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Department of Social and Family Affairs

An Roinn Gnóthaí Sóisialacha agus Teaghlaigh

Report to the Special Group on


Public Service Numbers and
Expenditure Programmes
- April 2009
Contents

Chapter No. Page No.

Chapter 1 Overview ................................................................................ 5

Chapter 2 Significant Issues affecting a number of payments or


programmes............................................................................. 20

Chapter 3 Social Insurance System ........................................................ 31

Chapter 4 Details on Main Programmes

Programme 1 – Children & Families


Child Benefit.............................................................................. 41

Back to School Clothing & Footwear Allowance........................ 43

School Meals Scheme............................................................... 44

Family Income Supplement ....................................................... 45

Programme 2 – People of Working Age


Sub-Programme: Illness ............................................................ 49

Sub-Programme: Carers ........................................................... 57

Sub-Programme: One-Parent Family Payment & Widow/er’s


Non-Contributory Pension ......................................................... 65

Sub-Programme: Jobseekers.................................................... 69

Sub-Programme: Employment Support Services ...................... 73

Sub-Programme: Other Schemes ............................................. 76

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Programme 3 – Retired & Older People
State Pension (Contributory)/State Pension (Transition) ........... 78

State Pension (Non-Contributory) ............................................. 81

Widow/er’s Contributory Pension .............................................. 83

Free Travel & Household Benefits Scheme............................... 84

Programme 4 – People with Disabilities


Invalidity Pension ...................................................................... 89

Disability Allowance................................................................... 91

Blind Pension ............................................................................ 93

Disablement Benefit .................................................................. 95

Programme 5 – Poverty & Social Inclusion


Fuel Allowance Scheme ............................................................ 98

Basic Supplementary Welfare Allowance .................................. 100

Rent Supplement....................................................................... 102

Mortgage Interest Supplement .................................................. 104

Exceptional & Urgent Needs Payments..................................... 105

Programme 6 – Identity Management & Secure


Access to Services ....................................... 108

Programme 7 – Operational Capabilities &


Modernisation .............................................. 114

Chapter 5 Control of Social Welfare Fraud & Abuse ................... 120

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Chapter 6 Agencies

Citizen’s Information Board ....................................................... 129

The Money Advice & Budgeting Service ................................... 132

Family Support Agency ............................................................. 133

Pension Ombudsman ................................................................ 137

The Pensions Board .................................................................. 139

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Chapter 1 – Overview
The Department of Social and Family Affairs

1. The Department administers more than 50 schemes. It processes in excess of 2


million claims per year, makes approximately 1 million payments each week and
a further 500,000 on a monthly basis. There are almost 5,000 people working in
the Department, spread across the 145 offices in 12 headquarters buildings, 62
local offices and a number of inspectors’ offices. In addition, 62 branch offices
provide claim services to the public on a contract basis. In 2007, the budget for
the Department stood at €15.5 billion while this year it will be close to €21.3
billion.

Overview of DSFA supports

2. Ireland’s social welfare system is:


 contingency based,
 delivered predominately through statutory schemes with some
administratively based schemes and
 funded very broadly 50:50 through social insurance and general taxation

3. In general, to qualify for a primary weekly social welfare payment a person must
experience a defined contingency, such as unemployment or lone parenthood, and
satisfy either a social insurance test (for a PRSI based payment) or a means test
(for payments funded through general taxation).

4. There is both an insurance-based and a means-tested payment in respect of many


contingencies, including unemployment, widowhood, old age etc. All social
insurance schemes, such as Jobseeker’s Benefit, most of the means tested
schemes, such as Jobseeker’s Allowance, and the more significant general
arrangements underpinning the system (such as definitions of employment and
unemployment, increases in respect of household dependency relationships, the
treatment of capital and various types of income etc.) are provided for in the
Social Welfare Act.

5. The main exceptions to the contingency model outlined above are the Child
Benefit scheme, which is virtually universal (i.e. there is no social insurance or
means test), and Supplementary Welfare Allowance (SWA), which is a means
tested general guarantee of minimum income not linked to any specific
contingency. Both of these schemes are statutory and may be paid to qualified
people in addition to other primary payments such as Jobseeker’s Benefit or
Allowance.

6. In addition, the Household Benefits Package is available to all persons aged 70


and over, regardless of social welfare status or otherwise or the composition of the
household. Finally, the Respite Care Grant is payable to all persons providing full
time care and attention without a means test or the necessity to be in receipt of a
carer’s weekly payment from DSFA.

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7. Well over one million people receive a primary weekly social welfare payment,
such as State Pension, Jobseeker’s Allowance, Widow’s pension, One-Parent
Family Payment, Disability Allowance or Carer’s Allowance in any given week.
The estimated average number of recipients per week for 2009 is 1,336,500.

8. In most cases, payment is made at the appropriate personal rate in respect of one
adult but increases are expected to be paid in respect of 173,500 dependent adults
and 463,000 dependent children.

Typical payments

9. The most typical social welfare payment is the €204.30 per week personal rate
paid on most schemes to people of working age. For example, this is what the
majority of people on the Live Register receive in Jobseeker’s Benefit or
Jobseeker’s Allowance. It is also the most typical rate of payment issued to people
on Disability Allowance, One Parent Family Payment, Illness Benefit, Farm
Assist, PRETA and Widow’s Non Contributory Pension. For most people, this
comprises their total income from the social welfare system.

10. In a minority of cases, increases are paid in respect of a dependent adult (spouse
or partner), typically €135.60 per week, and/ or one or more dependent children at
a payment rate of €26 per week in respect of each child.

11. Additional payments, sometimes known as secondary benefits, may also be paid
in certain circumstances.

12. Fuel Allowance is the most common additional payment in terms of the number
of recipients. Fuel allowances are paid to some 300,000 long-term social welfare
recipients during the winter heating season (start of October to end of April). The
allowance is €23.90 per week in urban areas1 where the sale of bituminous coal is
banned and €20 elsewhere.
13. The most significant additional payment in terms of the value to the individual
recipient is SWA-Rent Supplement. This payment aims to ensure that qualified
private sector tenants have sufficient income to meet their daily basic needs after
paying their rent. In general, it is paid at a rate that results in the recipient’s total
post-rent income being €24 below the relevant primary weekly social welfare
payment for a household in their circumstances.

14. Over 84,000 people receive Rent Supplement at present, about one third of whom
are on the Live Register.

15. In general, Rent Supplement is paid at a rate that results in the recipient’s post-
rent income being €24 below the relevant primary weekly payment rate for a
household in their circumstances e.g.
 €180.30 for a single person,
 €206.30 for a lone parent with one child,

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125,000 of the 300,000 recipients receive this higher rate.

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 €232.30 for a lone parent with two children,
 €315.90 for a couple with no children,
 €342.90 for a couple with one child,
 €367.90 for a couple with two children.

16. Other payments, such as SWA Diet, Heating and other supplements, Exceptional
Needs Payments, Child Benefit, Back to School Clothing and Footwear
Allowance etc. may also be payable. These are paid in addition to basic weekly
payments and in addition to any of the other additional payments for which an
individual or household qualifies.

Social Insurance
17. Social Insurance plays a key role in the provision of social protection in Ireland.
The PRSI system draws together a relationship between the employment or self-
employment status and the rate of contribution payable and benefits or pensions
receivable as a result of these contributions. Today’s contributors support both
past and current contributors while also ensuring their own future security by
building up entitlement to later benefits and pensions and paying into a
mechanism which redistributes income over one’s own lifetime.

18. Traditionally, social insurance spending has been funded on a tripartite basis –
with contributions coming from the Exchequer, employers and employees. In
2007 the breakdown was as follows:

o Employer PRSI – 74%;


o Employee PRSI – 20%;
o Self-employed PRSI – 5%;
o Investment income and other receipts – 1%

General Government Deficit


19. The current fiscal crisis as measured by the GGD (General Government Deficit)
has both a revenue component and an expenditure component. Both of these have
in turn a cyclical component and a structural component. The former relates to
the impact on spending and revenue of the fact that the economy is currently well
below potential growth, while the latter refers to the remainder which is
determined by the structure of spending programmes and revenue raising
measures in the economy. For instance, both entitlement conditions and payment
rates for benefits would be regarded as structural components on the spending
side, whereas the current high numbers of persons on the LR would be regarded
as cyclical. On the revenue side, lower PRSI income linked with lower
employment levels would be regarded as cyclical where the longer term under-
funding programme of the social insurance fund would be regarded as structural.
These four elements are summarized as follows:

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Possible Structural factors Cyclical factors
Expenditure Appropriateness of payment rates High levels of unemployment
Eligibility conditions too low
Insufficient movement off payments
Administration costs too high
Revenue Contribution rates too low Low levels of unemployment
Contribution base too narrow Depressed wage levels

DFSA Expenditure 2002 – 2009


20. The following table shows gross and net DSFA expenditure from 2002.

Net Net
Total Total Expenditure Expenditure
Expenditure GDP Expenditure as SIF (Less SI as % of
(€000) (€000)(1) % of GDP Income(2) Income) GDP

2002 9,450,208 130,190,000 7.3% 4,978,243 4,471,965 3.4%

2007 15,518,907 190,603,000 8.1% 7,833,137 7,685,770 4.0%

2008 17,711,400 185,721,000 9.5% 8,143,696 9,567,704 5.2%

2009 21,271,400 171,500,000 12.4% 7,571,068 13,700,332 8.0%

(1) Source 2002-2008 CSO National Accounts. 2009 Supplementary Budget Booklet Page C.8
(2) Source 2002- 2007 Annual Statistical Reports. 2008 & 2009 Supplementary Budget Brief

While the period from 2002 to 2007 saw significant nominal increases in both
gross and net expenditure, the proportion of both did not increase significantly as
a proportion of GDP. However, the period since 2007 has shown significant
increases in nominal terms and as a proportion of GDP. Gross expenditure is
projected to increase by around €5.7 billion over the period (or about 4.3% of
GDP) while net costs are expected to be up around €4.2 billion.

However, increased expenditure in payments to jobseekers comprises about €3.2


billion of this increase, as follows:

Expenditure on
Jobseeker’ Expenditure on
Total Expenditure Benefit/Allowance Administration All Other
(€000) (€000) (€000) Expenditure (€000)

2002 9,450,208 935,472 367,974 8,146,762

2007 15,450,829 1,420,369 495,958 13,534,502

2008 17,712,364 2,079,886 513,419 15,119,059

2009 21,271,323 4,616,620 552,179 16,102,524

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In this regard, it should be noted that increased expenditure on payments to
jobseekers does not capture all of the costs of higher unemployment. The latter
increases expenditure demands on a range of DSFA schemes such as Rent
Supplement, Mortgage Interest Supplement and Fuel Allowances as well as
Exceptional and Urgent Needs payments under the SWA scheme. In addition,
some recipients of non-jobseeker’s payments (generally lower income part-time
workers) also experience unemployment and the cost of same is often reflected in
higher costs on other payments such as One Parent Family Payment and
Disability Allowance. These cyclical costs are more difficult to quantify.

Decomposition analysis 2002 – 2009


21. A detailed analysis of the increase in spending from 2002 to 2009 (using the
Supplementary Budget projections) has been carried out at scheme level using a
“decomposition analysis”. This approach attributes the change in spending
(usually an increase) into a number of different components, namely: -

• Changes in social welfare rates changes for payments to recipients,


• Changes in payment rates for dependants,
• Changes in recipient numbers,
• Changes in dependant numbers,
• Other changes which affect average payments made (e.g. changes affecting
assessed means etc),

By applying the 2009 values for each of these parameters to the 2002 values, the
separate effect that these have had on spending in the scheme over the period can
be estimated. The impact of the changes in rates and numbers are therefore
identified separately. However, the sum of these individual changes is somewhat
less than the actual change in expenditure. When these effects are combined, they
“interact” to produce a higher increase than the individual changes on their own.
For example, higher social welfare rates and higher pensioner numbers would
lead to higher spending than either individual change reflecting the fact that there
would be additional numbers of pensioners at higher rates. Therefore the increase
(or decrease in spending in each scheme) can be broken down into its separate
components, which is combined with the "interaction effect" to produce the total
change.

The aim of the decomposition analysis is to show the impact of each of these
factors both separately and in combination so as to arrive at conclusions in
regards to the key drivers of spending.

The drivers of expenditure from 2002 and from 2007 are broken down in the
following table;

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Expenditure % of total Expenditure % of total
2002-2009 increase per 2007-2009 increase
€m component €m per
component
Base expenditure 8,210 13,621
Personal rate increases 5,576 52% 1,090 20%
Dependant rate increases 635 6% 192 4%
Increased recipients 3,703 34% 3,378 62%
Increased dependants 484 5% 523 10%
Other factors 367 3% 171 3%
2009 expenditure 18,975 18,975

As can be seen, increases in payment rates over the period from 2002 account for
the majority of the increase while the position is almost exactly reversed since
2007(largely reflecting the impact of higher unemployment).

Backdrop to Increased Expenditure


22. Increases in expenditure and, to a lesser extent, recipient numbers over the period
since 2002 must be considered in the context of the Government commitments
over that period. Over the period 2002 to 2007, key commitments were:

 “We will increase the basic State Pension to at least €200 by 2007.” (APG)

 “We will introduce a personal entitlement for pensioner spouses currently in


receipt of the Qualified Adult Allowance (QAA), set at a level of a full Non-
Contributory pension.” (APG)

 “To achieve a rate of €150 per week in 2002 terms for the lowest rates of social
welfare to be met by 2007…….” (NAPS)

 “We will complete our announced programme of multi-annual increases in Child


Benefit and ensure that the combined value of child support is increased in line
with our commitment under the National Anti-Poverty Strategy. (APG)

 “We will expand the income limits for the Carer’s Allowance so that all those on
average industrial income can qualify.” (APG)

 “We will implement significant increases in the value of the respite grant for
carers.” (APG)

By 2007, the level of the contributory pension was €209 per week with the non-
contributory rate at €200 in line with the commitment. While there was no
specific commitment as to how the lowest rates of payment would be indexed, by
2007 the rate has reached a level of not less than 30% of Gross Average Industrial
Earnings (the level which some of the social partners had maintained was implicit
in the commitment). The 2001 commitment to significantly increase Child Benefit
was fully met during the period while the commitments to carers were also

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achieved. In addition, a wide range of other improvements were introduced,
particularly over Budgets 2006 to 2008 inclusive.

