofhow the convention may benefit workers and their families. One of the most obvious examples concerns aggregation. Periods of insurance can be aggregated for the purpose of allowing a person to qualify for benefits. As the Channel Islands are not part of the EU, the periods of insurance of an Irish person who has worked in Jersey, Guernsey and Ireland currently may not be aggregated to allow him or her to qualify for a benefit. Under the convention, these periods of insurance can be combined to help the person qualify for short-term or long-term benefits. For example, a person who worked in Ireland for ten years and became unemployed following a period of employment in Guernsey could rely on the convention to obtain unemployment benefit in Guernsey. Any PRSI contributions paid in Ireland can be taken into account by the Guernsey authorities to help satisfy the contribution conditions.

Where a person does not qualify for old age or retirement pension based on PRSI contributions paid in Ireland, the convention provides for a pro rata pension based on the combined record of contributions paid in Ireland and, as the case may be, in Jersey, Guernsey or the Isle of Man. For example, a person with five years’ Irish PRSI contributions and 20 years’ contributions paid in the Isle of Man would, at pension age, get one fifth of the Irish old age contributory pension. He or she may also qualify for four fifths of an Isle of Man old age pension. In that case, he or she would not qualify for an Irish pension based on his or her Irish contributions alone. However, when one combines the records under the convention, that person can qualify for pro rata pensions from both jurisdictions.

The foregoing was a summary of the provisions of the convention. We will be happy to respond to any questions members wish to pose.

Deputy Stanton

I welcome Mr. Quirke and Ms Gordon. The convention seems fairly straightforward and sensible. I wonder why it took so long to formulate. I note that only a couple of hundred people per annum will benefit from it but it will be quite important because it will allow them to receive the benefits to which they are entitled. I congratulate those who worked on and negotiated the convention. Having read it, I note there was much detailed work involved and this must be acknowledged.

Article 17 gives rise to an issue concerning women. Does it imply that a married woman will receive only one pro rata pension, namely, that of her husband or her own? The convention states “Such a married woman shall be entitled to receive only the benefit of her choice.” Will the delegates clarify this?

The convention does not seem to be clear on recovery of advance payments and overpayments of benefit, as referred to in Article 30. Will the delegates elaborate on how it might be achieved?

Article 31 concerns arrangements for administration and co-operation. There seems to be a time limit set in terms of communication between the two competent authorities. The phrase used is "as soon as possible". Members have taken issue with such wording while dealing with Bills. Perhaps there is a tradition in which the phrase is deemed to mean "straight away". What does "as soon as possible" mean? Is there a time limit set for the repayment of moneys?

Article 34 alludes to an arbitration tribunal for the resolution of disputes. Who are the arbitrators and what qualifications must they possess? It is not stated in the convention. I assume there are certain qualifications required. How are requests to an arbitration tribunal made?

Deputy Connolly

I received this document this morning and am sure it contains quite an amount of information. Perhaps some of my questions will be answered. It would be useful if we could be provided with such documentation earlier to allow us to study it. This would dispense with the necessity to question people.

I note there is no reference to Northern Ireland. Perhaps reference could be made to it at some point. In respect of Ireland, the documentation states that the benefits covered by the convention include the outlying short-term benefits and long-term benefits. Given that some are listed specifically, are others omitted?

I would imagine the Irish people will benefit more than English people who come to Ireland. Who will pay the bill? If a person works in England for 20 years and works for five years in Ireland thereafter, from where will the money be derived to pay for the larger part of the pension? Are we hoping the numbers will eventually balance out? What numbers pertain to the Channel Islands, which is not part of the European Union? I understand there are 300 in total per annum but I would imagine the number pertaining to the Channel Islands is pretty small.

Deputy Ring

I am glad this anomaly is being dealt with. What is the position on the anomaly concerning those who had to pay PRSI compulsorily in 1988 and who had their full ten-year stamp? Simply because some employees had worked in the 1930s or 1940s, a calculation was made on the basis of 30 or 40 years and those who actually paid for only ten years got a full contributory pension while the others got only a pro rata pension. Is this anomaly being considered in respect of the agreement?

