I move that the Bill be now read a Second Time. Deputies will remember that we had a debate on the subject of widows' and orphans' pensions on the 12th November last arising out of a motion by Deputy Peadar Doyle and an amendment proposed, I think, by Deputy Davin or Deputy Norton. I told the House, in the course of the discussion on that occasion, that a Bill to amend the Widows' and Orphans' Pensions Act of 1935 was then practically prepared, and I told the House what, roughly, that Bill, when introduced, would contain and what it proposed to do. All Parties in the House were interested in the discussion, and Deputies of all sides took part in it, and there was a view expressed on all sides that it would be more satisfactory if a new Bill would propose to make pensions available for all necessitous widows and orphans.
After I had outlined the Bill, the following week I was met by a lot of the Deputies of my own Party who expressed that view to me pretty forcibly, and I took note of the statements made by Deputy Dillon in the same direction, urging me and urging the Government to provide, if possible, the necessary finances to cover, in the proposed amending Bill, pensions for all necessitous widows and orphans, as I have already said. The same claim was put forward and strongly stressed by the Deputies who spoke from the Labour Benches and, I think, the Independent Benches as well. Accordingly, having heard such a strong volume of opinion expressed, and feeling it was the right thing to do if the money could be found, I took the matter up again with the Minister for Finance and with the Executive Council, and I am happy to say that the money has been found and the Government has agreed to withdraw the Bill that was practically ready for introduction, and to substitute for it the Bill that has now been circulated, which does make provision for pensions for all necessitous widows and orphans.
This is a Bill to amend the Widows' and Orphans' Pensions Acts, 1935 and 1936, and is in fulfilment of a promise I have made several times in this House that the earliest opportunity would be taken to extend the number of necessitous widows and orphans who would benefit under the non-contributory scheme of pensions established by the Act of 1935.
It will be remembered that the Act of 1935 provided two classes of pension, contributory and non-contributory, and was framed on the principle that in dealing with the question of necessity arising amongst the widows and orphans of the wage-earning classes, through the premature death of the breadwinner, the best results would be obtained by adhering to the principle of compulsory contributory insurance. Such a scheme of contributory insurance would ensure that, for the future at any rate, the classes for whom protection was in the main desired, would be adequately covered. The system would provide for the payment during working life of contributions to a fund, which with the aid of a subvention from the State would guarantee pensions to the widows and orphans of wage-earners, without the imposition of a means test. The type of scheme established corresponds to similar schemes established in other countries, where the experience has been that they are of very great benefit indeed in meeting the hardships which arise through the death of employed husbands and fathers of families. We have now had something over a year's experience of the working of the contributory scheme in this country and I can say emphatically that, even in that short time, it has proved of very great benefit.
It was estimated that, in the first year of its operation, an average of 700 widows whose husbands would die during that year, would become entitled to contributory pensions at a cost of £30,000 for the year. The position as at 31st December last was, that there were 702 widows and 1,174 children (including orphans) in receipt of contributory pensions, the pensions amounting to £554 8s. 0d. per week, i.e., at the rate of £28,829 per annum. Since the 31st December these figures have increased as follows:—
Number of widows, 795.
Number of children and orphans, 1,370.
Weekly cost, £636 6s. 6d.
Annual cost, £33,089.
The cost of the contributory scheme will increase rapidly from year to year until the ultimate stage is reached, when it is estimated that there will be 23,000 widows and 18,500 children, including orphans, in receipt of contributary pensions.
Where the employment of the late husband or father was not agricultural employment, these pensions are at the rate of 10/- per week for the widow, 5/- per week for the first dependent child, 3/- per week for each other dependent child and 7/6 per week for each orphan child. The lowest pension in this group is 10/- per week and the highest is 42/- per week. In cases where the late husband or father was employed in agricultural employment, the pensions are at the rate of 8/- per week for the widow, 4/- a week for the first dependent child, 2/6 for each other dependent child and 6/- a week for each orphan child. The lowest pension in this group is 8/- per week and the highest, 32/- per week.
Though the Bill now before the Dáil does not make any important or radical alterations in the contributory scheme, I think it desirable to impress on Deputies that the system of pensions to widows and orphans is, in the main, a scheme of compulsory contributory insurance, which is relied on to meet, as far as possible, all cases of necessity arising in the future amongst the widows and orphans of the insured class, that is the great majority of wage-earners. The adoption of the contributory principle does not, however, deal with the case of the existing population of necessitous widows and orphans whose husbands or parents were already dead when the contributory system began, nor does it deal adequately with cases which might arise in the future where a man who was insured under the contributory plan failed to have sufficient qualifying contributions to his credit at the date of death. In order to meet that position (which to some extent is transitional, since the number of cases should begin to decline as soon as the contributory scheme is well established) the original Act provided for a scheme of non-contributory pensions in addition to the contributory scheme.