An Agreed Programme for Government, 2007 to 2012, contains, inter alia,


commitments to raise pension levels to €300 per week by 2012 and to maintain
the value of the lowest rates of payment. Progress on both was made in Budgets
2008 and 2009.

Poverty Impact of Social Transfers

23. The Survey on Income and Living Conditions (SILC) in Ireland is a voluntary
survey of persons living in private households. The primary focus of the survey is
the collection of information on the income and living conditions of the
population, from which indicators on poverty, deprivation and social exclusion
are derived. The data here is based on the results from the survey based on data
collected in the period December 2006 to November 2007.

24. At State level, social transfers represented just over 20% of gross household
income. But there was wide variation in the contribution made by social transfers
across the income distribution.

25. Social transfers represented over 91% of the gross household income of
households in the lowest income decile and between 70% and 80% of gross
household income of households in the second and third income deciles. By
comparison, social transfers represented approximately 7% of gross household
income of households in the top two income deciles.

Composition of gross household income classified by income decile,


SILC 2007

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26. When social transfers are included in income the at risk of poverty rate for 2007
was 16.5%, but when they are excluded the at risk of poverty rate increases to
41%. See table below.

27. The greatest reliance on social transfers can be seen among older people where
the at risk of poverty rate before social transfers was 86.2% in 2007, dropping to
16.6% when all social transfers are included. This was clearest among older
people living alone where the at risk of poverty rate excluding social transfers was
96.0%, falling to 24.3% once social transfers were included.

28. Social transfers also had a high impact for members of lone parents households,
where the at risk of poverty rate excluding social transfers was 75.1%, falling to
37.6% once social transfers were taken into account.

Social welfare rates of payment against benchmarks, 2002-2008

29. Social welfare rates increased at a significantly higher rate that the main income
benchmarks for welfare (earnings and prices) over the 2002-2008 period. The
increase in the lowest rates was higher than for other payment levels so that, for
example UA/JA increased by 67 per cent and OACP/SPC increased by 52% from
2002-2006. CPI and Average Industrial Earnings increased by 23 per cent and 30
per cent respectively over the same period. This risk of poverty (ROP) line is
often used as a benchmark for welfare levels, and the UA/JA personal rate
increased from 71 to 81.5 per cent of the risk of poverty line over the 2003-2007
period. Given the importance of social welfare in incomes of people below the
ROP line, as mentioned in the poverty impact of social transfers, the ROP rate is
very sensitive to social welfare levels. This is particularly evident in risk of
poverty rates for the elderly, as they are heavily dependent on social welfare (98
per cent of people aged over 65 are beneficiaries of social welfare) and their
payment levels are close to the ROP line.

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Comparison of social welfare rates of payment against benchmark indicators
2002 2003 2004 2005 2006 2007 2008
CPI 102.7 106.3 108.6 111.3 115.7 121.3 126.3
Average Industrial Earnings* €501.51 €535.74 €560.77 €580.88 €601.21 €627.24 €650.45
UA/JA €118.80 €124.80 €134.80 €148.80 €165.80 €185.80 €197.80
OACP/SPC €147.30 €157.30 €167.30 €179.30 €193.30 €209.30 €223.30
Risk of poverty line (60% median) €175.77 €185.51 €192.74 €202.49 €227.86 n/a
UA/JA as % of ROP line 71.0% 72.7% 77.2% 81.9% 81.5% n/a
OACP/SPC as % of ROP line 89.5% 90.2% 93.0% 95.5% 91.9% n/a
Risk of poverty rate 19.7% 19.4% 18.5% 17.0% 16.5% n/a
Risk of poverty rate for 65+ 29.8% 27.1% 20.1% 13.6% 16.6% n/a
*New series from 2008 on - Earnings and Labour Costs Survey - percentage increase in 2008 applied to 2007 data

Delivery systems
30. Most social welfare payments are delivered directly by the Department. The main
exceptions are Supplementary Welfare Allowance, which is administered by the
Health Service Executive on behalf of the Department, and aspects of the
Jobseeker’s Benefit and Jobseeker’s Allowance schemes in certain parts of the
State, which are administered by Branch Offices under contract to the
Department.
31. The Department pays agency fees to An Post, in respect of payment provision at
Post Offices, and to the Revenue Commissioners, in respect of the collection of
the Pay-Related Social Insurance contributions.

Administrative effort associated with programmes


32. The total amount of administrative effort absorbed by these programmes varies
considerably from scheme to scheme. The overall number of recipients is not a
good indicator of the effort absorbed, as most of the effort required is associated
with processing new entrants and to a lesser extent, leavers and changes in
circumstances. The level of this and other claim activity varies considerably
across the range of schemes, with some schemes having more throughput than
others.

33. For example, there is a significant level of both inflows and outflows to and from
Jobseeker’s Benefit and Allowance, Illness Benefit and Supplementary Welfare
Allowance during the course of a year. In addition, the level of claim activity can
vary significantly over the medium term, as for example with the Live Register,
whereas a lower and more consistent level of inflows and outflows is observed in
schemes such as State Pension, Widows Pension and Child Benefit.
34. The Live Register increased by 120,987 during 2008, rising from 170,376 at the
beginning of January 2008 to 291,363 at the end of December 2008. This
reflected the net effect of 449,895 inflows and 328,908 outflows during the year.
The comparable figures for 2007 were 298,217 inflows and 281,230 outflows.
35. Similarly, the number of people paid basic weekly Supplementary Welfare
Allowance increased by 8,220 during 2008, rising from 27,245 at the beginning of
January 2008 to 35,465 at the end of December 2008. This reflected the net effect
of 113,511 inflows and 105,291 outflows during the year. The comparable figures
for 2007 were 84,302 inflows and 82,317 outflows.

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36. The total volume of claim activity has increase during the period under review.

Claims Decisions
Number Claims Claims Received Decisions Made Per
Staff as Decisions
of staff Claims received Decisions Received Per Staff Made Per Staff
Date % of as % of
(posts) received as % of by year Per Staff Member Staff Member
2003 2003
serving 2003 Member as a % of Member as a % of
2003 2003

Dec-
4306.43 100% 1,743,902 100% 1,737,072 100% 405 100.00% 403 100.00%
03
Dec-
4285.67 99.52% 1,849,923 106.08% 1,822,163 104.90% 432 106.59% 425 105.41%
04
Dec-
4280.98 99.41% 1,882,104 107.92% 1,863,953 107.30% 440 108.57% 435 107.94%
05
Dec-
4317.03 100.25% 2,017,770 115.70% 2,017,162 116.12% 467 115.42% 467 115.84%
06
Dec-
4438.93 103.08% 2,137,844 122.59% 2,067,469 119.02% 482 118.93% 466 115.47%
07
Dec-
4539.00 105.40% 2,346,099 134.53% 2,334,923 134.42% 517 127.64% 514 127.53%
08

% Staff Vs. % Claims Received & % Decisions Per Capita

130% Staff as % of 2003

125%
Claims Received Per Staff
Member as a % of 2003
120%
Decisions Made Per Staff
115% Member as a % of 2003

110%
105%
100%
95%
2003 2004 2005 2006 2007 2008

Options for Change


37. A range of options for changes in schemes and services have been identified by
scheme (or blocks of schemes). These are not being advanced as the proposals of
the Department but as items which might be technically feasible within the
parameters of given schemes or across schemes.
These tend to fall into a number of categories, including: -

• Tightening the eligibility criteria for a scheme such as more stringent social
insurance contribution requirements;
• The extension and/or the standardisation of means testing in relation to the
payment of increases of social insurance based payments;

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• Changes to the means testing arrangements for social assistance payments;
• Adjustments to allowances such as the Household Benefits Scheme and
[TEXT WITHHELD – SECTION 20];
• A range of changes specific to a particular scheme or groups of schemes.

It should be noted that some of the options are mutually exclusive while others
interact with each other (often in a complex way). Finally, some options may
conflict with wider Government policies e.g. to promote employment, education
or training.

Key Options for Change


38. Key issues which transcend individual schemes and which, in some cases, would
have a direct impact in expenditure on other Votes or to Exchequer are dealt with
in Chapter 2. These relate to:
(a) changes in rates of payment;
(b) [TEXT WITHHELD – SECTION 20];
(c) concurrent receipt of more than one primary payment e.g. half-rate Carer’s
Allowance, half-rate JB/IB paid with OPFP, Widow/er’s payments;
(d) The payment of Family Income Supplement concurrently with some primary
welfare payments as well as the concurrent entitlement to some primary welfare
payments for persons in receipt of schemes operated by other bodies such as the
Community Employment scheme;
(e) Cross-cutting means testing issues;
(f) Non primary payments e.g. Rent Supplement, [TEXT WITHHELD –
SECTION 20], Treatment Benefits, [TEXT WITHHELD – SECTION 20] etc.
(g) The transfer of functions from the health sector to DSFA.

 Issues relating to Social Insurance are dealt with in Chapter 3.


 Chapter 4 deals with all of the major schemes operated by DSFA, details
the key features including expenditure and recipient trends as well as
outlining options for change.
 Chapters 5 and 6 look at Control Issues and the Department’s Agencies,
respectively.

Impacts of the abolition of schemes


39. The Group has specifically requested proposals relating to scaling back or fully
discontinuing each programme operated by the Department. While the options
outlined in the various chapters would involve a scaling back, to a greater or
lesser extent, of expenditure on individual schemes or groups of schemes,

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consideration of the abolition of schemes is, in general, quite a complex issue for
a range of reasons. These include:

• The role of most weekly schemes in providing weekly income maintenance to


persons without which most would have no or very little income (as outlined
above).

• The underlying and long standing social insurance principle that, on foot of
payment of contributions by employees/employers, protection is provided on a
non-means tested basis if and when a range of contingencies occur e.g. illness
or unemployment;

• In the event of the abolition of a given social insurance payment, persons


would have access to a social assistance payment for the equivalent
contingency, e.g. Jobseeker’s Allowance in the case of unemployment. While
not all would qualify due to means testing, many would thereby reducing the
overall savings quite significantly;

• Greater reliance on means testing would have significant resource


implications, particularly in the context of high unemployment levels;

• In the event of the abolition of a social assistance payment, it is probable that


all potential recipients of the given scheme would qualify under another
contingency or for SWA, the scheme based on need. Savings, accordingly, are
likely to be very limited.

Alternative Approaches
40. An alternative approach to abolition of schemes is the merging of schemes or
adjustment of the range of application of certain schemes. An example might
include the merging of Blind Pension with Disability Allowance.

Impact and Deliverability of Changes Generally


41. The deliverability of changes is critical, both in terms of public acceptability and
logistics
a. It is much easier to get public acceptance of change if it affects new claims
only – it is very difficult to deal with public reaction to the withdrawal of
payments from individuals and households that are currently receiving
payments that are withdrawn: this has in the past led to the reversal of
some measures;
b. Applying changes to new entrants only clearly reduces the savings in the
period immediately after implementation. However, the proportion of
claims eventually affected, and the length of time that elapses before they
are affected, varies considerably from scheme to scheme. There is a
considerable level of “churn” in many schemes and consequently, rules
affecting new entrants only will affect most or all recipients within a
reasonable period. This is particularly so in schemes with prescribed end
points (such as JB, IB and most obviously Maternity Benefit) but is also

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true in schemes with no prescribed end points, such as JA and SWA-Rent
Supplement. However, the saving of existing recipients in the latter type
schemes means that, effectively, two different sub-schemes would exist
often for a considerable period; this is undesirable from an administrative
point of view.
c. Changes that are difficult to implement for logistics reasons, however
apparently desirable from a policy or other perspective, will not simply not
deliver savings in the short term. If the difficulties are considerable and
resolutions protracted, such changes can induce negative behaviour effects
(e.g. because of perceived or actual disincentives) and lead to higher costs
(e.g. if people opt to remain on social welfare rather than progress to other
options).

International Comparators
42. It is difficult to make direct meaningful comparisons with social welfare systems
in other States because of profound differences in the systems and in the socio-
economic environment in which they operate. In many countries, social insurance
is administered entirely separately from social assistance and in some instances by
multiple separate agencies. Because of the obvious historic reasons, and because
we share a land border with them, comparisons are often made with the UK.
However, substantial differences exist even between the UK and Irish systems, for
example in relation to how child supports or pensions are provided.

43. Some of issues relating to any direct comparisons between the UK and Ireland
include:

I. 17% of UK population was aged 65 and over in 2005 compared to 11% in


Ireland.2

II. UK insurance coverage was far wider than Ireland’s prior to the 1970s/1980s.
This means that more people qualify for contributory pensions in the UK.

III. Per Eurostat, the UK spent 26.8% of GDP on social protection (in its widest sense
including health expenditure3) in 2005 or 118 per capita in PPS terms while
Ireland spent 18.2% or 96 per capita.4 The EU average was 27.2%. While the
differential is likely to have further narrowed in recent years, Irish expenditure on
social protection generally is not out of line with the UK.

IV. The recent weakness in sterling; the currency conversions used below are those
which applied at April 6 last when £1 was equivalent to €1.103. This is very low
when compared with the average over the past five years thereby tending to
overemphasise the disparity in the differences in rates between the two countries.

2
Source: Eurostat.
3
Social protection does not include the cost of tax reductions such as income tax relief for occupational
and personal pensions.
4
The Irish figure is equivalent to approximately 21.5 % of GNP – this would be a better measure of the
Irish level of expenditure given that GNP is less than GDP unlike the situation in most other countries
including the UK.