The following matter has been brought to my attention on many occasions in recent months. It may not come under the brief of the representatives but perhaps they will be able to address it, at a later date if not now. When a person applies for a pension or other State benefit, why must the State always look for that person's mother's date of birth or maiden name? In a case I encountered last week, these were the first questions asked of a person applying for State payments whose mother had died tragically in a car accident. The person was upset by this. Given the existence of computer databases and individual PPS numbers, why is it necessary to ask for the maiden name of the person's mother? People should be regarded as persons in their own right.

Chairman

Deputy Ring may have strayed from the topic but his points are always relevant.

Mr. Quirke

When we allocate a personal public service number, which everyone who has claimed social welfare must have, certain details — the person's name, address, date of birth, marital status and mother's maiden name and date of birth — must be provided before the allocation is made. This is to identify the person as precisely as possible. Two people could be called John Murphy, be the same age and live in the same street and the mother's maiden name is the only information that would distinguish one from the other. We have always sought that information when allocating a PRSI or PPS number.

We do not deal with people who were self-employed prior to 1988 who had entered insurance in the early years but a pro rata pension was introduced, equivalent to half of the old age contributory pension, in 2000 to cater for that category. The recipients have not been affected by the convention. Where a person has insurance in one state, such as one of the Channel Islands, and has insurance in Ireland, we can combine both to allow him to qualify for a pro rata pension that would be payable by one or both of the states in question.

Deputy Ring

That is an anomaly. If a person who has paid the ten years from 1988 did not have a stamp before that, he or she would not have been penalised and would have received the full contributory pension. The calculations are made over 20, 30 or 40 years. If the person never worked and started paying in 1988, he or she would get the full pension. There are only a few hundred people in the State in this situation and I ask the Department to consider their position. It is an anomaly that aggravates people who made their contributions for the ten years and who would have received the full contributory pension if they had not had a stamp before that. Only a few hundred people are affected.

Mr. Quirke

We will take note of the Deputy's point. The issue of who pays was raised. A person with five years' PRSI contributions who does not have sufficient contributions to qualify in his or her own right under Irish legislation for a pension may use the convention if he or she has insurance in the Channel Islands. He or she would qualify for five twenty-fifths of an Irish old age contributory pension that would be payable by the Department. Once the person reaches pension age in Jersey, he or she would qualify for a pro rata pension of 20 twenty-fifths of a Jersey pension and that amount is payable by the relevant department in Jersey. Each state pays its own proportion of the pension.

A question was asked about the benefits that were omitted. Most of our bilateral social security conventions concentrate on pensions. We have agreements with the US, Australia, New Zealand, Canada and Quebec concentrating on long-term benefits, particularly pensions. Since 1960, when we entered our first agreement with Britain, we covered the main categories of benefits such as sickness, invalidity, unemployment, occupational injury and maternity. These are the main contingencies and the main risks a worker or self-employed person faces and those are the main categories of social insurance benefit. We do not include carer's benefit because there is no corresponding benefit in Britain. These are the benefits to which we have agreed.

Deputy Stanton asked about a married woman's entitlement under Article 17. Under the British system, the basic state pension, the category A pension, is based on the person's own insurance contributions. A married woman could rely on her husband's insurance, a category B pension. Under the convention, if a married woman has an entitlement to a category B pension, it does not prevent her from qualifying for a pro rata pension if she has her own insurance. In Jersey, however, the authorities would agree to only one pension being payable and the married woman would have to choose which pension is more favourable.

Deputy Stanton also asked about the arbitration of disputes. Thankfully, we have not had to rely on arbitration to resolve any of the difficulties we have encountered to date; it has been done through consultation between ourselves and respective departments. Those who will be appointed, however, will have a judicial background and experience in arbitration. For example, we will engage people from the Labour Court to arbitrate on any issues that arise but none has arisen yet.

Ms Joan Gordon

Deputy Stanton raised the question of the recovery of advance payments and overpayments of benefit provided for in Article 30. Where one institution has given a payment in advance of a contingency or social assistance payment and subsequently decides that a benefit is due under the convention, one payment can be treated as being paid on account of the benefit. Any surplus, however, would be paid to the claimant.

