Written Answers Nos. 94-102
95. Deputy Terence Flanagan asked the Minister for Social Protection her plans to introduce legislation on pension protection in line with other countries (details supplied); and if she will make a statement on the matter. [53441/13]
Amharc ar fhreagraDefined benefit (DB) pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory obligation on employers under Irish law to contribute to their pension scheme (although schemes rules can place some level of obligation).
Most defined benefit pension schemes in Ireland were established under a trust deed. As part of the process of establishing each occupational pension scheme, an employer undertakes to be bound by the rules of the scheme and to undertake certain liabilities and duties defined therein. The position around the employers and employees contribution obligation in a trust deed varies from deed to deed.
Employers have, by and large, made great efforts to support and deliver on the promise made to scheme members. This process is generally managed through dialogue between trustees, employers and members, where efforts are made to reach agreement regarding the steps that must be taken to secure scheme viability which may include a mix of measures such as increased employer/member contributions, longer working and amended benefits.
In developing the measures contained in the Social Welfare and Pensions Bill (No.2) 2013, significant consideration was given to imposing a statutory obligation on employers to secure a minimum level of funding before a scheme could be wound up. The advantage of placing a minimum obligation on the employer would be to reduce further the possible risk to the State and to protect the benefits of current and former schemes members. It may also prevent employers from “walking away” from defined benefit schemes and would encourage employers to ensure that the scheme is well funded and managed.
However, there are strong arguments against the introduction of an employer obligation given the uncertainties as to the overall impact and potential for unintended consequences. The introduction of employer guarantee is not a simple matter and may result increasing State involvement in sponsoring employers’ business decisions. Whilst it may improve the security of scheme members in certain circumstances, in other situations it may not. For example, in certain cases of liquidation, there may be few or no assets available once the claims of preferred and secured creditors have been met.
Imposing an obligation on an employer may be seen as unfair on employers who have voluntarily set up DB pension schemes. The previously voluntary commitments under these schemes would be made mandatory whereas there would be no corresponding obligation on employers who had set up DC schemes or had not set up any pension scheme.
To avoid debt, there is a danger that some employers with underfunded schemes may wind up the scheme in advance of completion of legislative process which, by its nature, would be complex and take some time to put in place. Experience in other countries has shown that complex ‘anti avoidance’ structures, with the requisite resources and expertise, were required to prevent employers restructuring to avoid their obligations.
Given the current economic circumstances, the imposition of significant additional costs on employers may have a counter-productive impact regarding the very viability of the business and jobs of those employed given many employers lack of capacity to absorb this extra cost. As such an obligation on an employer may threaten the companies financial stability and in some circumstances render employers insolvent. This may then impact on the companies creditors.
Internationally, “debt on employer” structures are seen as a complex measure to provide for and administer. Given the very small proportion of DB schemes here linked to employers who have a credit rating, or another reliably accurate and consistent measure of solvency, it is not the case that a workable framework to selectively apply an obligation on the employer is easily achievable. Rather, than placing an obligation on the employer to protect member benefits, the approach in the Bill is to support schemes to gradually move to more appropriate funding levels through the short, to medium to longer term using regulation and the benefits of a strengthening economy. This involves the Funding Standard and improved regulation with provisions such as restructuring of scheme benefits, the introduction of a risk reserve and the availability of sovereign annuities. The overriding priority in this area is to ensure that pensioners and members of pension schemes are protected and the future viability and sustainability of their schemes is ensured and made safer.
96. Deputy Terence Flanagan asked the Minister for Social Protection the reason she is proposing to deduct from the IASS pensions of those who have worked hard and paid taxes all their lives; and if she will make a statement on the matter. [53442/13]
Amharc ar fhreagraYou will appreciate that it is not appropriate for me to comment on matters relating to individual pension schemes. Issues that relate to the operation of the scheme are a matter for the trustees of that scheme. The supervision of the scheme under the Pensions Act is a matter for the Pensions Board.
97. Deputy Denis Naughten asked the Minister for Social Protection if she will ensure that pensioners are given a right of audience with pension scheme trustees; and if she will make a statement on the matter. [53448/13]
Amharc ar fhreagraDefined benefit pension schemes in Ireland are in general set up under trust. The trustees of such pension schemes have a fiduciary duty under trust law and the Pensions Act to act in the best interest of all scheme members. In addition, the Pensions Act provides for further safeguards to protect the interest of pensioners. In the event of the wind up of a pension scheme the provision in the Pensions Act gives priority to the benefits of pensioners before any assets of the scheme are distributed to meet the liabilities of other scheme members.
The Social Welfare and Pensions (No. 2) Bill is amending this provision to provide for a more equitable distribution of scheme funds in the event of the wind up of a scheme. This change will only impact where the scheme is underfunded. However, pensions up to €12,000 per annum will continue to retain the same level of protection as heretofore. For higher pensions, 90% of the annual amount between €12,000 and €60,000, and 80% of the annual amount over €60,000, will also have priority over the distribution of assets to other scheme beneficiaries.