17
V. In any event, relative prices for goods and services are 47% higher in Ireland in
the UK based on current exchange rates.

(http://www.oecd.org/dataoecd/48/18/18598721.pdf)

UK and Irish Pension Rates of Payment.


44. The Irish Contributory Pension rate is €230.30 per week while the Non-
Contributory rate is €219. The UK Basic State Pension Contributory is £95.25 per
week (€105.06). However, this is a somewhat simplistic comparison in that the
UK system, in reality, pays a higher level of pension. Firstly, the UK has an
earnings related contributory pension top-up known, since 2002, as the Second
State Pension (this replaced the State-Earnings Related Pension Scheme -
SERPS5). The amount of second pension will vary depending on the level of
earnings when working.

Secondly, every person aged 60 or over living in the UK is entitled to a minmium


level of income support, set at a level in excess of the Basic State Pension. This is
known as the Pension Credit. Pension Credit is means tested and guarantees
everyone aged 60 and over an income of at least:

• £130 a week if single – equivalent to €143.39 per week.

Once a UK pensioner qualifies for Pension Credit it may mean s/he can get help
with Housing Benefit and Council Tax Benefit.

UK and Irish Unemployment Rates of Payment


45. The Irish Jobseeker’s Benefit/Allowance rate is €204.30 per week with the UK
equivalent payable at £60.50 or €66.73 per week. Persons in the UK do not have
any liability for Council Tax if solely dependent on welfare.

A lower rate of Jobseeker’s payment is made (at about 80% of the main rate) in
the UK where a person is aged under 25. From May 2009, a lower rate of
Jobseeker’s Allowance will be payable (at about 50% of the main rate) to most
recipients aged 18 and 19 in Ireland.

UK and Irish Child Income Support Rates


46. The Irish Child Benefit rate is €166 per month (€38.31 per week) for each of the
first two children and €203 per month (€46.85 per week) for the third and
subsequent children. In the UK, the rate payable for the first child is £20(€22.06)
with £13.20 (€14.56) payable for the second and subsequent children.

5
The SERPS calculation method differs from the Sate Second Pension in some respects.

18
In Ireland, a Qualified Child Increase of €26 per week is payable to persons in
receipt of a welfare payment.6 Parents in the UK can also qualify for additional
child income support. This is income related and is not dependent on being on a
welfare payment. This additional support is delivered through tax credits and can
include a direct cash payment to the parent. The rates of credit are as follows:

UK Child Tax Credits, 2008 -2009 and 2009-20107

Child Tax Credit


Family element £545 - £545
Family element, baby addition £545 - £545
Child element £2,085 +£150 £2,235
Disabled child element £2,540 +£130 £2,670
Severely disabled child element £1,020 +£55 £1,075

The Tax Credit system is somewhat complex. Child Tax Credit includes a family
element and a child element.8 The amounts shown above are the maximum
payable and are reduced as income increases. About 80 to 90% of UK families
with children have an entitlement to some amount of the family element of the
Child Tax Credit – the child element is withdrawn at lower income levels.

In the case of welfare dependent families, the amount of child income support
available to an unemployed Irish or UK person with a child aged 8 years of age
would be as follows:

IRELAND € per week UK € per week


Child Benefit 38.31 Child Benefit 22.06
Increase for 26.00 Child Tax Credit- 11.56
Qualified Child Family Element
Back To School, 3.46 Child Tax Credit- 47.41
Clothing and Child Element
Footwear.
Total 67.77 81.03

Where a parent in the UK is working and has a child, the Working Tax Credit
may be payable. This credit is income related and the basic element of the
payment amounts to €40.09 per week at a maximum. The Working Tax Credit
also increases in the case of a lone parent, a couple, where the employment is 30
hours a week or more. There is also an additional childcare element of the
Working Tax Credit (where childcare is a factor).

6
A half-rate may be payable where the spouse/partner is not a Qualified Adult. For certain schemes, no
QCI is payable where the spouse/partner’s income is in excess of €400 per week.
7
HM Treasury.
8
There is also an element for children aged under one and for disabled children.

19
20
Chapter 2 – Significant Issues affecting a number of payments
or programmes
Introduction
1. The social welfare system is complex and is influenced by factors that transcend
individual schemes. The most obvious of these is, of course, payment rates. This
and the more significant other factors are considered in this section.

Payment Rates
2. The most direct way in which to achieve significant and immediate savings in
expenditure is to reduce payment rates. [TEXT WITHHELD – SECTION 20 &
SECTION 21]

3. In his Supplementary Budget speech on 7th April the Minister for Finance said
that although payment rates had been increased by 3% in the previous Budget
(October 2008), and consumer prices are expected to fall by close to 4% this year,
the Government had decided not to reduce welfare rates in the Supplementary
Budget. He also stated that it may be necessary to review rates of payments in
future years if reductions in the cost of living materialise.
4. However, the Group will wish to be aware that each €1 paid in primary weekly
payments costs €72 million in 2009. Up to now, Budget increases in personal
payment rates have been matched by broadly proportionate increases in payments
in respect of dependent adults, which generally are paid at roughly 66% of the
value of the relevant full personal rate.

5. The following Table gives the estimated full year value of a change of €1 in the
main payment categories:

21
Change of €1 per week in Weekly Rate Cost/Saving €m
of Payment
Full Year

Personal Rate of Payment – 66 and Over 20.9

Qualified Adult Rate of Payment – 66 and 2.7


over – Proportionate Decrease

Personal Rate of Payment – under 66 44.9

Qualified Adult Rate of Payment – under 3.8


66 – Proportionate Decrease

Total Personal & QA Rates 72.3

Qualified Child Increase (QCI) 21.4

Child Benefit ( € 1 per month) 14.1

Living Alone Allowance 8.8

Over 80 Allowance 6.6

National Fuel Scheme 9.0

Smokeless Fuel Scheme 3.7

Respite Care Grant (change of €100 per 6.6


annum)

December Bonus Payment


6. The annual Estimates normally provided for a December Bonus of 70% of the
weekly rate of payment for a wide range of schemes (but not in the case of some
short-term schemes). Such a level of Bonus was provided for in Budget 2009
announced in October 2008. While a Bonus of 70% was normally provided, since
2000 a Bonus of 100% was actually paid. In the Supplementary Budget
announced in April 2009, it was announced that payment of the Bonus would be
discontinued in 2009 and the REV will reflect this decision.

Child Benefit

7. Child Benefit is not targeted at lower or no income households. However, the


universal payment approach of child benefit retains significant advantages when
one considers both horizontal equity objectives and the need to minimise labour
market disincentives in the social welfare system. Nonetheless, even despite the
relatively high level of CB, there remains an important role for targeted measures

22
(Family Income Supplement, increases in primary weekly payments in respect of
qualified children and the Back to School Clothing and Footwear scheme) in the
systems given the (still) relatively high level of child income poverty. 9

8. For over ten years, Child Income Support policy centred largely on increasing
Child Benefit and reducing the relative importance of targeted child additions to
social welfare payments. As a result, Child Benefit increased from 29% of the
total CB/QCI payment for a four-child family in 1994 to almost 60% this year.
This policy, which was reversed in last year’s Budget, was informed primarily by
the desire to avoid the employment disincentives associated with targeted
payments. DSFA is undertaking an Expenditure and VFM review of child
income support policy during 2009 which will consider the best balance between
universal and targeted measures in terms of horizontal objectives, poverty
alleviation, labour market incentivisation and other objectives.

Payment of Child Benefit on a more Selective Basis

9. [TEXT WITHHELD – SECTION 20]

View of DSFA
10. [TEXT WITHHELD – SECTION 20]

Means/Income Testing CB
11. [TEXT WITHHELD – SECTION 20]

Taxation of Child Benefit


12. [TEXT WITHHELD – SECTION 20]

Other Taxation Issues


13. [TEXT WITHHELD – SECTION 20]

Concurrent receipt of more than one primary social welfare payment

14. In general, a person is entitled to receive only one primary weekly payment at any
given time. However, there are some exceptions to this:
i. Half-rate Carer’s Allowance paid with all other personal social welfare
payments other than jobseekers’ payments and with all Qualified
Adult payments (including jobseeker’s payments). ,
ii. Half-rate Jobseeker’s Benefit or Illness Benefit, paid with Widow’s
pensions, One-Parent Family Payment (and associated payments such
as Deserted Wives Benefit which are now closed to new entrants) etc.

9
Early Childcare Supplement is paid by DSFA on behalf of the Office of the Minister for Children.
Policy responsibility for the scheme lies with that Office and the payment is due to be discontinued
with effect from January 2010 (and replaced by new initiatives on pre-school education).

23
iii. Full-rate Jobseeker’s Benefit, Illness Benefit, Maternity and Adoptive
Benefit, Widow/er’s Pensions, One Parent Family Payment and Health
and Safety Benefit paid with Blind Pension.

15. The provisions at item (ii) and (iii) above are longstanding while the half-rate
carers provision (item i) was introduced in September 2007. Entitlement to item
(ii) was abolished with effect from January 2004 for new claimants but this
measure was reversed with full retrospection in April 2004. The estimated total
value of the additional half-rate payments paid each year is set out in the
following Table:

Item: Cost €m Numbers of Note re Primary Payment


full year Recipients
Half-Rate Carer’s 60 to 70 16,400 See table in Chapter 4.
Allowance
Half Rate Illness 12.7 2,350 75% are OPFP/DWB
Benefit recipients, balance on
widow/er’s payments.
Half rate 18.1 3,500 63% ore OPFP/DWB
Jobseeker’s recipients, balance on
Benefit widow/er’s payments.
Full rate Illness 1.2 200 All Blind Pensioners
Benefit
Full Rate Minimal 10 All Blind Pensioners
Jobseeker’s
Benefit

16. The value of the other additional full rate payments paid to Blind Pensioners is
low. One of the options for the Blind Pension is to merge it into the Disability
Allowance scheme for new claimants – DA does not attract additional
entitlements to full or half-rate payments (other than half-rate Carer’s Allowance.

Concurrent receipt of primary payments and Family Income Supplement

17. FIS is not payable to a person participating in or in receipt of the Community


Employment Scheme payment, Part Time Job Opportunities Scheme payment, the
RSS scheme, Jobseeker's Benefit/Allowance, State Pension (Transition) and Pre-
Retirement Allowance.

However, it may be payable concurrently to persons in receipt of One-Parent


Family Payment, Deserted Wife's Benefit, Widow's or Widower's Contributory
Pension and Disability Allowance/Blind Pension. .

The issue has arisen as to whether concurrent entitlement to a primary payment


and FIS acts as a barrier to the take up of full time employment, despite

24
encouraging people to engage in part-time work of 19 hours per week or slightly
in excess same).

An analysis of hours worked based on a random manual sample of 526 FIS


recipients conducted in February 2008 found that:

o 35% of all recipients were recorded as working either 19 or 20 hours weekly


with a further 13% working 21 to 25 hours per week giving a combined total
of just under half of all FIS recipients who work 25 hours or under per week.

o 5% of recipients were recorded as working 26 to 30 hours weekly with a


further 7% working 31 to 35 hours weekly and 35% working 36 to 40 hours
weekly.

o 32% of all FIS payments are made to females who are also in receipt of OPFP
payments.

One approach to encourage people to move to full-time employment (or close to


full-time employment) might be to discontinue entitlement to a primary SW
payment and FIS simultaneously. However, the issues involved are complex for
the groups who might be affected (including childcare and personal capacity
constraints). As a consequence, such an approach might result in more limited
participation that currently exists.

An alternative approach might be to confine eligibility to FIS to persons who


work 30 hours a week or more, thereby reflecting the original FIS conditions.
Persons working less than 30 hours per week would continue to benefit from the
existing disregards and tapering arrangements applying to the primary scheme.

Concurrent receipt of primary payments and FAS schemes


18. What may be perceived as an analogous situation arises with the Community
Employment (CE) scheme operated by FÁS. CE participants receive an allowance
of €228.70 per week from FÁS, plus increases of €135.60 per week in respect of
any adult dependent they may have and €26 per week in respect of any child
dependent. These are equivalent to primary social welfare payments. As CE is
insurable employment and subject to labour law (minimum wage requirements
etc) income received from it is assessed against persons on means-tested benefits
in the same manner as income received from any other employment. Accordingly
in certain circumstances a participant on CE may continue to receive a reduced-
rate primary social welfare payment.

19. People on Jobseeker’s Benefit/ Allowance who take up these opportunities leave
the Live Register as they are obliged to do as they no longer meet the relevant
statutory requirements. Parallel payments do not therefore arise in their case.
People on other payments, such as One-Parent Family Payment or Disability
Allowance, may continue to receive a reduced rate payment provided they
continue to meet the relevant statutory requirements for those schemes.

25
20. In the case of One-Parent Family Payment (OFP), the first €146.50 per week of
employment income is disregarded in full and half of any balance between that
and €425 per week is also disregarded. Income from Community Employment
(CE) is employment income for these purposes. For example, a lone parent with
one child who receives €254.70 per week on a CE scheme (€228.70 plus €26
child allowance) is regarded as having means of €54.10 for OFP purposes and
consequently, receives €182.80 per week in OFP (as opposed to the maximum
rate of €230.30) in addition to the €254.70 from CE, bringing the total income to
€437.50. This method of assessment would be the same if income received was,
as mentioned above, derived from any other form of insurable employment. There
is however one difference; persons who are employed on a CE scheme are not
entitled to Family Income Supplement and therefore, assuming similar
circumstances, a person in open labour market employment receives more money
per week in total than a person on CE.
21. If SWA Rent Supplement is in payment, the amount paid is reduced to take
account of the additional income. The first €75 per week is disregarded in full and
25% of the balance above that, ensuring that the recipient is better off compared
to the position prior to taking up the CE place. In the particular example given, the
person is still €108 better off after the SWA-Rent Supplement is reduced by
€99.70.