Deputy S. Ryan

Are we only putting into practice the arrangements that already exist between Britain, Northern Ireland, the Isle of Man and ourselves? Entitlements to benefits in each state are not the same. Would someone from Guernsey living here who, for example, adhered to the arrangements in that jurisdiction, having made contributions or been absent from work for a specified period, benefit from those more favourable entitlements? The person might pay contributions here but might not be entitled to receive benefits in this jurisdiction. In which country does the benefit accrue?

Is Article 10, covering mariners and others employed on board ships or vessels, as simple as it seems? People might work on various vessels in various countries.

Mr. Quirke

The convention extends the agreements with the United Kingdom, the Isle of Man and Northern Ireland to cover the Channel Islands, Jersey and Guernsey, which were not covered by previous agreements or EU regulations. There was a gap there for Irish people who worked in England many years ago and who may have moved to work in Jersey, for example, in the hotel or construction industries. They might return home and discover that ten or 15 years' worth of contributions in Jersey were of no use. The contributions might not have been sufficient to qualify them for a pension in Jersey and could not be used to qualify them in Ireland. The chief benefit of the convention is that such people can take account of their contributions in the Channel Islands, if they do not have sufficient contributions here, when it comes to drawing a pension in this jurisdiction.

The State which pays is that in which the person was last insured.

Deputy S. Ryan

If the person works and pays contributions in Ireland, who pays?

Mr. Quirke

The person may not have enough contributions here to qualify for a benefit. For example, many of the people who came here recently from Poland, Lithuania and Latvia may not have enough contributions here to qualify for unemployment benefit but we could aggregate their insurance from their home countries so they might qualify through the combined insurance and be entitled to Irish unemployment benefit. Aggregation of insurance is the key to this.

Deputy S. Ryan

Do the rules and regulations of entitlement apply wherever one has made most of one's contributions?

Mr. Quirke

No. The short-term benefits come from the place one worked. If one worked in Ireland before becoming unemployed, the benefit is Irish and one must satisfy Irish benefit conditions. The position in respect of pensions is different.

Deputy S. Ryan

Is that the case even if a person made most of his or her contributions in Guernsey? If there were more lenient entitlement conditions in that jurisdiction, would a person not obtain benefits from there before qualifying for Irish benefits?

Mr. Quirke

If the person last worked in Ireland but perhaps worked for some years previously in Guernsey, he or she would seek employment first in Ireland and so would register as unemployed here. He or she would, therefore, satisfy our conditions with regard to seeking and being available for work and would claim the Irish benefit. The EU regulations endorse that state of employment principle. That is the case for short-term benefits such as sickness, maternity leave and unemployment benefits.

There are separate calculations for pensions. For example, we calculate what proportion of a pro rata pension the person would receive in Ireland, such as five years out of 25, that is, five times one twenty-fifth of the old age contributory pension, which we pay. Assuming the same pension age applies in Guernsey or Jersey, one would receive 20 times one twenty-fifth of the pension there. That is where the person could claim a separate entitlement under the pro rata system.

Deputy S. Ryan

I thank Mr. Quirke. What about the position of the mariners?

Ms Gordon

The provisions for mariners reflect the rules contained in regulation 1408 which, in general, provides that a person working on board ship should be liable to pay contributions to the country under whose flag that ship sails. If it is an Irish vessel, the person is subject to Irish legislation and pays Irish contributions. If a person's employer posts him or her to a vessel operating under a different flag for a year, he or she remains subject to Irish legislation if the employer's ship flew the Irish flag.

The convention provides that people who are not working at sea but at, for example, a port office pay contributions in the country in which they reside. These provisions reflect the EU regulations.

Deputy Carty

I welcome Mr. Quirke and Ms Gordon. They have been helpful whenever they have attended this committee.

Would the five years' Irish reckonable PRSI contributions and the 20 years' Manx contributions, amounting to five twenty-fifths of the old age contributory pension, based on a combined insurance of 25 years, be additional to the pension a person might receive from Jersey and Guernsey and so on?

