Written Answers Nos. 228-245
228. Deputy Peter Burke asked the Minister for Social Protection if he will expedite an appeal to a decision for arrears of domiciliary care allowance to a person (details supplied); and if he will make a statement on the matter. [38439/16]
View answerThe Social Welfare Appeals Office has advised me that an appeal by the person concerned was registered in that office on 1st November 2016. It is a statutory requirement of the appeals process that the relevant Departmental papers and comments by the Deciding Officer on the grounds of appeal be sought. When these papers have been received from the Department, the case in question will be referred to an Appeals Officer who will make a summary decision on the appeal based on the documentary evidence presented or, if required, hold an oral appeal hearing.
The Social Welfare Appeals Office functions independently of the Minister for Social Protection and of the Department and is responsible for determining appeals against decisions in relation to social welfare entitlements.
I hope this clarifies the matter for the Deputy. If you require further assistance with this query following the outcome of the appeal don’t hesitate to contact my office.
229. Deputy Michael Healy-Rae asked the Minister for Social Protection to set out the status of a family income supplement in respect of a person (details supplied); and if he will make a statement on the matter. [38440/16]
View answerThe person concerned applied for family income supplement (FIS) on 6th July 2015. The claim was refused by a deciding officer (DO) on the grounds that the person concerned was not working the required number of hours in order to qualify.
The person concerned appealed this decision and the appeal was allowed by an appeals officer (AO) in November 2016.
Unfortunately, the family income had not been fully assessed at the time of the original claim as it was considered by the DO that the claim was invalid due to the issue with the number of hours being worked. The claim is currently being examined by a DO in order to determine the correct rate of FIS due. The DO may need to get further clarification from the person in question on information already to hand in order to complete this as soon as possible. Once the correct rate of FIS has been determined, the decision of the AO will be implemented without delay and all arrears due will be issued.
I trust this clarifies the matter for the deputy.
230. Deputy Eoin Ó Broin asked the Minister for Social Protection whether his Department provides the Department of Housing, Planning, Community and Local Government with the number of homeless adults and children in his Department's funded accommodation services; and if he will engage with his counterparts in the Departments of Housing, Planning, Community and Local Government and Children and Youth Affairs and supply these figures from January 2017 to ensure that they are included in the Department of Housing, Planning, Community, and Local Government official monthly homeless figures. [38443/16]
View answerAs the Deputy is aware from the response to an earlier parliamentary question, the New Communities Unit (NCU) of my Department offers assistance to families who are primarily non-Irish, homeless and generally without recourse to any weekly income. The main focus of this unit is to ensure that families who have an entitlement receive an income maintenance payment, under the terms of the relevant legislation.
In addition, non-Irish homeless families have been referred to this unit directly by the Central Placement Service, operated on behalf of the four local authorities by Dublin City Council, and the staff in the NCU have facilitated booking these people into emergency accommodation. This accommodation is not funded by the Department of Social Protection, rather, it is sourced and funded by Dublin City Council under Section 10 of the Housing Act (1988).
The practice, whereby staff in the NCU act as booking agents in such circumstances, is a residual one from when the NCU was based in the HSE. Officials from my Department are considering the appropriateness and nature of the NCU’s involvement in the delivery of this service at present.
I trust this clarifies the matter for the Deputy.
231. Deputy Dara Calleary asked the Minister for Social Protection to outline the provisions to be taken to ensure the successful roll out of the schools meals scheme as announced in budget 2017; if storage, waste and administrative costs have been factored into the funding announced in 2017; the way in which the scheme will be administered by the participating schools; and if he will make a statement on the matter. [38472/16]
View answerThe school meals programme provides funding towards the provision of food to schools and organisations benefitting over 200,000 children at a total cost of €42 million in 2016. As part of Budget 2017, I announced an additional €5.7 million for school meals which will benefit over 50,000 children.