22. When social welfare recipients take up education or training opportunities, they
may qualify for training allowances or education grants from the service providers
in question. In cases where the person has a continuing eligibility for a weekly
social welfare payment, the income from these external supports is treated in
accordance with terms of the relevant social welfare scheme, as provided for in
the Social Welfare Act for the most part.
23. As mentioned earlier, non-primary payments, such as Rent Supplement, Fuel
Allowance, Treatment Benefits, Respite Care Grant etc. are paid with primary
payments and with FAS allowances, as appropriate.

Cross-cutting means testing issues


24. For means testing purposes, the weekly value of property (including capital) and
cash income is assessed. While there is a great deal of commonality in the
arrangements across schemes, there are significant differences. These are:
i. Differences in the value of capital/property to be disregarded;
ii. Varying amounts of earnings from employment disregarded and
differing assessments rates for any balances;
iii. Differing administrative disregards across schemes, many developed
on an ad hoc basis.
iv. Specific disregards of income from specified sources.

Capital/ Property
25. The first €50,000 of the value of property/capital is disregarded for means test
purposes for Disability Allowance. €5,000 is disregarded in the case of SWA
while a disregard of €20,000 applies in the case of all other schemes. While some

26
recipients of all schemes own capital/property, the amounts are, in general, not
very significant. The one exception is in the case of the State Pension Non-
Contributory (for both recipients and disallowed claimants). Any changes
(upwards or downwards) in the disregard for this scheme would involve a
significant administrative overhead.

Earnings
26. The assessment of earnings differs across a range of schemes. The arrangements
for key schemes are as follows:

Scheme Claimant – Qualified Adult – Tapering % (both


Amount Amount where applicable)
disregarded disregarded
JA €20 per day, €20 per day, 60%
maximum €60 per maximum €60 per
week week
DA €120 per week €20 per day, Claimant- 50% up
maximum €60 per to €350 per week.
week QA – 60%
OPFP €146.50 per week n/a 50% - no
entitlement to
OPFP where
earnings exceed
€425 per week.
State Pension Non €200 per week €200 per week None but means of
Contributory a couple are
halved.

27. The individual scheme disregards were introduced with specified policy
objectives e.g. in the case of OPFP to recognise that the cost of childcare may be a
factor in hindering labour force participation. However, there is an argument that
common disregards and tapering arrangements may be appropriate for working
age schemes generally with, possibly, better access to childcare services or a
specific disregard of the vouched cost of same. [TEXT WITHHELD –
SECTION 20]

Administrative Disregards – Home Helps


28. The principal and mostly costly administrative disregard applies in the case of the
assessment of income from a home help. While welfare legislation allows for the
disregard of an amount of earnings as a home help to be disregarded, no amount
has ever been prescribed. However, differing administrative disregards have been
applied on a scheme by scheme basis. In general, most or all income from
employment as a home help by the HSE (or voluntary bodies funded by the HSE)
is disregarded.

29. This was not a major issue when the remuneration of home helps was poor (circa
£2 per hour) and the then scheme disregards would have exceeded most or all of
the income. However, in the early 2000s, the position of home helps changed

27
when they became ordinary HSE employees with enhanced remuneration and
pension rights with a liability to income tax etc. The current salary scale ranges
from circa €27,000 per annum to €32,000. While most home helps are part-time,
some are full time – this has resulted in some social welfare claimants receiving a
payment at the maximum rate of payment while earning around €32,000 per
annum in addition.

30. There is no apparent objective justification for this position vis a vis the treatment
of other income from different employments including other employments in the
HSE. Accordingly, one option would be to remove the administrative disregards
for home help income. In that event, home helps would benefit from the existing
scheme disregards and tapering arrangements, as appropriate.

Disregard of Income from Specified Sources


31. There are a number of disregards which apply to all schemes or to a range of
schemes. These include:
• the disregard of income from Sceim na bhFoghlaimeoiri Gaeilge.
• the disregard of any income arising from a bonus under a scheme
administered by the Minister for Community, Rural and Gaeltacht
Affairs for the making of special grants to parents or guardians
resident in the Gaeltacht or Breac Gaeltacht (as defined in such
scheme) of children attending primary schools
• the child disregard of €133 per annum where a non-contributory
pensioner is self-employed.
• the disregard of income of up to €1,270 per annum from the collection
of seaweed (certain schemes only).
• the disregard of income from seasonal fishing. Disregard is €153 per
annum and half of the balance up to €381 per annum. (certain
schemes only)

32. The scheme savings from the abolition of the above types of disregards is low.
However, a major consequence of these disregards is that they add to the
complexity of individual schemes or groups of schemes (both for administrators
and for the public). More importantly, the issue arises as to why income from
specific activities should be treated differently from income from other sources. In
general, there would appear to be no objective reason for same.

Non-Primary Payments
33. The Department also operates a number of other cash benefits or benefits in kind
which are “top-up” schemes i.e. which provide additional support to certain
groups. These include Fuel Allowances, the Household Benefits Package, Living
Alone Allowances and the Respite Care Grant. While entitlement to these
schemes is dependant on entitlement to a given primary scheme (with certain
exceptions), these are regarded by recipients as an integral part of the income

28
support package for any given contingency. [TEXT WITHHELD – SECTION
20 & SECTION 21]

34. There are also standalone schemes such as the Bereavement Grant and the
Treatment Benefits scheme. Both are social insurance schemes and, thereby, part
of the social insurance package for workers. Other schemes include Rent and
Mortgage Interest Supplements which provide support to person with short-term
housing needs, in the absence of which persons would experience severe
difficulty in maintaining their existing accommodation position.

Transfer of Functions from the Health Sector to DSFA


35. On 28th February 2006 Government decided to transfer the following functions,
and associated staff and other resources, from the Health Sector to the Department
of Social and Family Affairs (DSFA):

i. The General Register Office (GRO) from the Department of Health and
Children;
ii. Domiciliary Care Allowance (DCA) and four other disability payments
from the Health Service Executive (HSE);
iii. The administration of the Supplementary Welfare Allowance Scheme
(SWA). This involves the transfer of the Community Welfare Service
(CWS) from the HSE to DSFA.

36. The Government also directed that an examination be undertaken of the


mechanics of transferring the Dental Treatment Benefit Scheme and Ophthalmic
Services from DSFA to the Health Sector.

37. On 19th September 2007, the Government approved a high level implementation
plan covering all elements of its earlier decision and approved arrangements
regarding the transfer of resources between the Health Sector and DSFA.

38. Significant progress has been made in transferring functions from the HSE to
DSFA. The General Register Office transferred on 1st January 2008 and
arrangements are well advanced for the transfer of DCA during 2009.

39. In relation to the transfer of the CWS, virtually all of the preparatory work that
can usefully be undertaken in advance of setting a firm date and commencing the
transfer has been completed.

40. There are significant benefits to be achieved in transferring the administration of


SWA from HSE to the DSFA. However, there are risks associated with the
industrial relations situation in particular. In considering these benefits and risks,
the priority will be to ensure that the transfer is managed in a well-planned and
efficient manner and that a high standard of service to the public is maintained
during the transition.

Benefits

29
41. The transfer will alleviate pressure on HSE and facilitate it in concentrating on its
core health and personal social service functions. The integration of the CWS
into DSFA will mean that all income maintenance schemes will be managed and
delivered within one entity, DSFA. This will provide opportunities in the medium
to longer term for enhanced customer service, achievement of efficiencies,
coordinated control mechanisms and elimination of duplication of effort, with
consequential savings to the Exchequer and better outcomes for users of social
welfare services.

42. The transfer programme is fully consistent with the broader proposals for public
service reform being considered following the 2008 OECD study. The transfer of
the CWS in particular will demonstrate the dismantling of existing barriers to
allow movement between the public and civil service.

Risks
43. The transfer of 866 front-line and other staff from the HSE to DSFA will have a
significant organisational and HR impact on the Department which is already
facing considerable additional pressures arising from the current very large
increase in claim levels.

30
Chapter 3 – Social Insurance System

1. Principles of Social Insurance

The Irish system of social protection is often described as a “mixed” system. Its primary
component is a social insurance system whereby entitlement to contingency-based
benefits are secured largely on the basis of paid contributions linked with earnings
income, with a subsidiary system of social assistance whereby entitlement for broadly
similar contingency-based payments are made on the basis of an assessment of the
person’s means. Similar systems exist across the EU Member States, generally with
highly comprehensive benefits, often pay-related. As a corollary, the rates of social
insurance contributions in most countries are generally well in excess of those existing in
Ireland.

Social insurance systems are broadly based on two fundamental principles:

• The “contributory principle” whereby there is a direct link between contributions


paid and entitlement to a varying range of benefits and pensions that are payable
as a right – if and when particular contingencies arise, and
• The “solidarity principle” whereby contributions paid by insured persons are not
actuarially linked to benefits but are instead redistributed to support contributors
who are more vulnerable. It is an expression of solidarity between both earning
groups and generations.

This Chapter outlines the social insurance system and deals, in the main, with the
financing of the system (as distinct from the levels of benefits and pensions which are
dealt with elsewhere in this document).

2. Features of the system

PRSI
The PRSI system includes contributions for three separate purposes, namely social
insurance contributions, Health Contributions and the National Training Fund Levy. The
latter two are not used for social insurance purposes and have no connection with the
Social Insurance Fund (SIF) or the DSFA Vote. Unlike the social insurance portion of the
overall PRSI contribution, payment of a Health Contribution or the National Training
Fund Levy does not confer an individual right to any payment or service. While they are
used to directly fund health services and various training schemes, they are, in effect,
direct taxation. Recently announced increases in the Health Contribution will mean that
the Health Contribution will comprise (in many cases) the major portion of the employee
PRSI contribution. This may have the effect of weakening the overall principle of social
insurance in the mind of contributors (who may not be aware of the various elements of
the overall contribution) as the overall amount payable will appear very much higher
without any changes in benefit entitlement (and, in relation to some benefits, some
contraction of same). There may be a case, in due course, for splitting the overall PRSI
contribution into two explicit contributions.

31
Coverage
The Irish social insurance system is now relatively comprehensive following the
extension of coverage over the period 1988 to 1995 to the self-employed, part-time
workers and new civil and public servants. In addition, arrangements were put in place to
disregard, for pension purposes, periods spent caring or homemaking.

Rates of Contributions
Social insurance contribution rates for both employees, employers and the self-employed
have generally decreased over the past 15 years. Even when the employer and self-
employed annual ceilings were abolished in 2001, this coincided with a reduction in
rates. Therefore the increase in the employee ceiling, in the Supplementary Budget in
April 2009, represents the first significant increase in PRSI in recent times.
An employee contribution is not made when weekly earnings are less than €352 per
week. The latter measure i.e. an exemption threshold, was initially introduced as a
component of a partnership agreement on wages and salaries and in recent years the
exemption threshold has mirrored the income tax entry point for a single PAYE worker.
It could be argued that an exemption from an employee contribution weakens the
contributory principle generally particularly when successive actuarial reviews of the SIF
have shown that the lower income persons derive significantly more from benefits and
pensions from the SIF than middle to higher earners.
Given the current and future financing pressures on the SIF, upward adjustments in the
rates of contribution as well as other revenue raising measures e.g. raising/abolishing the
current employee ceiling, and questioning the continued existence of the exemption
threshold are likely to be necessary to maintain the viability of the system. Such measures
would complement any expenditure control measures relating to future benefit levels and
the role of the State as statutory residual financier of the SIF.
SIF
Contributions paid under Social Insurance by employers, employees, the self employed
and voluntary contributors are paid into the SIF. The Fund then finances the payment of
social insurance payments such as short-term benefits and long-term pensions.

The SIF comprises a current account and an investment account. The Minister for Social
and Family Affairs manages and controls the current account of the Fund while the
Minister for Finance manages and controls the investment account. Benefits payments are
paid from the current account. To the extent that annual income is not required for
benefit payments, it is retained in the investment account and this finance together with
the accumulated surplus from previous years, is transferred to the investment account
which is managed by the Minister for Finance (through the National Treasury
Management Agency). Both the income arising from these investments and the capital is
available for current payments if and when required. The Comptroller and Auditor
General has responsibility for auditing, on a yearly basis, the accounts of the SIF.

32
Redundancy Payments
In addition, employers are entitled to a rebate of 60% of redundancy payments from the
Department of Enterprise, Trade and Employment (DETE), provided they have given the
employee two weeks notice. Where the employer cannot or does not pay a statutory
redundancy entitlement to an employee, the employee can claim 100% of statutory
entitlement from DETE. All rebate and lump sum payments made by DETE are funded
from the Social Insurance Fund (SIF). Redundancy and insolvency payments represent a
serious and increasing drain on SIF resources.

3. DSFA View of Social Insurance


In general, the social insurance system maintains a relationship between labour force
status, earnings from work, contributions made and, finally, entitlement to benefits in the
event of certain specified contingencies (such as illness, unemployment or old age).
DSFA is of the view that the social insurance system is the main pillar of social
protection in Ireland and should remain so given that it:
a) Encourages participation in employment and work over the course of a lifetime
given that access to social protection requires a contribution record,
b) It can give recognition to socially useful activities which are not in paid
employment (such as credits for carers, homemakers disregards),
c) Given that access to benefits are linked with specific contingencies related to
events which reduce income (illness, unemployment, retirement), benefits are
relatively well targeted at need,
d) Contributions are directly linked with individuals who then have a sense of
security and protection which facilitates a dynamic labour market and society,
e) To the extent that contributions are seen by contributors as giving them
individual, legislative-based entitlements to social protection, it will be less likely
that payments will be seen as a tax with commensurate impact on wages and other
labour market variables, thereby contributing to competitiveness,
f) It is more efficient to administer social insurance benefits on the basis of
contribution records rather than means tested assistance payments;
g) There are other advantages for social protection systems such as take-up of
benefits and reduction of stigma associated with claiming means tested benefits,
h) It gives concrete expression to the concept of social partnership within the
financing and delivery of social protection, particularly with regard to those
benefits which are closely associated with participation in the workforce (such as
unemployment, maternity, illness).