The non-contributory scheme of pensions set up by the Act of 1935 provided pensions under certain conditions to the widows and orphans of certain classes. These classes are, firstly, persons who would have been insured under the contributory scheme if it had been in force when they died and, secondly, small working farmers to whom schemes of compulsory contributory insurance cannot be applied. The first class referred to is defined by the test of insurance under the National Health Insurance Acts, i.e., a non-contributory pension is payable to a widow of a man who, when he died, was insured under these Acts. The second class referred to is defined by reference to the valuation of the holding occupied at date of death and comprised only small-holders whose valuation did not exceed £8. Further, in both classes, payment of pension is limited to widows who have dependent children and to widows aged 60 and over who have no dependent children. The pensions are smaller in amount than the contributory rates and, subject to the other conditions, are paid only to necessitous widows; that is to say, all non-contributory pensions are payable subject to a means test.
The experience of the working of the non-contributory scheme has disclosed certain anomalies and inequities which have already been referred to in this House. For instance, many widows who are in fact necessitous have failed to qualify for pension because their husbands were not insured under the National Health Insurance Acts. These include the widows of independent tradesmen such as blacksmiths, bootmakers, jobbing carpenters, painters, carters, slaters, etc., etc. Another type of case under which hardship arose was where the husband, when employed, was normally insured under the National Health Insurance Acts, but where prolonged unemployment before death resulted in the termination of his insurance. Among small holders instances of a similar nature occurred as, for example, where the holding was just over the valuation limit of £8 or where the holding had been assigned to a son before death, or where, after death, the widow had ceased to reside on the holding.
The whole question has now been reconsidered in the light of the experience which has been gained in the operation of the Act since January, 1936, and the Government has arrived at the decision that, so far as non-contributory pensions are concerned, the most logical and equitable course is to remove all the tests regarding the nature of the occupation of the deceased husband or parents. The Bill accordingly provides for the repeal of those sections of the 1935 Act which limited the classes of deceased persons to whose widows and orphans non-contributory pensions would be payable. Further, under the existing statute, a non-contributory pension cannot be paid to a widow who has no dependent child, unless she is aged 60 years or over. The Bill proposes to reduce this to the age of 55. The effect of the new proposals is, therefore, that non-contributory pensions will be payable to all necessitous widows who have dependent children, to all necessitous widows who have no dependent children but who are 55 years of age or over and to all necessitous orphans, irrespective altogether of the nature of the occupation of the deceased husband or parents. These are the main proposals in the Bill now before you and they are of farreaching importance. As I will explain later on, these proposals will considerably increase the number of beneficiaries under the non-contributory scheme.
The next most important change which is proposed, is to modify the means test in favour of claimants. In assessing income under the Act of 1935 special exemptions from earned income were allowed to widows who had dependent children. These exemptions were at the rate of 2/6 for each child in the case of a resident in a county borough, 2/3 in the case of a resident in an urban area and 2/- in the case of a resident in a rural area, with a maximum exemption of 7/6, 6/9 and 6/- respectively. The Bill proposes to apply these exemptions also to cases where the income is unearned. Consequently, the necessity for distinguishing between earned and unearned income disappears and provision is made for the necessary amendment in the First Schedule to the Act of 1935.
Furthermore, it is proposed to exempt up to an amount not exceeding £6 10s. 0d. a year or 2/6 a week, any charitable donations or voluntary payments made by organisations or institutions or by relatives or other persons not contributing towards their own board and lodging. In addition, it is proposed to exempt income received by way of bonus or grants made to persons residing in Gaeltacht areas by the Department of Education, in cases where Irish is used as the language of the home. In order to remove doubts, provision is also made that home assistance, if received, will not be taken into account.
The effect of these proposals will be that, in the first instance, in assessing income, no account will be taken of home assistance, Gaeltacht grant or the first 2/6 per week of charitable payments. Any income still remaining after these deductions have been made will further be reduced as follows: in county boroughs, by amounts varying from 5/- in the case of a widow with no children to 12/6 in the case of a widow with three or more children; in urban areas, by amounts varying from 4/- in the case of a widow with no children to 10/9 in the case of a widow with three or more children; in rural areas, by amounts varying from 3/- in the case of a widow with no children to 9/- in the case of a widow with three or more children
The only income which will be taken into account for the purpose of calculating the pension payable will be any income remaining after all these deductions have been made. It follows that a widow with three children residing in a county borough might have a total income, apart from home assistance, of 15/- a week and still get the maximum pension, applicable in her case, of 14/- a week.
Criticisms have been directed against the payment of low rates of pension in certain cases. It will be obvious that, in such cases, the widow is in receipt of other income. The fact that a low rate of pension is payable is very often an indication that the widow concerned is better off than the widow to whom the maximum rate of pension is payable.