Additional funding is being provided to DEIS schools already participating in the scheme to provide breakfast and lunch to pupils. My Department has also written to some 50 DEIS schools not participating in the scheme and invited them to join. To date, 11 additional DEIS schools have expressed an interest in joining the scheme. The additional funding provided in Budget 2017 also provides some provision towards the extension of the scheme to breakfast clubs in non-DEIS schools from September 2017. This is the first time in many years that increased payments will be provided to schools outside of DEIS.
More than 50,000 children will benefit from the increased funding providing breakfasts and lunches. Of these, some 35,000 extra school breakfasts will be provided in non-DEIS schools from the start of the new school year and will be expanded in future years.
Officials in my Department are engaging with colleagues in the Department of Education and Skills regarding the provision of the additional funding to schools for the next school year and priority will be provided to those schools where there is most need.
Funding is provided directly to participating schools/organisations which are responsible for the operation and administration of their school meals project. The scheme is administered by schools in a variety of ways and depends on the needs, capabilities and resources of the schools/groups. Examples of delivery modality include full canteen services, purchase of prepared meals by the school from specialist school meals suppliers or from local suppliers and purchase and preparation of meals by school/group staff or volunteers. Funding under the programme is provided for food costs only and does not cover storage, waste, administration or any other non-food costs.
I trust this clarifies the matter for the Deputy.
232. Deputy Willie Penrose asked the Minister for Social Protection if he will restore the average PRSI contributions required to qualify for the contributory old age pension to the levels applicable prior to the financial crisis and whereby such a move would be in line with the restoration of wages and salaries under the Haddington Road agreement; and if he will make a statement on the matter. [38476/16]
View answerThe overall concern in recent years has been to protect the value of weekly social welfare rates. Expenditure on pensions, at approximately €7 billion each year, is the largest block of expenditure in my Department in the Estimate for 2016, representing approximately 35% of overall expenditure. Due to demographic changes, my Department’s spending on older people is increasing year on year. Maintaining the rate of the State pension and other payments is critical in protecting people from poverty.
There are three main pensions paid by my Department to people aged 66 and over, namely the State pension contributory (which is based on PRSI contributions), the State pension non-contributory (which is based on means), and the Widows/Widowers/Surviving Civil Partners Contributory pension (which is based on PRSI contributions, and is also payable at a lower rate before 66).
The State pension contributory (previously called the Old Age Contributory Pension) was introduced in 1961, and is funded by PRSI contributions, on a pay-as-you go basis. Since its introduction, the rate of payment has been based on the ‘yearly average’ test.
These rates are banded, and those bands have been amended from time to time, most recently in 2012. There have been no changes in the structure of the bands since then, aside from increases in the rates, which are passed on pro-rata to the reduced rates.
As provided for in Budget 2012, from September 2012, new rate bands for State pension (contributory) were introduced. This resulted in one of bands (in respect of those with a yearly average of 20-47 contributions), being replaced with three bands (in respect of yearly averages of 40-47, 30-39, and 20-29 respectively). The changes did not impact upon whether someone qualified for a pension, nor whether they would qualify for the full rate. These additional bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life are likely to benefit more in retirement than those with lesser contributions.
Prior to these changes, in the period from 2000-2012, someone with a yearly average of 47 contributions qualified for the same rate of payment (98% of the maximum rate) as someone with a yearly average of 20 contributions, despite generally their much more significant PRSI record, and this was regardless of their means. A person with an average of 48-52 PRSI contributions per year over their working life received a weekly State pension of only €4.50 more than someone with a yearly average of 20 PRSI contributions. Aside from the lack of equity involved, this was a significant disincentive to longer working, as in most cases, contributions paid by people in their sixties had no impact upon the rate of their State pension upon retirement.
The principle that the rate of a State pension contributory should reflect the PRSI contributions paid over a working life needs to be adhered to so that we can fund such pensions into the future. Given the requirement to make savings in recent years, it was considered more equitable to address this disparity, than to reduce the rate of payment for all pensioners by an across the board cut in payment rates. Such a cut would not just have penalised those who had paid into the system over the course of their lives, but it would also have reduced the incomes of the most vulnerable pensioners, who do not generally receive reduced rate contributory pensions, but rather receive a non-contributory pension, or a maximum rate contributory pension if they have the required contributions.