Funding Future Benefits


Social insurance spending has traditionally been funded on a tripartite basis – with
contributions coming from the Exchequer, employers and employees. Legally, the
Exchequer is the residual financier of the Fund and Exchequer contributions were the
norm for over forty years – for example, in 1967, the State contribution was 38% of SIF
expenditure; and almost 29% in 1985. However, no Exchequer contribution has been
required since 1996 as the Fund has been in surplus on foot of contributions from
employers and workers.

33
Actuarial Review
The Actuarial Review of the Social Insurance Fund, 2005 advised that significant
increases in contribution income will be required in future years – if the policy imperative
is to be maintenance of current distributions from the SIF. In line with current pensions
policy DSFA supports the view that that progressive action is required if future public
pension liabilities (and other SIF liabilities) are to be met. This will involve finding an
appropriate balance between the three strands of the tripartite funding system but also
building a closer relationship between benefit rates/conditions and contribution rates, and
gauging the cost of credits.

In this regard, the function of actuarial reviews will be crucial. Heretofore, the reviews
have not offered specific recommendations but it is envisaged that they should become
much more instructive with regard to both benefits and contributions (Next review: Initial
scoping: 2009, Data 2010, Report: 2012).

Ultimately, such a policy focus may have the effect of re-balancing the SIF away from
the solidarity principle towards the contributory principle.

4. Financing of the Social Insurance Fund, 2007

In 2007, contributions were made in the following proportions:


• Employer PRSI – 74%;
• Employee PRSI – 20%;
• Self-employed PRSI – 5%;
• Investment income and other receipts – 1%.

5. Financial position of the Social Insurance Fund - 2007 and 2008 (Rounded
figures)

Income Source 2007 2008


Provisional
€Million €Million
Employer/Employee 7,301 7,577
Contributions
Self-Employed 420 405
Contributions
Other Income 112 160
Total Income 7,834 8,144
SIF Scheme 7,008 8,117
Expenditure
Admin Expenditure 243 258
Surplus 583 (231)
Accumulated Surplus 3,632 3,401
Note: The income and expenditure is exclusive of Health Contributions (HC) and
the National Training Levy (NTL) of €1b and €0.4b respectively in 2007, which is
collected and paid over to the HSE and DETE. The HC and NTL for 2008 are
€1.2b and €0.4b respectively

34
Trend in SIF income vs. expenditure
As the above table demonstrates the SIF recorded an annual (provisional) deficit of
€231m in 2008. The most recent REV figures suggest that the deficit in 2009 will be €2.8
Billion and surplus balance at end of year will be €650 million. A continuation of this
trend into 2010 would see fund reserves exhausted early in the year – current projections
indicate that the defecit for 2010 will be €4.4 Billion, with defecits of a similar order
predicted for 2011 and 2012.

6. Potential changes to PRSI rate structure – yields and costs to individuals

[TEXT WITHHELD – SECTION 20]

7. Improvements to the Social Insurance System

[TEXT WITHHELD – SECTION 20]

35
Chapter 4 – Details on Main Programmes
Introduction
i. Total expenditure by the Department in 2009, reflecting increases announced in
Budget 2009 is expected to be €21.27 billion. The provisional outturn for 2008 is
€17.71 billion.

ii. The Department’s total expenditure is allocated across seven high-level


programmes in its Annual Output Statement (AOS). The AOS for 2008, based on
actual expenditure in 2008, is in preparation but is expected to show spending
across the seven programmes as set out in following Table. These totals are
sufficiently accurate to form the basis for the present discussion and are used in
the rest of the document:

Expenditure 2008 and 2009


2008 REV 2008 2009 % Change
Outturn, on Outturn
€m
€m €m
Net Voted Expenditure* 9,612.2 9,479.2 11,098.0 17%
Appropriations in Aid* 19.5 22.9 32.1 11%
Gross Voted Expenditure* 9,631.7 9,502.1 11,130.1 17%
Non-Voted (State source) 7,678.2 8,209.3 10,141.2 24%

Total Gross Expenditure 17,309.9 17,711.4 21,271.3 20%


of which – Exchequer Pay 214.8 15.6 29.5 6%
No. of Public Service Employees 4,639.5
* As in Budget Estimates / Revised Estimates
Breakdown of Total Gross Expenditure by Programme
2008 REV 2008 2009 % Change
€m Outturn, €m on Outturn
Programme Name: €m
1. Children and Families 3,144.9 3,181.1 3,381.8 6.3%
2. People of Working Age 5,727.0 5,989.8 8,678.4 44.9%
3. Retired and Older People 5,377.6 5,518.4 5,791.6 5.0%
4. People with Disabilities 2,013.2 2,039.5 2,146.8 5.3%
5. Poverty and Social Inclusion 894.6 841.0 1,117.9 32.9%
6. Identity Management & 17.5 14.7 14.1 -4.1%
Secure Access to Services
7. Operational Capabilities and 135.0 127.0 140.7 10.8%
Modernisation

Total Gross Expenditure 17,309.9 17,711.4 21,271.3 20.1%


* As in Budget Estimates / Revised Estimates

36
iii. Further detail is provided in this Section in relation to all seven programmes. The
AOS format is followed in the case of four of the programmes:

 Children and Families,

 Retired and Older People,

 People with Disabilities, and

 Poverty and Social Inclusion.

iv. The Working Age programme is divided into sub-programmes to facilitate


consideration of the range of issues arising in this complex and diverse
programme.

v. The remaining two programmes have an internal and organisational focus that
makes them quite different to the other direct service delivery programmes, both
in their nature and in the scale of expenditure involved. These are taken together.

37
Programme 1 – Children and Families
1.1 Introduction
The goal of this programme is to contribute to the well-being of children and families
through income and other supports and facilitate participation in employment. Total
expenditure in this Programme in 2009 is estimated to be €3,382 million. The schemes
included in this programme are:
• Child Benefit – €2,530 million
• Qualified Child Increases – €534 million
• Back to School Clothing & Footwear Allowance – €69million
• School Meals Scheme – €35 million10
• Family Income Supplement – €212 million

It should be noted that where expenditure on any given scheme is shown elsewhere in
this document, it includes expenditure on Qualified Child increases. This reflects scheme
spending as shown in the Estimates. For AOS purposes, expenditure on Qualified
Children is disaggregated.

Inputs

Programme 1 : 2,008 Outturn Year 2009 %Change


2008 on
Outturn
Families & Children € million € million € million

Programme Expenditure
- Current 3,132.7 3,168.2 3,369.1 6.3%
- Capital

- Pay 7.0 7.5 7.2 -3.7%


- Non-Pay 5.2 5.4 5.5 2.0%
Total Gross Programme 3,144.9 3,181.1 3,381.8 6.3%
Expenditure
Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 179.3
- Other public servants

1.2 Child Benefit


Child benefit is a benefit paid every month usually to the mother in a family in respect of
each qualified child. Unlike most social welfare payments which are paid selectively
either on the basis of a social insurance record or on the basis of limited means, CB is a

10
Including expenditure of €1.2m on the Urban and Gaeltacht School Meals scheme.

38
universal payment paid in respect of all children. Provisions in the tax code meant that
the benefit is not taxed.

1.3 Child Benefit – Trends


Expenditure Recipients
€m
2002 1,463 1,015,000
2007 2,233 1,119,600
2009 2,530 1,175,019
% Change 2002 to 2009 73% 16%
% Change 2007 to 2009 13% 5%

The rates of Child Benefit have increased by MM% since 2002 and by BB% since 2007.

2002 to 2009
The decomposition analysis finds that 75% of the increase in expenditure in the period is
attributable to increases in rates of payment while 22% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that 52% of the increase in expenditure in the period is attributable to
increases in rates of payment while 31% arises from the increase in the number of
recipients.

1.4 Child Benefit – Scheme Context


Child Benefit is a very important part of the provision income supports for families.
While some income supports are selective - like the Family Income Supplement for low-
paid workers, or the Qualified Child Increase paid with social welfare payments, Child
Benefit is paid to all families, regardless of the parent’s income or labour force status.

In Budget 2009, it was announced that CB would no longer be payable in respect of


children aged 18 with effect from January 2010; the rate payable in respect of 18 year
olds was halved for 2009. A special compensation mechanism was also put in place
whereby affected parents who are in receipt of an Increase for a Qualified Child also
receive an additional payment designed to fully compensate for the loss in 2009 and
partially compensate in 2010. This compensation payment will cease with affect from
January 2011.

1.5 Child Benefit – Contingency Options

Options Child Benefit


Average Number of Recipients
Abolition/Partial Abolition of Not an option
Scheme
Entitlement Conditions for Scheme
Duration of Benefit [TEXT WITHHELD – SECTION 20]
Conditionality

39
Ancillary Payments Reduce/abolish grants in respect of multiple
births
Average Spending per Recipient
Means Testing Means/income test entitlement to CB.
Taxation of Benefits Remove the tax-free status of CB
Payment Ceilings
Non-Monetary Benefits
Other Reduce levels of payment in respect of
twins/multiple births.

1.6 Recent child income support policy

 The policy direction followed by successive Governments in recent years has


focused on the ongoing objective of reforming income support for children in
order to reduce work disincentives by making child income support more neutral
vis-à-vis the employment status of the parent.

 Child Benefit (CB) rates have been increased substantially as a result of this
policy focus with a view to facilitating a greater level of choice with regard to
economic participation, particularly by women, with female participation rates in
the workforce having increased significantly.

 This policy focus has been driven, in part, by the recognition that the loss of the
Increase for Qualified Child (IQC) by social welfare recipients on taking up
employment acts as a disincentive to taking up available work opportunities.

Issues relating to the payment of Child Benefit on a more selective basis were discussed
in Chapter 2.

1.7 Back to School Clothing & Footwear Allowance


The purpose of the Back to School Clothing and Footwear scheme (BSCFA) is to assist
families on social welfare and health board payments towards the cost of uniforms and
footwear for children who are attending school. BSCFA is administered on behalf of the
Department by the community welfare division (CWS) of the HSE. Applications for the
allowance may be made between the beginning of June and the end of September each
year

1.8 Back to School Clothing & Footwear Allowance – Trends

Expenditure Recipients
€m
2002 15.2 155,800
2007 40.2 180,250
2009 60.2 190,000
% Change 2002 to 2009 405% 141%
% Change 2007 to 2009 51% 27%

40
The 2009 rates are €200 for children aged 2 to 11 years old and €305 for children aged 12
to 22.

BSCFA Payment Rates 2000 to 2007

Year 2000 2002 2003 2006 2007 2008 2009


2-11 Years €80 €80 €80 €150 €180 €200 €200
12-22 Yrs €99 €120 €150 €190 €285 €305 €305

Budget 2009 increased the income thresholds for entitlement to back to school clothing
and footwear allowance by €50 per week. This will bring the income limits for the
allowance for parents with one child to €559.80 (for couples) and €406.30 for lone
parents. The purpose of the household income limit is to ensure that the allowance is
directed at those with the greatest need. It was estimated that the new income limits will
enable an additional 18,000 families to benefit from the scheme.

1.9 Back to School Clothing & Footwear Allowance – Scheme Context


Costs associated with school-going children are faced by all families of their income.
The allowance is not intended to meet the full cost of school clothing and footwear but
only to provide assistance towards these costs, where people are on low incomes.

An expenditure review Report on the BSCFA scheme was published by the Department
in August 2004. One of the issues considered by the Working Group in this review was
the adequacy of the payment. The working Group noted that while there had been a
general decrease in the cost of clothing and footwear costs, BSCFA and basic social
welfare payments had increased considerably. The Report concluded that payment rates
did not warrant adjustment.

1.10 Back to School Clothing & Footwear Allowance – Options


No specific options are being put forward. However, issues relating to the more efficient
delivery of the scheme will be considered.

1.11 School Meals Schemes


The School Meals Programme gives funding towards the provision of food services for
disadvantaged school children through two schemes. The first is the long-standing
statutory urban school meals scheme, operated by local authorities and part-financed by
the Department of Social and Family Affairs. The second is the School Meals Local
Projects scheme through which funding is provided directly by this Department to
participating schools and local and voluntary community groups who are running their
own school meals projects.

Funding under the School Meals Local Projects scheme is available for a variety of
school meals projects, including breakfast clubs, snack clubs, lunch clubs, dinner clubs
and homework clubs. The decision to operate a school meals projects, and responsibility
for the actual operation of the project, rests entirely with the school or organisation
concerned.

41
Funding under the scheme is to assist participating schools/organisations with their food
costs only. Food supplied has to be of good nutritional value and all funds must be
directed towards providing food for disadvantaged children. Funding is issued on the
basis of a rate per child, per meal, per day. It is the responsibility of the school or project
to ensure that food is purchased only for children in attendance.

1.12 School Meals Scheme – Trends


The School Meals Programme has expanded significantly in recent years. Expenditure on
the urban and local projects school meals schemes for the past five years is as follows:

Year Expenditure
€m
2004 4.7
2007 28.2
2009 33.8

1.13 School Meals Scheme – Scheme Context


The school meals programme makes an important contribution to ensuring that school
children receive better nutrition and contributes to improved school attendance and
quality of learning. The aim of the scheme is to assist children who are unable by reason
of lack of food to take full advantage of the education provided for them.

Priority for funding under the School Meals Local Projects scheme is given to schools
which are part of the Department of Education & Science’s initiative for disadvantage
schools, ‘Delivering Equality of Opportunity in Schools’ (DEIS). The focus of the
School Meals scheme will remain on disadvantaged children and the inclusion of
additional DEIS schools in the scheme will continue to be the Department’s main
priority.

1.14 School Meals Scheme – Contingency Options


No specific options are proposed.