Further minor alterations are also proposed, of which the following may be mentioned:—Under the existing statute, a dependent child is a child who is under the age of 14 years, or a child who is under 16, but who, on attaining the age of 14, was under full-time instruction in a day-school and continues thereafter under such full-time instruction. Some doubt has arisen as to whether, under this provision, a child whose period of instruction is interrupted after the age of 14 qualifies for an allowance. In order to remove this doubt, it is now proposed to treat a child as dependent during any periods between the age of 14 and 16 while he is attending school. Power is also taken to make regulations to include certain periods as periods of attendance at school, as, for example, periods of recognised school holidays or periods during which the school is closed on account of an epidemic, etc.
Cases have also arisen where orphans' pensions claimed in respect of illegitimate children had to be refused because the death of both parents could not be proved. In such cases it is proposed that a pension will be payable if the mother is dead and if the father is unknown. Under the existing provisions, a claimant is given one month after the death of her husband in which to make a claim. If the claim is made within the period of a month, the pension is payable as from date of death. If the claim is made after the expiration of a month, the pension is paid from date of claim. Experience has shown that this period of a month is too short, and it is proposed to extend it to three months.
Contributory pensions are payable at present outside Saorstát Eireann in cases where the pensioner is resident in an appointed country. An appointed country is a country with a similar scheme of contributory pensions under which payments of pension are made in the Saorstát. Great Britain and Northern Ireland are appointed countries, because they have schemes of pensions to widows and orphans which are substantially the same as the contributory scheme in force here, and under these schemes pensions are payable in the Saorstát. Accordingly, the existing statute provides for the payment of contributory pensions to persons going to reside in Great Britain or Northern Ireland, subject always, of course, to the conditions regarding insurance in the Saorstát having been satisfied.
It will be remembered that when a widow, who is in receipt of a contributory pension, reaches the age of 70, she becomes entitled to an old age pension of 10/- a week under the Old Age Pensions Acts without any test as to means. A difficulty arose here, because old age pensions are not payable outside the Saorstát. It is accordingly proposed in the Bill that where a woman becomes entitled to an old age pension under the Old Age Pensions Acts because she was in receipt of a contributory widow's pension, then the old age pension to which she becomes entitled may be paid to her if she becomes resident in an appointed country. Under similar conditions an old age pension payable under the British or Northern Ireland Old Age Pensions Acts is payable in the Saorstát.
There are, in addition, certain minor amendments which are of an administrative character, or are intended to clarify the provisions of the 1935 Act. It will be observed also that the principal amendments will not come into force until a day which is to be appointed. It will be appreciated that some time will be required to reexamine all the claims which have been rejected under the Act of 1935 and also the large number of new claims to be expected as a result of this Bill. Every effort will be made to deal expeditiously with these cases, and it is hoped to have the new pensions paid within a few months after the passing of the Act.
As I have already stated, the effect of the proposals will be to increase considerably the number of persons entitled to non-contributory pensions and, as a consequence, the annual cost of these pensions. Under the present scheme the number of persons in receipt of pensions, the weekly cost of these pensions and the corresponding annual cost are as follows—the figures relate to the 31st January of this year:—
Contributory scheme—Number of widows, 795; number of dependent children (including orphans), 1,370; weekly cost, £636 6s. 6d.; corresponding annual cost, £33,089.
Non-contributory scheme—Number of widows, 13,797; number of dependent children (including orphans), 13,065; weekly cost, £4,567 19s. 0d.; corresponding annual cost, £237,533.
The figures for both classes combined are:—Widows, 14,592; dependent children and orphans, 14,435; weekly cost, £5,204 5s. 6d.; corresponding annual cost, £270,622.
The new proposals will not affect the cost of the contributory scheme, which, as I have already mentioned, will increase steadily from year to year. When the Act of 1935 was before the Dáil, I stated that in making estimates of cost considerable difficulty was experienced, as full material was not always available on which to base calculations. Although considerable experience has been gained, the extension to include all necessitous widows makes it very difficult to make firm estimates. Taking all the facts known to us into consideration, the best estimate, so far as the non-contributory scheme is concerned, is that under the new proposals the number of beneficiaries in the first year will be 41,500 widows and 29,000 children (including orphans). These numbers will be subject to reduction in future years as the number of persons entitled to contributory pensions increases.
The principle adopted in financing the scheme under the Act of 1935 was to estimate the income and expenditure over a period of ten years and to set off the surplus arising in the early years against the deficiencies which will normally occur in the later years. The resulting excess of total expenditure over total income for the ten years was then met by an equal annual subvention from the State in each of these years. The 1935 Act accordingly provided for an annual State subvention of £250,000 for each of the first ten years. Of this ten-year period, two years have elapsed, and two annual payments of £250,000 each have been made. It is now estimated that the new proposals will require an additional subvention of £200,000 for each of the remaining eight years of the period, and in arriving at this amount regard was had to the surplus already in hand as a result of the first year's working of the scheme. The Bill accordingly proves that for the remaining eight financial years of the ten-year period the State subvention is to be at the rate of £450,000 instead of £250,000 as originally provided.