Vol. 573 No. 1
73 Mr. Ring asked the Minister for Social and Family Affairs if she has satisfied herself with the methods used in her Department's estimation of the numbers who would qualify for a pension based on their pre-1953 contributions. [24395/03]
In May 2000 a special half rate old age (contributory) pension was introduced to enable those with pre-1953 insurance who could not qualify for a payment under normal qualifying conditions to receive a pension. Those already qualifying for pensions at less than half rate could also benefit from the new scheme. In order to be eligible for the payment, a person needs 260 paid contributions at the appropriate rate which can comprise a mixture of pre and post-1953 contributions.
Based on an analysis of pension claims which failed to satisfy the standard conditions and experience of take-up on previous pension measures, it was estimated that some 3,000 persons would qualify for the new pension in 2000 at a full year cost of €8.9 million. The overall claim load, ultimately, was not expected to exceed 5,000.
By the end of 2000 over 11,500 applications had been received, of which 3,545 had been awarded pensions. The Department also reviewed 13,500pro rata pension cases receiving less than half rate. Of these, 7,332 were successful in qualifying for the new pension.
Up to the end of August 2003, a total of 27,562 pre-1953 pensions were awarded. Almost 63% of these pensions are being paid to residents of the United Kingdom and other countries. The cost in 2002, which includes the budget increases, amounted to €113 million.
Prior to the introduction of this pre-1953 pension in May 2000, there was a considerable level of demand from pensioners, many quite elderly, for some recognition of their pre-1953 contributions. The pension introduced gives limited recognition to these contributions which, it has to be said, did not specifically contain a pension element and is only of benefit to persons old enough to have had contributions prior to 1953.
One of the difficulties in estimating costs was that the records available to the Department in relation to pre-1953 contributions were not in such a form as to allow for ready estimation of the numbers of contributions. Many of the records in question were incomplete and had to be supplemented by separate information obtained when claims were made. Furthermore, the Department, based on its current databases, did not anticipate the large influx of claims from persons resident abroad. This was greatly influenced by a major campaign by groups working in Irish centres of population in the United Kingdom and the Department's own publicity.
It must be acknowledged that the numbers qualifying and the overall cost of this measure have been seriously underestimated. That said, my Department is frequently required to estimate the costs of policy measures and its record in this regard is good, as has been recognised by the Department of Finance. There were particular circumstances in this case which made it highly unusual. As I explained, it related essentially to the lack of adequate data. However, the Department will take on board the specific lessons of this project in estimating the costs of similar proposals in the future.
I supported this first-class scheme when introduced and have no problem with it. The people concerned who have paid their dues did not qualify for pensions under the ten year rule. I welcome and support the Government's decision to provide them with a pension.
We were told that the scheme would cost €6.7 million in 2000 and after one year €8.9 million. It is now costing €113 million per year. How did the Department get it so wrong? How could it not do the calculation? Can it not add or has something gone wrong? Besides not being able to add, it is now trying to get the money back. For example, when those in receipt of disablement allowance got their books this year, the Department had not included the page providing payment for the last week of the year. That is how it was going to claw back the money. I brought the matter to its attention and I am delighted it will now write to inform the people concerned that they will receive their payment.
How did the Department get it so wrong? Last year the Minister stood up at budget time and lectured us. She informed us she had done well and got extra money from the Department of Finance. However, she did not tell us that most of the money would go abroad. There are more people drawing this money in England and outside the country than inside. The increases the Minister got last year have actually gone abroad.
The Comptroller and Auditor General was also concerned. How could the Department not add up or calculate the number who would qualify for the scheme? For the figure to go from €8.9 million to €113 million means it is costing the Department 13 times as much as expected. Is there nobody in the Department who can add? The Department can certainly add when assessing a poor person on the street for social welfare or the person looking for farm assist aid. Will the Minister tell us how it could get it so wrong? Somebody must take responsibility.
I am glad the Deputy is perfect and that he acknowledges that the people of County Mayo have benefited substantially from the pre-1953 pension. It would be a sorry day if he headed back to the county not having agreed that it was one of the best pension provisions made by my colleague.
I am sure all Deputies have encountered difficulties, on behalf of constituents, when trying to get a continuum from old records. That was one of our greatest difficulties. There was no expectation, wrongly I suppose, that the networking would be as good as it was and that people living abroad would apply for the pension. As the Deputy said, it is their due. They had to travel abroad to find work and we should recognise them in respect of their contributions pre-1953. They account for some 60% of those receiving the pre-1953 pension. They are living in 28 countries. The majority of payments are made to persons living in the United Kingdom. There are over 9,000 people living in Ireland receiving the pension; over 11,000 in the United Kingdom; 1,500 in the United States; 829 in Canada; 865 in Australia, and 61 in South Africa.
I assure the Deputy that the Department can add, subtract, multiply and divide.
It did a bad job in this case.
Given the circumstances and the fact that employment records of many at the time would have been sporadic, it was difficult to provide for a proper assessment of the numbers who would apply. There are still people working and negotiating with the Department to ensure they are eligible. The Department has learned lessons. At the end of the day, we all agree it is a good scheme.