1.15 Family Income Supplement


FIS is a weekly payment for families, including lone parent families, at work on low pay.
The scheme was introduced in October 1984 and is designed to provide cash support for
employees with families on low earnings and, thereby, preserve the incentive to remain in
employment in circumstances where the employee might only be marginally better off
than if s/he were claiming other social welfare payments.

Qualification for payment under this scheme requires that a person must be engaged in
insurable employment for a minimum for 19 hours or more per week or 38 hours every
fortnight, are maintaining one or more children and have an average weekly income
below a prescribed limit. FIS payment is calculated at 60% of the difference between
your average weekly family income and the income limit for your family size. A
minimun payment of €20 is payable if the claiment qualifies for a payment less than €20
per week..

42
1.16 Family Income Supplement – Trends

Expenditure Recipients
€m
2002 42 11,800
2007 140 22,820
2009 212 29,000
% Change 2002 to 2009 296% 21.9%
% Change 2007 to 2009 49.8% 5.4%

2002 to 2009
The decomposition analysis finds that 36% of the increase in expenditure in the period is
attributable to increases in rates of payment while 64% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that 24% of the increase in expenditure in the period is attributable to
increases in rates of payment while 76% arises from the increase in the number of
recipients.

1.17 Family Income Supplement – Scheme Context


The principal developments in recent years are as follows:

 The tendency in recent years towards the employment of non-Irish Nationals in


many lower paid employments, in conjunction with the classification of FIS as a
family payment under EU regulations has resulted in an increase in claims from
non Irish Nationals

 Recent improvements to family income supplement include the change of


assessment from a gross income basis to net income, the increase to EUR20 per
week in the minimum payment and the continued re-focusing of income
thresholds to include additional gains for larger families.

1.18 Family Income Supplement – Contingency Options

Options Family Income Supplement


Average Number of Recipients
Abolition/Partial Abolition of
Scheme
Entitlement Conditions for Scheme Increase number of hours to be worked from 38
per fortnight; or
Abolish entitlement where a primary weekly SW
payment is being made.
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

43
Options Family Income Supplement
[TEXT WITHHELD – SECTION 20]
Duration of Benefit
Conditionality
Ancillary Payments [TEXT WITHHELD – SECTION 20]
Average Spending per Recipient
[TEXT WITHHELD – SECTION 20]
Means Testing

44
Programme 2 – People of Working Age
High Level Goal 2 – People of Working Age
To provide income and other supports to people of working age and to facilitate them in
taking up employment, training, education or development opportunities

Inputs

Programme 2 : 2008 Outturn Year 2009 %Change


2008 on
Outturn
People of Working Age € million € million € million

Programme Expenditure
- Current 5,524.2 5,775.5 8,448.6 46.3%
- Capital

- Pay 133.1 129.8 145.1 11.8%


- Non-Pay 69.7 84.5 84.7 0.2%
Total Gross Programme 5,727.0 5,989.8 8,678.4 44.9%
Expenditure
Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 2,911.0
- Other public servants

To facilitate consideration of the range of issues arising in this complex and diverse
programme, it is divided into sub-programmes:

 Sub-Programme: Illness

 Sub-Programme: Carers

 Sub-Programme: One-Parent Family Payment &


Widow/er’s Non-Contributory Pension

 Sub-Programme: Jobseekers

 Sub-Programme: Employment Support Services

 Sub-Programme: Other Schemes

These sub-programmes are each considered in turn below.

45
Sub-Programme: Illness
2.1 Introduction
The schemes included in this sub-programme are:
• Illness Benefit – Estimated expenditure of €889 million in 2009.
• Injury Benefit – Estimated expenditure of €19 million in 2009

2.2 Illness Benefit - Trends


Illness Benefit (IB) is a social insurance scheme payable to qualified insured persons
aged under 66 years who are unfit for work due to illness. The following Table
summarises the trend in expenditure and numbers of beneficiaries since 2002:

ILLNESS Expenditure Recipients Adult and Child


BENEFIT Dependents
2002 €385m 53,400 50,810
2007 €755m 71,160 40,230
2009 €889m 76,200 39,250
% Change 2002 to 131% 53% - 23%
2009
% Change 2007 to 18% 17% -2%
2009

Expenditure Drivers
64% of the increase in expenditure in the period 2002 to 2009 is attributable to increases
in rates of payment while 36% arises from the increase in the number of recipients. In the
period 2007 to 2009, 51% of the increase in expenditure is attributable to increases in
rates of payment while 49% arises from the increase in the number of recipients.

The weekly Personal and Qualified Adult rates of payment have increased by 72% since
2002 and 10% since 2007.

Increase in Recipient numbers, decrease in Dependent numbers


While the number of recipients of Illness Benefit has increased by 53% since 2002, the
annual inflow has remained at close to the same proportion of the workforce (around
14%). Similarly, the Illness Benefit stock remained at close to the same proportion of the
workforce over the whole period (just over 3%). However, this has to be viewed in the
context of changes in the workforce in that time, driven mainly by the addition of large
numbers of younger workers who have a superior personal health profile to the overall
insured population.

The decrease is the number of dependents is due to the measure introduced in 2004 to
abolish entitlement to increases in respect of dependent children where a spouse/partner’s
earnings were in excess of €300 per week (now €400).

46
IB Inflows analysis 2002 to 2007
Stock
Contributors Inflow as % Stock as %
In at end
Year Insured for Inflows of current of current
employment of
IB employment employment
year
2002 1,924,390 1,770,700 248,383 14.0% 54,590 3.1%
2003 2,010,720 1,815,300 267,021 14.7% 56,294 3.1%
2004 2,088,574 1,894,100 261,478 13.8% 58,726 3.1%
2005 2,185,783 1,980,600 275,676 13.9% 61,845 3.1%
2006 2,319,805 2,066,100 287,733 13.9% 65,774 3.2%
2007 2,319,805 2,138,900 305,734 14.3% 70,404 3.3%

2.3 Illness Benefit - Duration


No payment is made for the first three days of any illness. Where a person has less than
260 PRSI contributions paid since first starting work (equivalent to 5 full years), IB is
payable for a maximum period of 52 weeks. Where at least 260 PRSI contributions have
been paid, IB claims made prior to January 5, 2009, can continue to be paid for as long as
the person remains unfit for work and under age 66. However, the duration of IB is now
limited to two years in relation to claims made after that date.
54% of Illness Benefit payments cease within three weeks and 70% cease within six
weeks. In 2008, a total of 303,852 claims were received of which 251,203 were awarded.
Of the claims that were awarded, the breakdown is as follows:
 54,420 closed within 1 week 22%
 55,107 closed in 2 weeks 22%
 25,865 closed in 3 weeks 10%
 15,566 closed in 4 weeks 6%
30% of claims currently in payment have been in payment for three years of more. These
comprise 33% of current claims from females and 22% of current claims from males.

2.4 Illness Benefit – Other features


Increases
The rate of IB payable depends on the claimant’s family size, circumstances and
earnings. Payment is made up of a personal rate in respect of the claimant and additional
(means tested) increases in the case of Qualified Adults and Children.

Where a claimant’s spouse or partner is not a Qualified Adult, any increases in respect of
Qualified Children are payable at half-rate. However, where the income of the
spouse/partner exceeds €400 per week, no Qualified Child Increase is payable.

Graduated Rates of Payment


Where the claimant’s average weekly earnings are below €300 in the Relevant Tax Year
(RTY), the personal rate of IB and the increase in respect of a Qualified Adult are
payable at reduced rates (known as graduated rates). Full-rate IB is payable where the
claimant’s average weekly earnings are €300 or over.

47
Overlapping Benefits
If a person is in receipt of a One-Parent Family Payment, a Widow/er’s Pension or an
analogous payment, then IB can be paid in addition for a period of up to 15 months. IB is
paid at ½ the personal rate in these circumstances and no increase in IB is payable in
respect of children. In addition, if a person is getting either Blind Person’s Pension or
Guardian’s Pension, then IB can also be paid in full for the duration of the illness. See
Chapter 2 regarding overlapping benefits.

Certification
For the purposes of this scheme, illness is certified by the recipient’s own doctor.
Recipients are required to provide medical certs weekly, monthly or twice yearly. The
certification frequency for any customer is determined by the nature of their illness.
When a person makes a claim for IB, they are assigned to a particular illness group (A, B,
C or D) depending on the nature of the illness. These groupings determine the point at
which a claim will be referred to a Medical Assessor (MA) for review and also the point
at which the person will be moved from weekly to monthly certification.

Groups A & B are generally illnesses that either are short term in nature (i.e. cold/ flu) or
that may be short term or long term in nature depending on the severity (e.g. mental
health conditions such as anxiety/depression). Group C would be more chronic conditions
(e.g. chronic respitory infection, Crohns Disease) and Group D would include the most
severe conditions (e.g. Coronary/Cancer/Stroke/ Renal Failure).

The criteria currently applied to determine the certification frequency is as follows:


Group A, B. - Certify weekly up to 6 months duration. Then monthly.
Group C. - Certify weekly up 2 months duration. Then monthly
Group D. - Certify monthly regardless of duration.

Of the current stock of IB claims in payment, 44% certify weekly, 39% monthly and 17%
twice yearly.

Role of Medical Assessors


Medical Assessors play a critical role in operation of the Medical Review and
Assessment Service (MRAS) whose function is to confirm the eligibility for illness,
disability and carer schemes, based on medical certification and reports provided by the
claimant’s medical practitioner, or based on medical examination undertaken by a
Medical Assessor.

Desk assessments are currently carried out in Dublin and Longford while in person
assessments (medical examinations) are carried in 54 centres located around the country.

There are currently 24 Medical assessors employed by the Department of whom 13


including the Chief Medical Adviser are based in Dublin with the remainder located in
the following regional centres Cork (3), Longford (2), Galway 2), Waterford (1)
Kilkenny (1), Limerick (1) and Letterkenny (1)

48
Control Savings arising from reviews carried out by Medical Assessors
Savings of €42.402m (106% of target) were achieved as a result of Medical Review and
Assessment activity in 2008. A breakdown of savings by scheme is set out below.

MRAS – ILLNESS SAVINGS BY SCHEME

TARGET ACHIEVED
€m €m

Illness Benefit (IB)


- Found Capable of Work 26.800 29.670
- Submitted Final Certificate 6.700 6.252
before examination.
Sub-total 33.500 35.922

DA Reviews 3.200 4.175

Invalidity Pension 3.200 2.290

Unemployability Supplement 0.100 0.015

TOTAL 40.000 42.402

Medical Referral and Case Management Project (MRCM)


Horwath Consulting Ireland (HCI) undertook a fundamental review of the Department’s
Medical Review and Assessment Service (MRAS) during 2005 and 2006. Following on
from that review, a project to modernise the MRAS is underway.
The main objectives of the modernisation project are -
 To deliver a modernised MRAS supported by ICT;
 To improve accountability and transparency leading to improved public
confidence in the service;
 To create a more efficient customer and user-friendly operational environment;
 To design efficient and effective business processes leading to improvements in
productivity;
 To improve medical management structures leading to an improved working
environment and enhanced performance;
 To be in a position to anticipate and respond to changing business demands.

Achieving these objectives will require the development of a case management system,
which in turn will mean some revised business processes and organisational structures.

BearingPoint has been selected to implement organisation and technical change in MRAS
and to also develop a generic case management system which can be modified for use
within the overall Department. The Project will run from January 2009 to July 2010 at a
cost of €4.1m.

49
Exemption Scheme
Recipients of Illness Benefit for 6 months or more may receive permission to engage in
one of the following:
• Part-time employment (including self-employment) for not more than 20 hours
per week;
• A CE scheme or FAS training course;
• An Educational Course.

Entitlement to Illness Benefit is retained for the duration of the employment/training or


education. The aim of these arrangements (known as an “Exemption”) is for
rehabilitative and occupational therapy purposes. The overall objective is that this will
enable them, subsequently, to return to the workforce on a full time basis. All exemptions
are subject to the approval of a Departmental Medical Assessor, can vary in duration and
can be extended. There were approximately 3,044 Exemption cases as at end December
2008.

Supplementary Payments
A December Bonus is not payable with this scheme. While the National Fuel Allowance
is also not payable with this scheme, the Smokeless Fuel Allowance is payable during the
fuel season once the recipient has a duration of 3 months. There were 1,810 (5 on OIB)
recipients of Smokeless Fuel Allowance as at end December 2008.

Income Tax
Illness Benefit payments (excluding any increases for Qualified Children) are liable to
income tax. However, IB payments for the first 36 days (6 weeks) in each tax year are
exempt from tax.

2.5 - Review recommendations


Significant changes were introduced in both 2004 and 2009. The most far-reaching of
these was the introduction of an overall limit of two years entitlement, affecting new
claims from 5th January 2009.

Expenditure Review Initiative


In September 2003, the Report of the Working Group on the Review of the Illness and
Disability Payment Schemes was published. Some of the Group’s recommendations
included:
• “Concurrent payment of illness and disability payments with all other social
welfare payments (other than Disablement Benefit) should be discontinued for
new cases.
• Overlaps between personal rates of illness and disability payments for young
recipients and child dependant increases payable in respect of the same people
should be discontinued for new cases.
• Where an IB claim lasts for at least a year, the same tax arrangements as apply in
the case of Invalidity Pension should be applied.

50
• In view of the changes that have occurred since it was last investigated, it is
considered that a re-examination of Statutory Sick Pay would have considerable
merit at this stage, given the potential administrative savings for the Department
and the potential to reduce absenteeism rates. As a first step, the current
incidence of payment of sick pay by employers should be established. In view of
the issues involved, such consideration would be best progressed through the
social partnership structures.”

These recommendations have not been implemented to date.