For those with insufficient contributions to meet the requirements for a full rate State pension (contributory), they may qualify for a means tested State pension (non-contributory) which has a maximum personal rate of €222, or just over 95% of the maximum rate of the State pension (contributory). Alternatively, if a person’s spouse or civil partner is in receipt of a State pension (contributory) they may instead qualify for an Increase for a Qualified Adult of up to €209, which is just less than 90% of the maximum personal rate of the State pension (contributory).
It is estimated that the cost of reverting to the rate-bands which existed between 2000 and 2012 would be over €50 million in 2017, and that this will rise at a rate of some €10 m annually.
In 2008, the maximum personal rate of the contributory pensions was €223.30, and the maximum rate for the non-contributory pension was €212. Despite negative inflation in the intervening period, these payments have already been increased by €10, before taking into account a further €5 increase next year. While reverting to the 2008 rates of payments would be of benefit to pensioners who have significant other means and who contributed less to the Social Insurance Fund, it would be of no benefit to those who contributed to the system all their lives, nor would it be to that half of our elderly who rely solely on the State pension for their income. I am satisfied that the across the board increases, which benefit everyone, have been a more appropriate approach in Budget 2017.
I hope this clarifies the matter for the Deputy.
233. Deputy David Cullinane asked the Minister for Social Protection to outline the compensation he is putting in place for former workers at a company (details supplied) with unpurchased pensionable years as part of their overall compensation package; the details of such compensation; the way in which and when it will be paid; and if he will make a statement on the matter. [38500/16]
View answerI do understand that the members concerned are anxious that these matters are settled in a timely manner. I want to reassure the Deputy that it is my intention to try and resolve the outstanding issues in relation to the company’s pension schemes as quickly as possible but unfortunately the issues involved are quite complex and are taking time to tease through. Officials of my Department are currently examining all options available and are in advanced discussions with the mediator of the settlement to facilitate a resolution that is both in keeping with applicable law and public financial procedures. Every effort is being made to bring this to a conclusion as soon as possible.
I hope that this clarifies the matter for the Deputy.
234. Deputy Michael Healy-Rae asked the Minister for Social Protection the position regarding waiting times for social protection applications (details supplied); and if he will make a statement on the matter. [38547/16]
View answerThe information requested (where available) by the Deputy is detailed in the following tables.
|
- |
Social Welfare claims by average waiting times (weeks) 31 October 2016 |
|
Scheme |
Average Waiting Time |
|
Jobseeker's Benefit |
1 |
|
Jobseeker's Allowance |
2 |
|
One-Parent Family Payment |
6 |
|
State Pension Contributory (Dom) |
6 |
|
Widow’s, Widower's or Surviving Civil Partner’s Contributory Pension |
1 |
|
State Pension Non-Contributory |
14 |
|
Household Benefits |
3 |
|
Free Travel |
2 |
|
Domiciliary Care Allowance |
16 |
|
Supplementary Welfare Allowance |
1 |
|
Child Benefit (Domestic & FRA) |
3 |
|
Child Benefit (EU Regulation) |
37 |
|
Family Income Supplement (New) |
4 |
|
Disability Allowance |
12 |
|
Invalidity Pension |
9 |
|
Average Appeal processing times (weeks) by scheme 01/01/2016 – 31/10/2016 |
||
|
- |
Summary Decisions |
Oral Hearings |
|
Carers Allowance |
17.9 |
21.9 |
|
Carers Benefit |
20.3 |
22.4 |
|
Child Benefit |
22.6 |
39.9 |
|
Disability Allowance |
14.7 |
20.3 |
|
Domiciliary Care Allowance |
24.2 |
30.6 |
|
Invalidity Pension |
22.3 |
29.7 |
|
State Pension (Contributory) |
25.6 |
45.4 |
|
State Pension (Non-Contributory) |
23.2 |
33.5 |
|
Jobseeker's Allowance (Means) |
16.4 |
25.5 |
|
Jobseeker's Allowance (Payments) |
15.9 |
21.2 |
235. Deputy Seán Haughey asked the Minister for Social Protection if a carer's allowance payment will be made to a person (details supplied) in view of the fact this was approved by the Social Welfare Appeals Office some time ago; and if he will make a statement on the matter. [38566/16]
View answerAs a result of an appeals officer’s decision, carer’s allowance was awarded to the person concerned on 5 December 2016 and the first payment will issue to her nominated bank account on 29 December 2016. Arrears for the period 12 November 2015 to 28 December 2016 will issue shortly.