We have a situation in counties Donegal and Mayo where money is being taken from those in receipt of a pro rata English pension. Because of the strength of sterling, the people concerned are being assessed on a weekly rather than a yearly basis. That is wrong and unfair. They, too, have subscribed to the system.
Perhaps we will discuss that matter when we come to deal with another parliamentary question.
74 Mr. Penrose asked the Minister for Social and Family Affairs the number of persons who currently have a personal retirement savings account; if she has satisfied herself with the level of take-up of the accounts; her plans to increase awareness regarding these accounts and their importance; and if she will make a statement on the matter. [24391/03]
An essential aim of current pensions policy is to increase pensions coverage from its current level of over 50% towards the agreed target of 70% of the workforce over 30 years of age. Progress will be reviewed on an ongoing basis. In addition, a report on supplementary pensions coverage is required by legislation by September 2006. Data in relation to PRSA contracts are being submitted to the Pensions Board on a quarterly basis by PRSA providers. The first such quarterly report related to end June 2003. I understand from the Pensions Board that the returns gave a figure of 2,550 PRSA contributors. However, the first PRSA products were only approved in February. The next report, due at the end of this month, will relate to the position at the end of September. While there may be some increase, I do not expect it to be significant as the mandatory employer access to PRSAs came into effect from 15 September. While I understand there is anecdotal evidence from PRSA providers that between 40,000 and 50,000 employers have signed an agreement with a PRSA provider, this will not become clear until returns due at the end of December are available. I will examine closely the data relating to that and subsequent quarters to assess the position and, in particular, the impact of the mandatory employer access requirement.
I am acutely aware that the development of pensions coverage, for a variety of reasons, will be a slow burner. That is the reason the Government is committed to raising awareness among the general public in relation to PRSAs and with regard to pensions issues generally. The two key issues relate to coverage and its quality. This is directly related to the level of contributions made by those in employment and, in the case of employees, their employers.
In budget 2003 I provided for an allocation of €500,000 for a national pensions awareness campaign which I asked the Pensions Board to undertake. Since May of this year the Pensions Board has been active in communicating the "pensions message", in particular through the publication of information booklets for both consumers and employers, by spreading the message on local radio and by contributing to the pension supplements produced in the print media in recent months.
Last week I formally launched National Pensions Awareness Week, which will concentrate on an advertising campaign designed to target people who are without any pension coverage. I would draw the House's attention to a pensions calculator the size of a credit card that has been produced by the board as part of its "Think about tomorrow today" campaign. This card, copies of which will be sent by the board to all Deputies, is a simple ready reckoner of the level of pension coverage a person can expect at different rates of contributions, made at different ages. The message is simple – the sooner contributions are made the better.
Additional information.PRSA and pension providers generally have also been very active and have committed large resources to publicity campaigns, including television and radio advertisements. I am hopeful that the work of the Pensions Board, coupled with the publicity effort of the pension providers, will succeed in raising the profile of pensions among the general public and lead to an increased level of coverage of a quality nature.
I assure the Minister the Labour Party strongly supports the effort to widen access to pensions. Will the Minister confirm that employers had to submit a form to her Department in order to get certification to be pension providers? Forms are coming in slowly for that certification, especially from small shops in rural areas where only one or two people are employed. The Minister should try to help those people and not penalise them. Every assistance should be given, especially to those employing one or two people as they are probably the people who most want to participate in the scheme.
The Minister had €500,000 at her disposal for an information campaign. Why then had the majority of people never heard of PRSAs some two to three weeks before the 15 September deadline? Has any thought been given to why SSIAs, of which there was a huge take-up and which necessitated the expenditure of much more money on a monthly basis, were seen to be much more attractive than PRSAs? The SSIAs give a quicker rate of return while the pensions, obviously, are more of a long-term investment. It has taken years of studies and reports to get the PRSA off the ground and if it does not take off, where will we go from there? I know a three-year review mechanism has been built in. When the SSIAs mature, will there be an incentive to encourage people to invest the returns they might get into the PRSAs, which would be of a longer-term benefit? This is an issue to which the Minister should give some consideration, together with the Minister for Finance, Deputy McCreevy, who sometimes tends to put the cart before the horse.
On the pensions awareness campaign, given that I only have a certain amount of money, I decided it would not be spent specifically on PRSAs and would be a comprehensive pensions awareness campaign. I did not consider it appropriate to replicate what the providers are doing themselves on television, radio and in the print media. I thought I should use my resources better by designating a specific week to target pensions per se and try to use a number of people to convey that message, especially to young people. I have had a number of ongoing discussions with providers and bodies like IBEC with which my Department is in close contact, as is the Pensions Board. We were involved in assessing how best to target those who perhaps are not that interested in pension coverage, such as the small business person to whom the Deputy referred. At the end of the year, when I receive my reports, I will assess the numbers that have signed up. I am relatively happy that in the region of 2,500 employers have already signed on and it is important that we build on that momentum.
I, too, considered the SSIAs and have put together a working group to examine this issue. I agree that if people will have a certain lump sum available to them, it might be better for them to put that towards pension provision rather than a holiday. I will discuss the matter with the Minister for Finance and his officials.