2.6 Illness Benefit – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Illness Benefit


Average Number of Recipients
Abolition/Partial Abolition of [TEXT WITHHELD – SECTION 20]
Scheme
Entitlement Conditions for Scheme Abolish entitlement to half rate IB for persons
also in receipt of another social welfare
payment.
[TEXT WITHHELD – SECTION 26]
[TEXT WITHHELD – SECTION 26]
[TEXT WITHHELD – SECTION 26]
[TEXT WITHHELD – SECTION 26]
[TEXT WITHHELD – SECTION 26]
Duration of Benefit
Conditionality
Ancillary Payments [TEXT WITHHELD – SECTION 26]
Average Spending per Recipient
Means Testing
Spouse/Partner’s Earned Income
Claimant’s Earned Income
Social Insurance – Means Testing [TEXT WITHHELD – SECTION 26]
for Dependents
Social Insurance – Reduced Rates
Taxation of Benefits [TEXT WITHHELD – SECTION 26]
Payment Ceilings
Non-Monetary Benefits
Other

The Group may wish to note the following points in assessing these possible options:

1. Any changes in eligibility or other conditions relating to this scheme should have
regard to:
 any administrative impacts given the significant turnover levels outlined
above and

51
 the introduction in January 2009 of a maximum duration of two years for
receipt of the benefit, which will have the effect of significantly reducing
numbers from 2011 on.
2. [TEXT WITHHELD – SECTION 20 & SECTION 21]
3. The impact of abolition of half-rate payments generally is dealt with in Chapter 2.
4. [TEXT WITHHELD – SECTION 26]
5. Savings relating to changes in the income tax arrangements are a matter for
the Department of Finance.
6. The remaining options have not been costed due to time constraints.
7. Given the changes introduced in 2009 relating to the contribution conditions for
entitlement and the duration of the benefit, no further proposals relating to these
aspects are included above.

2.7 Injury Benefit - Trends


Injury Benefit is a weekly social insurance payment payable to persons who are unfit for
work due to an accident at work or who have contracted a prescribed work related
disease.11 The following Table summarises the trend in expenditure and numbers of
recipients since 2002:

Expenditure Recipients
2002 €11.8 m 830
2007 €17.2 m 900
2009 €18.8 m 1,330
% Change 2002 to 2009 59% 60%
% Change 2007 to 2009 9% 48%

The weekly personal and Qualified Adult rates of payment are equivalent to Illness
Benefit rates and have increased by 72% since 2002 and 10% since 2007.
As in the case of Illness Benefit, Injury Benefit is not normally paid for the first 3 days
(known as “waiting days”). Payment can last for a maximum of 26 weeks from the date
of the accident or the onset of the disease. If a person is still incapable of work after 26
weeks, they may be entitled to Illness Benefit or, if they do not qualify for IB or IP and
are permanently incapable of work, Incapacity Supplement.
Unlike Illness Benefit, there are no graduated rates of Injury Benefit.
If a person is getting a One-Parent Family Payment, a Widow/er’s Pension or other
analogous payment, then Injury Benefit can be paid in addition. Injury Benefit is paid at
½ the personal rate in these circumstances and no increase in Injury Benefit is payable in

11
There are no contribution conditions applying to the OIB schemes. Once the accident or disease arises
out of and in the course of employment which is insurable for OIB purposes, the person is covered for
Occupational Injury Benefits. In addition, accidents which occur while a person is travelling directly to or
from work are deemed to be occupational accidents.

52
respect of child dependants. In addition, if a person is getting either Blind Person’s
Pension or Orphan’s Pension, then Injury Benefit can also be paid in full for the duration
of the illness or 26 weeks, whichever is the shorter.
Injury Benefit is taxable on the same basis as Illness Benefit.

2.8 Injury Benefit – Options


The main options for change that the Group may wish to consider are summarized in the
following Table:

Option Injury Benefit


Average Number of Recipients
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]

Other options are similar to those already outlined for Illness Benefit.

Given the relatively low levels of expenditure on this scheme, savings from the measures
outlined above (other than the SSP proposal) would not be significant. However, in the
event of amendments to conditionality for analogous schemes, it would be appropriate
from an administrative and consistency aspect to extend these to Injury Benefit at the
same time.

53
Sub-Programme: Carers

2.9 Introduction
Total expenditure in this sub-programme in 2009 is estimated to be €643 million. The
relevant schemes are:

• Carer’s Allowance – €490 million in 2009.


• Carer’s Benefit - €41million in 2009
• Respite Care Grant - €112 million in 2009

2.10 Carers’ Payments - Trends


Carer's Allowance is a means tested payment for carers who look after people in need of
full-time care and attention. The following Table summarises the trend in expenditure
and numbers of beneficiaries since 2002:

CARER’S Expenditure Recipients Child Dependents


ALLOWANCE

2002 €160m* 20,000 18,540


2007 €361m 30,070 27,700
2009 €490m 42,560 32,820
% Change 2002 to 206% 113% 77%
2009
% Change 2007 to 36% 42% 18%
2009
* Data for 2002 includes expenditure on the Respite Care Grant

Carer’s Allowance recipients by age and rate, Feb 2009.


Recipients % of Total
Under 66 full rate 25774 59%
Under 66 1/2 rate 10558 24%
Over 66 full rate 1870 4%
Over 66 1/2 rate 5825 13%
Total 44030
The rate of Carer’s Allowance (over 66) has increased by 95% to €239 since 2002 while
the rate of Carer’s Allowance (66 and under) has increased by 80%12 to €220.50 since
2002.13 The respective weekly rates of Carer’s Allowance are now the highest weekly
rates of any social welfare income maintenance payment payable to pensioners or those
of working age. 14

12
Compared to BB% for the State Pension Non-Contributory and 72% for the lowest rates of payment.
13
These increases included increases of over 17% in 2006.
14
other than in the latter case - Carer’s Benefit which is €0.70 per week higher.

54
Carer’s Benefit
Expenditure Recipients QCs
2002 €6m* 600 740
2007 €27m 1,820 2,350
2009 €41m 2,800 3,200
% Change 2002 to 350% 367% 332%
2009
% Change 2007 to 52% 54% 36%
2009
* Data for 2002 includes the Respite Care Grant

The rate of Carer’s Benefit has increased by 67% to €221.20 since 2002.

Respite Care Grant


Expenditure Grants
2007 €73m 48,670
2009 €112m 66,000
% Change 2007 to 2009 53% 36%

The rate of Respite Care Grant has increased by 168% to €1,700 since 2002

Decomposition Analysis

2002 to 2009
The decomposition analysis (including carer’s allowance, carer’s benefit and respite
care grant) finds that 49% of the increase in expenditure in the period is attributable to
increases in rates of payment while 51% arises from the increase in the number of
recipients.

2007 to 2009
The analysis finds that 40% of the increase in expenditure in the period is attributable to
increases in rates of payment while 61% arises from the increase in the number of
recipients.

Impact of Half-Rate Carer’s on Recipient Numbers and Expenditure


The introduction, in 2007, of an entitlement to a half-rate carer’s allowance payment in
conjunction with another primary welfare payment had a relatively complex impact of the
number of recipients and overall expenditure. Recipient numbers increased as persons on
another welfare payment gained entitlement to a (partial) carer’s payment for the first
time. However, overall expenditure on carer’s allowance decreased by an estimated €13
million but expenditure on other schemes increased by circa €69 million15; this arose as
persons on full-rate Carer’s Allowance became entitled to a half-rate Carer’s Allowance
plus another weekly social welfare payment.

15
As estimated in Budget 2007.

55
2.11 Carer’s Allowance, Carer’s Benefit & Respite Care Grant.
Increases
Increases are paid in respect of Qualified Children but not Qualified Adults. Carers
providing care to more than one person are entitled to a 50% additional payment.
Means Test – Carer’s Allowance
The means test for Carer’s Allowance is significantly less onerous than that which
applies to all other means tested welfare payments. Weekly means of €332.50 are
disregarded in the case of a single person and €665 in the case of a couple.16 As a result,
a couple with two children, earning a joint annual income of up to €37,200 can qualify
for the maximum carer's allowance while such a couple earning €64,200 per annum will
still qualify for the minimum carer's allowance, plus the household benefits package and
the respite care grant.
In the case of a similar type household, where, say, one applies for Jobseeker’s
Allowance and the second of the couple is in employment, JA at the maximum rate will
only be payable where income is less than €3,120 per annum and there is no entitlement
once income exceeds €36,81517.
Treatment of Carer’s Allowance in other social welfare means tests
Unlike other weekly social welfare payments, Carer’s Allowance is not assessed (or is
partially assessed) for the purposes of other means tests. For example, Carer’s Allowance
is not assessed for FIS purposes (unlike most other welfare payments) and is partially
assessed for Rent and Mortgage Interest Supplement.18 These aspects are further dealt
with in the sections dealing with the specific schemes where these arrangements apply.
Overlapping Payments – half-rate Carer’s Allowance
Where a carer has an underlying entitlement to another social welfare payment (except
for Jobseeker’s Benefit or Allowance) or is the Qualified Adult of another person who is
receiving any welfare payment, that entitlement can be retained and Carer’s Allowance is
payable at half the rate it would be payable at if there was no other welfare entitlement.
For example, in the case of a contributory pension couple, the contributory pension
continues to be payable (€22,703 per annum) plus half-rate Carer’s Allowance (€6,032)
bringing combined annual income to €28,735.19 In the case of a carer who is the
Qualified Adult of a JA recipient, the combined income from JA and half-rate Carer’s
Allowance is €23,408 per annum.20 Both households also would automatically receive
the Respite Care Grant of €1,700 per annum.

Supplementary Payments

16
Includes means from all sources, including property, capital and self-employment.
17
Gross income.
18
These arrangements are mirrored in certain other schemes operated by other Departments, e.g. Third
Level Education Grants and Medical Cards.
19
The figures are based on a couple where both are aged 66 or more, one being a Qualified Adult, and do
not take into account the value of the December Bonus, the Household Benefits Package and Fuel
Allowances (if eligible).
20
Based on a couple with no children. Fuel allowances are automatically payable to those on JA (subject to
household composition).

56
The December Bonus is payable with this scheme. A Respite Care Grant of €1,700 is
payable once a year to those in receipt of carer’s allowance on the designated date in
June. Fuel allowances are not payable. Household benefits are payable. The Household
Benefits Package is made up of three allowances, Electricity or Gas Allowance,
Telephone Allowance and Free Television Licence. These allowances provide
contributions towards your electricity or natural gas or bottled gas refill bill and
telephone bill and cover the cost of your Television Licence each year.

Carer’s Benefit
Carer's Benefit is a payment made to insured people who leave the workforce temporarily
to care for someone who is need of full-time care and attention.

Duration
The benefit is payable for a period of 24 months for each care recipient and may be
claimed over separate time periods.

Increases
Increases are paid in respect of Qualified Children but not Qualified Adults. Carers
providing care to more than one person are entitled to a 50% additional payment (a
double Respite Care’s Grant is payable).

Supplementary Payments
The December Bonus is payable with this scheme. A Respite Care Grant of €1,700 per
care recipient is payable once a year to those in receipt of carer's benefit on the
designated date in June. Fuel allowances are not payable. Household benefits are
payable.

Respite Care Grant


The Respite Care Grant is an annual payment (€1,700) for full time carers who look after
certain people who require full time care and attention. The payment is made regardless
of the carer’s means but is subject to certain conditions. It is payable automatically
(without application) to persons in receipt of Carer’s Benefit or Allowance (including the
half rate). 21

2.12 Carer’s Allowance/Benefit & Respite Care Grant – Scheme Context


There have been very significant changes to the Carer’s Allowance and Benefit and
Respite Care Grant schemes since 2002:
 The income disregard for Carer’s Allowance increased by 74%;
 A “Half Rate” Carer’s Allowance was introduced, under which people in receipt
of a social welfare payment who are also providing someone with full time care
and attention can retain their main welfare payment and also receive a half rate
carer’s allowance. Similarly, people currently in receipt of a carer’s allowance,
who may have an underlying eligibility for another social welfare payment, can
transfer to that other payment and continue to receive up to a half rate carer’s
allowance. Up to the introduction of these arrangements, concurrent payment of

21
It is also paid automatically by the HSE where Domiciliary Care Allowance is in payment.

57
two primary weekly social welfare payments was not normally available within
the welfare system (with certain limited exceptions);
 Carer's allowance and benefit recipients may engage in employment or self-
employment for up to 15 hours per week (up from 10) provided their income does
not exceed €332.50 per week (increased from €95.23);
 The duration of Carer’s Benefit extended to 24 months, up from 15;
 The Respite Care Grant has increased from €635 per week to €1,700 per week
and extended to all carers providing full time care and attention regardless of their
means or social insurance contributions (i.e. they do not have to be receiving
carers allowance or benefit);
 The condition requiring recipients of Carer's Benefit to be in employment in the
three months prior to commencement of full-time caring, was abolished.

Census Results on Carers


According to Census 2006 there are approximately 160,000 people providing at least 1
hour of unpaid help per week for a friend or family member with a long term illness,
health problem or disability. This is an increase of over 12,000 people, or 8%, since
Census 2002 was conducted.

According to Census 2006, the number of hours of care being provided is as follows:
• 40,90022 people provide 43 hours or more unpaid personal help per week, or over
6 hours per day.
• 9,600 people provide 29-42 hours unpaid personal help per week, or between 4
and 6 hours per day.
• 17,100 people provide 15-28 hours unpaid personal help per week, or between 2
and 4 hours per day.
• 93,400 people provide 1-14 hours unpaid personal help per week, or up to 2 hours
per day.

So there are approximately 50,400 people providing care for more that 29 hours per week
(just over 4 hours per day). Of these, approximately 19,600 people are classified (by
principal economic status) as being “at work”.

Census 2002 included information regarding the number of hours worked by people in
employment but this information is not included in the results for 2006. However, a
significant proportion of the 19,600 people classified as “at work” will be working more
than 15 hours per week and as such they would not satisfy the full-time care and attention
requirement for carer’s allowance, carer’s benefit or the respite care grant.