The Bill also amends the Pensions Act to extend the options available to trustees of a scheme by providing for reductions of a portion of the benefits payable to pensioners. The restructure of scheme benefits under section 50 of the Pensions Act is not an arbitrary matter and must comply with the requirements of the Pensions Act and the criteria set out in statutory guidance.
Before the trustees make an application to the Board, they must consult with the employer, the scheme member, with pensioners and with the authorised trade union representing members. Trustees must undertake a comprehensive review of the scheme with a view to the long term stability and sustainability of the scheme.
In advance of any application to the Pensions Board to restructure scheme benefits, the trustees must notify, in writing, all members of the scheme including pensioners of; The circumstances giving rise to the proposed application and the reasons why the trustees believe an application is in compliance with their fiduciary duties; the proposed benefit reductions which are to apply to each category of member or other person and the reasons for treating one or more categories of member or other person differently to others; that the trustees have requested additional contributions from the employers to avoid the necessity for a reduction in benefits and the response of the employers; provide general examples of the projected impact of the reduction(s) on members using such assumptions as the actuary deems appropriate.
Members have 30 days to respond to the notification and their interests will be considered. In the context of the current Bill, stakeholder groups including pensioner representatives were consulted last year and asked to make submission in relation to the proposed changes to the Pensions Act. The input from the stakeholders was taken into account in developing the proposals in the Bill. It would be my intention that this practice of consultation with pensioner representatives and indeed with all stakeholder representatives would continue in relation to any further consideration of changes to the Pension Act. As I said at the outset, the trustees of a defined benefit pension scheme are required under trust law to act in the best interest of all scheme members. The changes I am proposing in this Bill will enhance the ability of the trustees to protect the overall best interest of all scheme members.
98. Deputy John McGuinness asked the Minister for Social Protection the position regarding issues raised in correspondence to her Department in respect of a person (details supplied). [53459/13]
Amharc ar fhreagraI am advised by the Social Welfare Appeals Office that an Appeals Officer, having fully considered all of the available evidence including that adduced at oral hearing, decided to disallow the appeal of the person concerned. The daughter of the person concerned wrote to the Social Welfare Appeals Office on 23rd November 2013 requesting the Chief Appeals Officer to review the decision of the Appeals Officer under Section 318 of the Social Welfare Consolidation Act, 2005. The person concerned will be notified when the Section 318 review has been completed.
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.
100. Deputy Terence Flanagan asked the Minister for Social Protection the steps being taken to deal with social welfare fraud; the amount that has been recovered; if targets have been met; and if she will make a statement on the matter. [53472/13]
Amharc ar fhreagraThe Programme for Government commits to a zero tolerance approach towards social welfare fraud and the Department’s Fraud Initiative further articulates this overarching policy objective. A key priority is to ensure that social welfare payments are paid to those who are entitled to them and that fraudulent activity is vigorously prevented and combatted.
Over the past number of years, fraud detection and control systems have been refined and enhanced and are subject to on-going review. A range of measures are employed by the Department to ensure that social welfare fraud and abuse is minimised and that its control activity is appropriately focused. The approach taken by the Department to combat fraud is frequently reviewed and is regularly adjusted to ensure it is proportionate and is targeted on the areas of greatest risk. Actual money recovered arises where the Department raises overpayments in individual cases. Overpayments raised by the Department are categorised as ‘fraud’, ‘non-fraud’ or ‘estate’ cases. Fraud cases arise mainly on foot of false declarations by customers concerning their employment, income and family status. Non-fraud cases are primarily due to customer or third party error, with some due to Departmental error. Estate cases arise where undisclosed means by customers come to light after their deaths.
In 2012, a total of €97m was raised in overpayments and of this amount, €40.9m was recorded as attributable to fraud or suspected fraud. In 2012, a total of €53.3m was recovered. In addition, the Department’s control work is measured in terms of control savings which are used as a performance indicator for year-on-year activities. Without this control work, social welfare expenditure would over time increase by this amount. Control savings do not include any cases of departmental or clerical error or any cases where the customer voluntarily told the Department of their altered means or circumstances, which resulted in a change to their rate of payment. My Department recorded control savings of €669m in 2012. In excess of €525m was recorded in respect of control savings from January to end of October 2013.
102. Deputy Paul J. Connaughton asked the Minister for Social Protection when a decision will be made regarding an appeal for farm assist in respect of a person (details supplied) in County Galway; and if she will make a statement on the matter. [53482/13]
Amharc ar fhreagraI am advised by the Social Welfare Appeals Office that an Appeals Officer, having fully considered all of the available evidence including that adduced at the oral hearing, has decided to disallow the appeal of the person concerned. The person concerned was notified of the Appeals Officer’s decision on 9th December 2013.
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.