Mr. Quirke

Yes, they would be two pro rata pensions — one from Ireland and one from Jersey.

Deputy Carty

Following up on Deputy Ring's comments on the PPS numbers, I do not understand what happens to a person receiving a pension whose family circumstances change. For example, a spouse may die. If a person applies for another pension by submitting his or her PPS number to the Department, the pension is paid but 18 months later he or she receives a letter stating he or she was not entitled to it and demanding the return of a certain sum. I have seen many such cases. People become aggrieved and approach a Deputy to set up an appeal which involves a great deal of work.

If a person applies for a benefit with his or her PPS number, which is exclusive, is it not possible to feed that into the Department's computer and bring up a record of every payment he or she receives? The Department should be able to tell immediately if such person were not entitled to another benefit. I have inquired about this and been told that there are two incompatible software packages in the Department's system. We operate in an age of modern technology and this problem should be resolved once and for all. Those people do not feel they are making fraudulent claims and the matter could be easily checked by means of using their PPS numbers.

Deputy Callanan

If a person were receiving an English pension, though not a full one, over the years and had worked in this country for a number of years at one stage, would he or she be entitled to draw that pension now? My other question is a little more complicated and relates to the self-employed. For the self-employed to get full pensions, they must pay contributions for ten years. If one pays for nine years, one gets a proportion of the pension. A person might have worked in the Isle of Man, for example, for one year, perhaps 40 years ago. Does the contribution extend back for the 40 years? That would be unfair and I am aware that it happened in the case of a particular farmer. It happens here and it probably would happen, pro rata, abroad.

Deputy Stanton

Article 5 mentions refugees and stateless persons. Do the habitual residence rules apply in their case or are they treated the same as in their countries? On what date is the convention expected to come into force? How are payments to be made to people who live, for example, in Jersey or Guernsey and who are receiving payments from the Irish State? Will it be by means of electronic funds transfer? I know there have been issues regarding the tracking of such transfers to ensure, for example, that the recipients are still alive or even in the jurisdiction. These moneys are often paid into bank accounts even though a person might have moved to, for example, Australia. What mechanism is in place to ensure such payments are stopped if a person is no longer eligible? Is there any limit to retrospective payments or when do payments commence?

Mr. Quirke

Regarding habitual residence, the scenario mentioned would not apply because we are, in the first instance, referring to social insurance benefits. In addition, the islands are within the common travel area. Once a person is habitually resident in that area, he or she satisfies the test.

Regarding the date of introduction, the convention must be approved by Dáil Éireann. Following that, it will be signed into legislation via a statutory instrument, namely, an order by the Minister for Social and Family Affairs. A similar process will be followed in the United Kingdom's House of Commons. We expect the process to be completed and the new provisions to be in operation by next September.

Pensions paid to people under bilateral agreements are normally paid by cheque. From time to time we check that those people are still living at the relevant addresses.

Deputy Stanton

Is the electronic funds transfer mechanism used?

Mr. Quirke

No. Regarding the self-employed, if a person spent a year in the Isle of Man 20 or 30 years ago that would be taken into account but in a different way from that suggested by Deputy Callanan. We have to calculate pensions on the pro rata system. We would take the number of years spent in Ireland as a proportion of the total number of years of a person’s working life.

Deputy Callanan

Would that person lose out?

Mr. Quirke

He or she would lose out in this jurisdiction but might qualify for a small pro rata pension based on the example given.

Chairman

The period over which calculations are made is 40 years. Someone might have been working in 1953 or 1954, for example, and is now in the system. Such a person might have worked two or three years in this country. Some people might have entered self-employment and some might have worked on the lump in England. Some of them are those we are now trying to assist. In that context, surely what people are saying is that the timeframe is unfairly long.

Is it not time that a period of less than 40 years was considered? People's working lives have gradually become shorter. At one time, people worked for 40 years perhaps with a local authority, a board of works or the OPW. That is no longer the case. It is time we considered a shorter period regarding this issue. Does the same system apply in other countries or, for example, in the Channel Islands?