The person concerned was notified on 5 December 2016 of the outcome.
I hope this clarifies the matter for the Deputy.
236. Deputy Sean Fleming asked the Minister for Social Protection to set out the number of persons in respect of whom domiciliary care allowance was being paid up to their 16th birthday, who, having reached this birthday, applied for disability allowance but were refused on the basis that they did not meet the requirement for each of the years 2013 and 2015, and 2016 to date; and if he will make a statement on the matter. [38641/16]
View answerDomiciliary care allowance (DCA) is paid in respect of children who have a disability requiring care and attention substantially in excess of that needed by a child of the same age without the disability. The need for the additional care and attention must be likely to last for at least 12 months. DCA, which is not means-tested, is payable in respect of qualified children to age 16 years, after which they may apply for disability allowance (DA) in their own right.
However, the qualifying conditions for DA are very different to DCA. To qualify for a DA payment a person must: be substantially restricted in undertaking suitable employment; be aged between 16 and 65; satisfy a means test; and be habitually resident in the State. Therefore a child is not automatically entitled to DA because a DCA was in payment.
My department does not maintain statistics on how many people whose DCA ceases at age 16, apply for DA and go on to qualify for a DA payment.
I trust this clarifies the matter for the Deputy.
237. Deputy Sean Fleming asked the Minister for Social Protection the position regarding the situation in which domiciliary care allowance is being paid in respect of a person until his or her 16th birthday, the parent is granted carer's allowance to care for the person who obviously requires full-time care, and arising from the fact that the person has turned 16 years of age, all payments are cut off; the reason the person may not be provided with disability allowance in view of the fact that domiciliary care allowance was deemed necessary up to the date of the 16th birthday; and if he will make a statement on the matter. [38642/16]
View answerDomiciliary care allowance (DCA) is paid in respect of children who have a disability requiring care and attention substantially in excess of that needed by a child of the same age without the disability. The need for the additional care and attention must be likely to last for at least 12 months. DCA, which is not means-tested, is payable in respect of qualified children to age 16 years, after which they may apply for disability allowance (DA) in their own right. Carer’s allowance (CA) may be payable in addition to DCA where all the conditions are satisfied.
The qualifying conditions for DA are different to DCA. To qualify for a DA payment a person must: be substantially restricted in undertaking suitable employment; be aged between 16 and 65; satisfy a means test; and be habitually resident in the State. Therefore a child is not automatically entitled to DA at age 16 simply because a DCA was in payment.
It is a condition for receipt of a carer’s allowance (CA) that the person being cared for must have a disability whose effect is that they require full-time care and attention.
For the purposes of CA, full-time care and attention is defined as requiring from another person continual supervision and frequent assistance throughout the day in connection with normal bodily functions or continuous supervision in order to avoid danger to him or herself and likely to require that level of care for at least twelve months.
Moreover, a person’s eligibility for DCA, DA and CA may change over time. My Department periodically reviews claims in payment to ensure that there is continued entitlement. CA cases where DCA is stopping due to the child reaching 16 years are not automatically reviewed at that time. Reviews of CA are selected based on various parameters including where medical advice indicates or where there is any other indication that any relevant circumstances may have changed. In addition, some reviews are randomly selected.
Following examination of all available evidence, where it is decided that a care recipient no longer requires full-time care and attention, the carer is given ample time to provide additional evidence before payment of CA is stopped. The person receiving an adverse decision is also offered the right of appeal to the independent social welfare appeals office. The options to have an adverse decision reviewed by a deciding officer or to appeal it are available across all the schemes operated by my department.
