Tuesday, 19 January 2010
Dáil Eireann Debate
Deputy Michael Creed: By nature of the matter under discussion, I will speak about correspondence between the Department of Social and Family Affairs and elderly people and pensioners. Major distress has been caused by correspondence sent in recent days to a significant number of elderly people which cites section 110(1) of the Social Welfare (Consolidation) Act 2005 as the basis for informing them that their pensions are being withdrawn and refunds of payments sought. In some cases, people are being notified that the payments for which they are awaiting approval are being withdrawn.
The basis for this decision is that the people in question did not pay PRSI contributions before they reached the age of 66. However, the correspondence sneakily omits section 110(2), which states: “Notwithstanding subsection (1), the Minister may, where he or she is satisfied that in all the circumstances of the case it would be appropriate to do so, direct that subsection (1) shall not be applied in that case.” I contend the individuals in question have been approved under section 110(2) of the Act and, having carried these applications across the threshold of eligibility by establishing that a farm or business partnership existed and that retrospective PRSI payments could be made, the Minister for Social and Family Affairs cannot now decide to retrospectively withdraw her discretionary approval to pay the pension.
If a satisfactory response is not given to us tonight, we will raise the issue by every parliamentary device available to us to ensure the Government recognises the folly of the course it is attempting to follow.
Deputy Olwyn Enright: I support the points made by my colleague, Deputy Creed. I do not understand the rationale behind the Minister’s approach to this matter other than as a money-saving mechanism. The section of the legislation to which Deputy Creed referred makes clear this is a matter of ministerial responsibility. It is clearly the Minister who has made the decision to contact these people to indicate that their pension entitlement will be withdrawn. I questioned the Minister on this issue earlier today in the House and am disappointed she is not here to address it on the Adjournment. She told us that 87 people are currently affected by the change, but this number does not take account of the many more who will be affected when they reach the age of eligibility.
The Minister has it entirely in her power to withdraw the notice sent out to the persons concerned. Her staff throughout the State made the relevant calculations on the applicants’ behalf and told them how much they would have to contribute in order to be eligible for the allowance. Some people have been making contributions and have now received a letter asking that they withdraw the moneys submitted. This is unfair and miserly. It makes little of the legitimate expectation of those involved in the commercial partnerships in question, as set out to them by departmental staff. That expectation was fulfilled by way of payment in the case of at least 87 of them. Like my colleague, I call on the Minister to act upon the power accorded to her under subsection 110(2) of the Social Welfare Consolidation Act 2005 to ensure those payments are made.
Deputy Jimmy Deenihan: The scheme in question was announced on 25 June 2008 by the Minister, Deputy Hanafin. She said at the time that it was “hugely important” for women who have over many years contributed greatly to family commercial partnerships and that it would “primarily benefit women who are approaching pension age but are not covered for a contributory pension”. The details of the scheme were published in social welfare booklet SW124. The booklet, which I and many of my colleagues have used in advising clients and constituents, makes no mention of the fact that the individual must have paid at least one contribution prior to turning 56 years of age. It is important to note that when a spouse is assessed by the Department and qualified to back pay PRSI for earlier years, the PRSI then collected includes, in the majority of cases, PRSI for years prior to the applicant’s 56th birthday.
In the letters sent out to applicants informing them that they will not qualify for the pension, the Department has, as Deputy Creed noted, only referred to subsections 110(1)(a) and 110(1)(b) of the Social Welfare Consolidation Act 2005. There is no reference to subsection 110(2) which states:
In other words, the Minister has the power to overturn this decision in respect of those persons who have made contributions. At the very least, those who have already been awarded a pension should retain that entitlement.
Deputy Barry Andrews: I am taking this Adjournment matter on behalf of the Minister for Social and Family Affairs. Spouses who are actively engaged in a commercial partnership, including the operation of a farm, as opposed to simply being the joint owners of a property, are treated as individual self-employed contributors and are thus liable to social insurance contributions. On foot of a programme for Government commitment, an information leaflet, entitled “Working with your spouse: how it affects your social welfare contributions and entitlements”,was developed between the Department of Social and Family Affairs and the Revenue Commissioners to set out the social welfare and tax implications of families co-working in a shared business. It was published on 25 June 2008.
The leaflet clarifies that spouses who operate in a commercial partnership may be brought into the social insurance system, subject to certain criteria. In this way, both spouses incur a liability to pay self-employed PRSI and build up entitlement towards a contributory State pension and other social welfare benefits. Following the above campaign, more than 1,000 applications for commercial partnership status were received, of which 579 applications have been finalised, including 508 that were approved. Applications for pension or benefit are submitted and processed in the usual way.
To qualify for a contributory State pension, several conditions must be satisfied. A person must have at least 260 paid social insurance contributions, with a yearly average of at least ten contributions paid or credited since entry into the social insurance scheme. Applicants must have entered into social insurance before attaining the age of 56 years. In addition, subsection 110(1) of the Social Welfare Consolidation Act 2005 provides that a self-employed contributor shall not be regarded as satisfying the qualifying conditions for a contributory State pension unless he or she has paid self-employment contributions in respect of at least one contribution year before attaining the pensionable age of 66 years and all self-employment contributions payable by him or her have been paid. The above condition in respect of one year’s paid self-employed contributions before reaching age 66 has been in existence since 5 April 1995.
A State pension is a valuable benefit and it is important that the conditions applied ensure that those qualifying for payment have an adequate and sustained history of contributions to the social insurance fund over their working lives. Approximately 268 applications for a contributory State pension have been received under this scheme. Following a review of these pension claims, it was discovered that several individuals who had been in receipt of a pension did not satisfy the condition whereby they were required to have paid at least one year’s self-employment contributions before reaching age 66. As they did not satisfy this condition, they have been notified that their claims have been disallowed from the date of pension award. To date, 97 claims for contributory State pension which were in payment have been disallowed and 16 customers have had their rates reduced. However, following the provision of additional information by some customers and further investigation in conjunction with Revenue, ten of the 97 cases above have had their payments reinstated. A further 46 customers have failed to satisfy the qualifying conditions and accordingly their claims have been refused. One further case is currently under investigation. Overpayments will be determined in the above cases and the customers will be notified and requested to repay the amounts involved. However, a recovery officer may reduce or cancel an overpayment based on the circumstance of an individual case, in line with the governing legislation.
There are 121 additional applications for commercial partnerships currently being processed by the scope section of the Department where the persons concerned have not paid any self-employment contributions prior to reaching age 66. If a favourable partnership decision is reached these persons may incur a PRSI liability for the years in question. These customers will not satisfy the condition that they paid self-employment contributions prior to reaching age 66. Last week the Department contacted all applicants to advise them of the position and to ascertain whether they wish the Department to continue its investigation or if they wish to withdraw their application.
While the publication of the leaflet to which I referred clarified existing procedures in regard to the recognition of commercial partnerships between husbands and wives for social insurance purposes, including retrospective payment of social insurance, it did not involve a change in existing policy or administration. In particular, the clarification of the position did not alter people’s potential entitlements, and all applicants for the contributory State pension must continue to satisfy the eligibility conditions contained in legislation.
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