What Deputy Seán Ryan said is true. The thrust of the convention is beneficial but which is the most favourable regime for a person to be assessed under? That is the critical question. It is fine to get one's benefits but if Guernsey has a more favourable regime, is that the one to be promoted? Mr. Quirke spoke of the place where a person makes his or her last contribution in terms of the short-term benefits and I accept that. However, surely what counts is the regime which will give the most benefits to the applicant. Has the Department given any consideration to this area? I appreciate that we have gone outside the terms of the debate but Mr. Quirke might bring the matter back to the gods that be, so to speak, to alert them that this committee is thinking about the matter.

Someone who, for example, worked in 1953, perhaps breaking stones and rocks for roads, as many did with the county councils, might have gone to England or elsewhere to work on the lump. Such people were employed and then returned to Ireland, where they might then have worked for a few years. The entire period is taken into account. On the other hand, someone might be, as I was for a period, self-employed. I might apply with regard to 1988 when my ten years' self-employment was complete. I would then be far better off than my brother, for example, who went to England in 1956.

That is the point my colleagues are trying to make. We are possibly not making it in a very eloquent manner but Mr. Quirke understands this very well and gets our drift. It is surely time to reassess and re-examine the matter in this context. I appreciate that pension law is not the simplest. Every time one looks at it, a loophole is closed or something is made easier or more difficult for someone else.

While the convention is excellent, should the applicant have the option of choosing whatever regime — be it that which applies in the Channel Islands or that relating to Ireland — suits him or her best? It is more than likely to be the Irish regime. The ancillary benefits available in Ireland might not be applicable in some of the other regimes. Is it possible to seek the option?

Mr. Quirke

I will first explain the current system for old age contributory pensions. A person might get a job and become insured under the social insurance system. Anyone from the age of 16 can become insured and remain so until pension age, which is 66. That is a 50-year period — the maximum. The Deputy is correct in saying there can be problems. People might have breaks in their working lifetime and might not have paid PRSI contributions. This average system can lead to difficulties. We take a yearly average over the 50 years, from the date a person starts work to the date he or she finishes. Members probably know that the Department is examining whether there is a better system and whether we should consider basing a pension on the total number of accredited contributions over one's working lifetime rather than on a yearly average. That is an area we are examining. When one looks at other EU countries, one sees their approaches vary. Some have 50 years and some 40, but the trend, because of the problems they now face regarding their aging populations, is that many are adjusting their pension systems by either extending the period or reducing the percentage payable per year.

Mr. S. Ryan

Is that the way that the Department is considering doing it?

Mr. Quirke

No. Thankfully Ireland does not yet have an aging population problem. I was simply indicating some of the ways in which they are considering reforming their pensions. They vary, some over 40 years and others over 45. Many of them are earnings-related pensions and there is a specific percentage for every year that one has worked. The pro rata system covered here is the most favoured and is used by everyone with bilateral agreements. It is essentially where one shares the costs. For example, where one works for a number of years in a country, one should not lose the pension entitlement that one has earned through one’s contributions and that country should pay one a share of a pension relating to the number of years one has worked. One could work in several countries — three or four, for example — and get three or four pensions reflective of one’s working life. I see no country with the highest level of benefits willing to pay the full pension. That would put too much of the cost burden on the country with the higher benefits. The system works by sharing costs between all the member states.

Chairman

I welcome Deputy Kehoe. I thank Mr. Quirke and Ms Gordon for their contributions today and their patience with us in explaining some very technical aspects of this agreement. A broad overview certainly will be beneficial. In any cost-benefit analysis, the first thing we must ensure as an Oireachtas committee is that people do not lose out. It is always useful when one sees a positive description whereby at least a few hundred people will benefit. One of the problems in any of those conventions is that they are fairly technical and mechanical in so far as they are obviously agreements between two countries and jurisdictions. We hope that, in the long term, those aspects might be refined so that they are easily understandable for ordinary people. Without the help of the witnesses, we would have had difficulty trying to understand this. We thank them once again for attending and giving us their time and knowledge.