I trust this clarifies the matter for the Deputy.
238. Deputy Niamh Smyth asked the Minister for Social Protection the proposed changes to the way rent allowance is being paid (details supplied); and if he will make a statement on the matter. [38655/16]
View answerRent supplement is currently supporting approximately 49,700 tenants at a total cost of €267 million this year. The strategic policy direction of my Department is to return rent supplement to its original purpose of being a short-term income support scheme. Under the new Housing Assistance Payment (HAP), responsibility for the provision of rental assistance to those with a long-term housing need will transfer to local authorities, under the auspices of the Department of Housing, Planning, Community and Local Government (DHPCLG).
From 1st December 2016, the HAP scheme is now operational in 28 of the 31 local authority areas, having commenced on a statutory basis in nine further local authority areas; Cavan, Kerry, Laois, Leitrim, Longford, Roscommon, Westmeath, Wexford and Wicklow. It is expected that HAP will be fully rolled out to the remaining Dublin areas from 1 March 2017.
In local authority areas where HAP is in place, new applicants assessed as requiring social housing support will be considered for HAP rather than rent supplement. Under HAP the local authority pays the rent directly to the landlord and the HAP recipient will then pay a rent contribution to the local authority. The rent contribution is a differential rent, which is set by the local authority based on income and the ability to pay.
DSP will continue to provide rental support, under the rent supplement scheme, to those with a short-term need, generally because of a temporary loss of employment.
The implementation of the HAP is a key Government priority and a major pillar of the Social Housing Strategy 2020 and the Action Plan for Housing and Homelessness – Rebuilding Ireland – which has committed to an accelerated target of 15,000 HAP tenancies in 2017. The Department is fully engaged in the development of HAP and officials in my Department work closely with colleagues in DECLG and the local authorities to ensure the successful implementation of the scheme.
I trust this clarifies the matter for the Deputy.
239. Deputy Mattie McGrath asked the Minister for Social Protection the number of first-time applications submitted seeking funding from the community services programme in County Tipperary in the past 12 months; if there are plans to increase the number of community services programme funded projects; if so, when; and if he will make a statement on the matter. [38693/16]
View answerThe Community Services Programme (CSP) is designed to address locally identified gaps in the provision of services to communities and to utilise the potential of community assets and resources that are already in place to support the delivery of services and to improve community well-being. Funding is provided to support the employment of staff to deliver the service.
There are currently 10 service providers receiving funding from the CSP for 31.5 full-time positions in County Tipperary.
Pobal is contracted by the Department to undertake the financial and contract management for the CSP. To date in 2016, Pobal has been requested to work with 10 new social enterprises to undertake an in-depth business planning process to determine the overall suitability and the resource requirements of their proposal in line with CSP criteria. One of these organisations is based in County Tipperary.
Following the announcement of an additional €1 m for the CSP budget, funding of €46 m will be provided for the programme in 2017. The increased funding will allow for a small number of new companies to be supported. Further information on the criteria for these new projects will be available in early 2017.
I hope this clarifies the matter for the Deputy.
240. Deputy Thomas Pringle asked the Minister for Social Protection if a decision has been made on a disability allowance application in respect of a person (details supplied); and if he will make a statement on the matter. [38699/16]
View answerThis man has been awarded disability allowance with effect from 22 June 2016. The first payment will be made by his chosen payment method on 21 December 2016.
Arrears of payment due will issue as soon as possible once any necessary adjustment is calculated and applied in respect of any overlapping payments or in respect of outstanding overpayments (if applicable).
I trust this clarifies the matter for the Deputy.
241. Deputy Pat Breen asked the Minister for Social Protection when a decision on an invalidity pension will issue to a person (details supplied); and if he will make a statement on the matter. [38707/16]
View answerInvalidity pension (IP) is a payment for people who are permanently incapable of work because of illness or incapacity and who satisfy the pay related social insurance (PRSI) contribution conditions.
To qualify for IP a claimant must, inter-alia, have at least 260 (5 years) paid PRSI contributions since entering social insurance and 48 contributions paid or credited in the last complete contribution year before the date of their claim. Only PRSI classes A, E or H contributions are reckonable for IP purposes.
The gentleman referred to is in receipt of disability allowance (DA) since 1 February 2012. He is not eligible for credited contributions for the period while he is in receipt of DA due to a gap in his insurance record for a number of years immediately prior to his DA application.
A claim for IP was received from him on the 17 October 2016. He was refused IP on the grounds that the contribution conditions for the scheme were not satisfied. Specifically, he does not have 48 contributions paid or credited in the reckonable year, 2015 in this case. He was notified on 21 November 2016 of this decision, the reason for it and of his right of review and appeal.
I hope this clarifies the matter for the Deputy.
242. Deputy Michael Healy-Rae asked the Minister for Social Protection to set out the status of a review on a disability allowance in respect of a person (details supplied); and if he will make a statement on the matter. [38745/16]
View answerI can confirm that this lady is in receipt of disability allowance (DA) from my department. We received a request from her to review her claim due to the fact that her financial circumstances had changed. The claim was referred to a social welfare investigative officer (SWI) for a review of her means and circumstances. Following on from that we requested some information which we have now received. The deciding officer will make a decision on the claim as soon as possible and the person concerned will be notified directly of the outcome.
I hope this clarifies the matter for the Deputy.
243. Deputy Robert Troy asked the Minister for Social Protection if he will re-examine changes which were made to the eligibility criteria for the contributory pension system in 2015, whereby contributions were averaged over the working years; and when he will address this issue as it is currently a severe disadvantage for women who have worked in the home for periods of time. [38751/16]
View answerThe overall concern in recent years has been to protect the value of weekly social welfare rates. Expenditure on pensions, at approximately €7 billion each year, is the largest block of expenditure in my Department in the Estimate for 2016, representing approximately 35% of overall expenditure. Due to demographic changes, my Department’s spending on older people is increasing year on year. Maintaining the rate of the State pension and other payments is critical in protecting people from poverty.
There are three main pensions paid by my Department to people aged 66 and over, namely the State pension contributory (which is based on PRSI contributions), the State pension non-contributory (which is based on means), and the Widows/Widowers/Surviving Civil Partners Contributory pension (which is based on PRSI contributions, and is also payable at a lower rate before 66).
The State pension contributory (previously called the Old Age Contributory Pension) was introduced in 1961, and is funded by PRSI contributions, on a pay-as-you go basis. Since its introduction, the rate of payment has been based on the ‘yearly average’ test.
These rates are banded, and those bands have been amended from time to time, most recently in 2012. There have been no changes in the structure of the bands since then, aside from increases in the rates, which are passed on pro-rata to the reduced rates.
As provided for in Budget 2012, from September 2012, new rate bands for State pension (contributory) were introduced. This resulted in one of the bands (in respect of those with a yearly average of 20-47 contributions), being replaced with three bands (in respect of yearly averages of 40-47, 30-39, and 20-29 respectively). These additional bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life are likely to benefit more in retirement than those with lesser contributions.
Prior to these changes, in the period from 2000-2012, someone with a yearly average of 47 contributions qualified for the same rate of payment (98% of the maximum rate) as someone with a yearly average of 20 contributions, despite generally their much more significant PRSI record, and this was regardless of their means. A person with an average of 48-52 PRSI contributions per year over their working life received a weekly State pension of only €4.50 more than someone with a yearly average of 20 PRSI contributions. Aside from the lack of equity involved, this was a significant disincentive to longer working, as in most cases, contributions paid by people in their sixties had no impact upon the rate of their State pension upon retirement.
The principle that the rate of a State pension contributory should reflect the PRSI contributions paid over a working life needs to be adhered to so that we can fund such pensions into the future. Given the requirement to make savings in recent years, it was considered more equitable to address this disparity, than to reduce the rate of payment for all pensioners by an across the board cut in payment rates. Such a cut would have reduced the incomes of the most vulnerable pensioners, who do not generally receive reduced rate contributory pensions, but rather receive a non-contributory pension, or a maximum rate contributory pension if they have the required contributions.
For those with insufficient contributions to meet the requirements for a full rate State pension (contributory), they may qualify for a means tested State pension (non-contributory) which has a maximum personal rate of €222, or just over 95% of the maximum rate of the State pension (contributory). Alternatively, if a person’s spouse or civil partner is in receipt of a State pension (contributory) they may instead qualify for an Increase for a Qualified Adult of up to €209, which is just less than 90% of the maximum personal rate of the State pension (contributory).
It is estimated that the cost of reverting to the rate-bands which existed between 2000 and 2012 would be over €50 million in 2017, and that this will rise at a rate of some €10 m annually.
I hope this clarifies the matter for the Deputy.
244. Deputy Willie O'Dea asked the Minister for Social Protection when payment will commence in respect of a carer's allowance application that was awarded after an appeal on the part of a person (details supplied); and if he will make a statement on the matter. [38753/16]
View answerAs a result of an appeals officer’s decision, carer’s allowance was awarded to the person concerned on 5 December 2016 and the first payment will issue to her nominated bank account on 8 December 2016. Arrears for the period 3 December 2015 to 7 December 2016 have also issued.
The person concerned was notified on 5 December 2016 of the outcome.
I hope this clarifies the matter for the Deputy.
245. Deputy Clare Daly asked the Minister for Social Protection to outline his plans to review the minimum funding standard provisions in the 1990 Pensions Act (as amended), particularly if it is having unintended and harmful consequences for defined benefit pension schemes and if it is distorting investment decisions without protecting pensioners. [38754/16]
View answerThe funding standard provides the regulatory mechanism for ensuring that a defined benefit (DB) pension scheme can live up to the promised level of pension benefits and a benchmark against which the health of a scheme can be tested. The funding standard is a wind-up standard, and is intended to approximate the monies needed to secure the benefits if the scheme was wound up and the accrued benefits bought out. Any reduction in the funding standard would not improve a scheme’s ability to pay the benefits as they fall due.
In the first instance it is the responsibility of the trustees of a pension scheme to ensure compliance with the funding standard and other obligations set out in the Pensions Act 1990, as amended. The existence of the funding standard is not the central issue in relation to whether a scheme is properly funded. The responsibility rests with the employer and the trustees for ensuring that the scheme is properly funded and managed.
Public companies are obliged to report on any defined benefit schemes in their annual financial statements. The basis of these calculations is defined in the relevant accounting standards and is independent of the Irish funding standard.
The Pensions Authority is the independent body responsible for regulating the funding standard. If a scheme does not meet the funding standard, a funding proposal must be submitted to the Authority in accordance with the time limits detailed in the Pensions Act. It should be noted that the Irish funding standard is less demanding in comparison to almost all other European countries. Accordingly, I have no plans to review it.
The Pensions Authority requires that, in setting investment policy, the trustees of a DB scheme must have regard to the need to satisfy at regular intervals the minimum funding standard set down in the Pensions Act. However a number of steps have been taken to reduce the risks to pension scheme members caused by market volatility.
The Social Welfare and Pensions Act 2012 required a DB scheme to hold additional funding in the form of a ‘risk reserve’ by 2023. This function of this ‘risk reserve’ is to provide some protection and long term stability for scheme members against future volatility in financial markets. Additionally, and in appropriate circumstances, the regulator may approve scheme funding proposals that provide for the recovery of their schemes funding over longer periods that was previously the case.
In order to provide increased investment options for pension schemes the Social Welfare and Pensions Act 2010 and 2011 introduced the option for trustees to purchase sovereign annuities. Pension schemes that purchase sovereign annuities or the underlying bonds benefit from a reduction in their liabilities under the funding standard. Buying sovereign annuities for the pensioners has the effect of reducing pensioner liabilities under the funding standard and provides additional funds for the other members of the scheme.
The situation of defined benefit funding is being actively monitored by the Department and the Pensions Authority.
I hope this clarifies the matter for the Deputy.