Carer’s Strategy:
During 2008 an interdepartmental group, chaired by the Department of the Taoiseach,
with secretariat support provided by DSFA, undertook work to develop a national carers
strategy. As it is not possible in the current economic climate to consider introducing any

22
Numbers rounded for clarity.

58
developments in services for carers at this time, the Government, rather than publishing a
document which does not include any significant plans for the future, decided not to
publish a strategy at this time.

Half-Rate Carer’s Allowance.


At the end of January 2009, there were 16,200 recipients of half-rate Carer’s Allowance
as follows:

Recipients of Half-Rate Carer’s Allowance by primary payment, end January 2009.


Awarded Awarded Total
Pre- Sept. 2007 Post-Sept. 2007
Re-Rates New Cases
Other Claim 166 133 299
SPT / SPC 716 1699 2415
QA SPT / SPC 845 764 1609
SPNC 829 990 1819
QA SPNC 110 79 189
WCPS 460 524 984
WIDOWS NON CON 45 15 60
DWB 89 196 285
PWA 0 1 1
BLIND PENSION 7 6 13
QA BLIND P 9 8 17
INVP 108 841 949
QA INVP 491 363 854
DA 235 648 883
QA DA 442 515 957
ILLNESS BEN 147 688 835
QA ILLNESS B 52 140 192
INJURY BEN 7 12 19
QA INJURY BEN 6 6 12
INCAP BEN 0 1 1
QA INCAP BEN 6 2 8
PRETA 29 79 108
QA PRETA 6 16 22
JOB BEN QA 69 129 198
JOB ALL QA 160 334 494
FARM ASSIST 29 45 74
QA FARM ASSIST 15 35 50
MAT 15 16 31
Health & Safety 0 1 1
Health & Safety QA 2 0 2
OPFP 908 1906 2814
BTW QA 0 8 8
BTE 0 1 1
TOTAL 6000 10200 16200

59
37% of all Carer’s Allowance recipients are now on a half-rate payment. 17% of all
recipients are aged 66 or over and the vast majority of these are in receipt of a half-rate
payment. The numbers of pensioners in receipt of Carer’s Allowance has grown to 7,700
from about an average of 1,150 in 2002. Given the projected increases in the numbers of
pensioners in the short to medium term, this will have resource implications (over and
above increased pension costs).

2.13 Carer’s Allowance, Carer’s Benefit and Respite Care Grant – Options for
Change
The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Carer’s Allowance Carer’s Benefit


Average Number of Recipients
[TEXT WITHHELD – [TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20] SECTION 20]
[TEXT WITHHELD –
SECTION 20]
[TEXT WITHHELD –
SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
[TEXT WITHHELD – . .
SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
Average Spending per Recipient
Means Testing
Spouse/Partner’s Earned Income
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
Other Means Tested items – Social
Assistance
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]

[TEXT WITHHELD –
SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
Taxation of Benefits .
Payment Ceilings
Non-Monetary Benefits
Other Review December Review December

60
Options Carer’s Allowance Carer’s Benefit
Bonus. Bonus.

The major cost reducing option outlined above is the cessation of the half-rate carers
entitlement. This would yield in the range of €60 to €70 million in a full year. The yield
from the abolition of the Carer’s Benefit scheme is difficult to establish as a proportion
would qualify for Carer’s Allowance particularly given the nature of the means test.

Respite Care Grant


[TEXT WITHHELD – SECTION 20]

61
Sub-Programme: One-Parent Family Payment & Widow/er’s Non-
Contributory Pension

2.14 Introduction
Total expenditure in this sub-programme in 2009 is estimated to be €1,136million. The
relevant schemes are:

• One-Parent Family Payment – €1,116 million in 2009


• Widow/er’s Pension – €20 million in 2009

2.15 One Parent Family Payment – Trends

The following Table summarises the trend in expenditure and numbers of beneficiaries
since 2002:

Expenditure Recipients QCs


€m
2002 613 78,400 123,870
2007 962 84,230 139,050
2009 1,116 87,900 144,920
% Change 2002 to 82% 12% 17%
2009
% Change 2007 to 16% 4% 4%
2009

The weekly personal rate of payment has increased by 72% since 2002 and 10% since
2007.

2002 to 2009
The decomposition analysis finds that 83% of the increase in expenditure in the period is
attributable to increases in rates of payment while 18% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that 74% of the increase in expenditure in the period is attributable to
increases in rates of payment while 30% arises from the increase in the number of
recipients.

The majority of OFP recipients have one child (57%), with 28% having two children and
10% have 3 children. The percentage of recipients under age 30 is falling with those over
age 30 increasing - 61% of recipients at the end of 2008 are aged over 30 years. This
reflects the increasing numbers coming to the scheme after marriage/ relationship
breakdown and the fact that women generally are having children at a later age. The
number of teenage mothers, (under age 20), claiming the OFP has always been relatively
small, but has been dropping further - 4.4% (1997) to 2.2% (2004) to 1.7% (2008).

62
Approximately 60% of recipients are working, but generally in low-paid part-time
employment. Some 5,000 OFP recipients are on a CE scheme. Some 15,570 OFP
recipients are in receipt of Rent Supplement.

2.16 One Parent Family Payment – Scheme Context


The One-Parent Family Payment (OFP) is a means tested payment for men and
women who are bringing up a child/ren without the support of a partner. The claimant
must be widowed, separated or divorced, unmarried or a prisoner's spouse. The person
must also: have main care and charge of at least one child who is residing with them,
not be cohabiting and have made efforts to seek maintenance.

The current OFP payment rate is €204.30 per week with an increase of €26 for each
qualified child.

A lone parent can earn up to €146.50 per week without loss of payment, with income
between that and €425 assessed at 50% and a reduced rate of OFP payable. A transitional
payment can be made where the claimant has been in receipt of the payment for 52
consecutive weeks and their income exceeds the upper income limit. This allows them to
retain half their rate of payment for 26 weeks, before payment ceases completely. OFP is
payable until the child is 18 or 22 if in full-time education.

Applicants for one-parent family payment are required to make ongoing efforts to look
for adequate maintenance from their former spouses, or, in the case of unmarried
applicants, the other parent of their child. The payment of OFP guarantees the recipient a
regular weekly income which he/she might not otherwise enjoy if solely dependant on
maintenance payments, particularly if such payments are irregular. In every case where
OFP is awarded, the Department seeks to trace the other parent (liable relative) in order
to ascertain whether he or she is in a financial position to contribute towards the cost of
the OFP. Liable relatives earning more than €18,000 p.a. are assessed with maintenance
liability. Moneys are paid by liable relatives directly to the lone parent or the Department
and the OFP is adjusted accordingly. In 2008, some €3.563m was saved as a result of
maintenance recovery activity.

According to Census figures, there were over 189,000 lone parent families in private
households in 2006. Of these, 103,400 had at least one child aged under 16.

2.17 OFP Review


A review of the One-Parent Family payment was carried out in 2006 and was
incorporated into the Government discussion paper, “Proposals for Supporting Lone
Parents,” which put forward proposals to tackle obstacles to employment for lone parents
and other low income families. These included proposals for the extension of the
National Employment Action Plan to focus on lone parents, focused provision of
childcare and the introduction of a new social assistance payment for low income
families with young children.

63
This new payment would replace the OFP and the Qualified Adult Allowance for
claimants of working age social assistance payments. One allowance would be paid to 1
and 2 parent families where there was a child under a specified age. Conditions would
attach to receipt of the new payment, with progressive activation as the youngest child
gets older.

To inform the process, the Department, with the co-operation of FÁS, the Office of the
Minister for Children and Youth Affairs and the Department of Education and Science,
tested the proposals in 2008 in both an urban and rural setting. These studies were
carried out to facilitate the development of the policy and operational details of the new
scheme. The process involved both lone parents and qualified adults. It was carried out
on a voluntary basis and the take-up was low.

The experience has however highlighted how both lone parents and qualified adults are
not a homogenous group, are of different ages, have experienced different routes into
their current situation and have different needs. Educational levels of those who
participated were generally low, there was little or no engagement with FÁS, some
participants intended to return to full or part-time work when their child was a few
months old; others, however, had been out of the work force for a considerable period of
time. Earnings from previous employment were generally low. For almost all of those
intending to return to work, affordable childcare is a critical issue.

The Department continues to work on developing the proposed new income support
payment and the experience of this engagement process is feeding into the development
of our approach to working with lone parents and qualified adults.

2.18 Widow/er’s Non-Contributory Pension


Widow's or Widower's (Widow/er's) Non-Contributory Pension is a means-tested
payment payable to a widow or widower whose income falls below a certain limit and
who does not satisfy the contribution conditions for contributory widow/er's payment.
Widow/er's ( Non-Contributory) Pension is a payment for widow/ers who do not have
dependent children. A widow/er with dependent children may qualify for One-Parent
Family Payment.

2.19 Widow/er’s Pension – Trends


Expenditure Recipients
€m
2002 116.4 16,520
2007 19.9 2,160
2009 19.7 1,970
% Change 2002 to 2009 -83.1% -88.1%
% Change 2007 to 2009 -1% -8.8%

The weekly personal and Qualified Adult rates of payment have increased by 72% since
2002 and 10% since 2007.

2002 to 2009

64
The decomposition analysis finds that -13% of the increase in expenditure in the period is
attributable to increases in rates of payment while 112% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that -1,268% of the increase in expenditure in the period is
attributable to increases in rates of payment while 1,368% arises from the increase in the
number of recipients.

2.20 Widow/er’s Pension – Developments


The main development was the transfer of recipients aged 66 and over to the State
Pension Non-Contributory in 2006. These represented the vast majority of recipients.

2.21 Widow/er’s Pension – Options for Change

No specific options are being put forward at this stage.

65
Sub-Programme: Jobseekers

2.22 General
Total expenditure in this sub-programme in 2009 is estimated to be €4,617million. The
relevant schemes are:

• Jobseeker’s Benefit – €2,424 million in 2009


• Jobseeker’s Allowance – €2,193 million in 2009

2.23 Jobseeker’s Benefit


Jobseeker’s Benefit is a social insurance payment. It is paid weekly to insured persons
who are out of work. To qualify a person must at all times be unemployed at least 3 days
within 6 days, under age 66, capable of work, available for full-time work and genuinely
seeking work. For benefit a person must have suffered a loss of employment, that is, s/he
must have lost at least one day's insurable employment including a loss of income. Any 3
days of unemployment within a period of 6 consecutive days is treated as a week of
unemployment. Any two such weeks not separated by more than 13 weeks are treated as
part of the same claim.

2.24 Jobseeker’s Benefit – Trends


JOBSEEKER’S Expenditure Recipients Adult and Child
BENEFIT Dependents
2002 €423m 63,300 64,920
2007 €545m 54,970 17,720
2009 €2,424m 220,000 85,970
% Change 2002 to 472% 249% 32%
2009
% Change 2007 to 344% 314% 385%
2009

Decomposition Analysis

2002 to 2009
The decomposition analysis finds that 18% of the increase in expenditure in the period is
attributable to increases in rates of payment while 82% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that -4% of the increase in expenditure in the period is attributable to
increases in rates of payment while 104% arises from the increase in the number of
recipients.

2.25 Jobseeker’s Benefit – Scheme Context


Significant changes to the JB scheme were introduced in 2009. These changes are as
follows:

66
• Entitlement to Job-Seekers' Benefit was reduced from 15 to 12 months for
recipients with 260 or more contributions and duration of less than 6 months.
• The duration of Jobseeker's Benefit was reduced from 12 months to 9 months
where a person has less than 260 contributions paid and duration of less than 3
months.
• The current weekly earnings threshold for the payment of reduced rates of
Jobseeker’s Benefit was increased from €150 to €300.
• The underlying number of paid contributions for entitlement to Jobseekers Benefit
was increased from 52 to 104.
• A condition was introduced whereby 13 paid contributions are required in the
relevant tax year (and certain other tax years) for eligibility for Jobseeker’s
Benefit and Health and Safety Benefit.

2.26 Jobseeker’s Benefit – Contingency Options


Options Unemployment Benefit
Average Number of Recipients
Abolition/Partial Abolition of SchemeNot an option
Entitlement Conditions for Scheme [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
Abolish entitlement to half rate JB for persons
also in receipt of Widows/One Parent payments
(circa 1,500 persons).
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
Average Spending per Recipient
Means Testing
Spouse/Partner’s Earned Income
Claimant’s Earned Income
Other Means Tested items – Social
Assistance
Social Insurance – Means Testing for
Dependents

Social Insurance – Reduced Rates


[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
Payment Ceilings Not applicable.
Non-Monetary Benefits Not applicable
Other

67
2.27 Jobseeker’s Allowance
Jobseeker’s Allowance is a means tested payment payable in respect of any week of
unemployment. To qualify a person must be unemployed at least 3 days within 6 days,
under age 66, capable of work, available for full-time work and genuinely seeking work.
Any 3 days of unemployment within a period of 6 consecutive days is treated as a week
of unemployment. Any two such weeks not separated by more than 52 weeks are treated
as part of the same claim. The weekly rate of payment depends on the amount of weekly
means assessed.

2.28 Jobseeker’s Allowance – Trends


JOBSEEKER’S Expenditure Recipients Adult and Child
ALLOWANCE Dependents
2002 €512m 74,470 56,940
2007 €875m 78,640 53,990
2009 €2,193m 180,000 111,310
% Change 2002 to 328% 142% 95%
2009
% Change 2007 to 151% 129% 106%
2009

Decomposition Analysis

2002 to 2009
The decomposition analysis finds that 32% of the increase in expenditure in the period is
attributable to increases in rates of payment while 69% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that 2% of the increase in expenditure in the period is attributable to
increases in rates of payment while 98% arises from the increase in the number of
recipients.

68
2.29 Jobseeker’s Allowance – Contingency Options
Options
UA
Average Number of Recipients
Abolition/Partial Abolition of Scheme Not an option
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
Duration of Benefit
Conditionality
[TEXT WITHHELD – SECTION 20]
Ancillary Payments [TEXT WITHHELD – SECTION 20]
Average Spending per Recipient
Means Testing
Spouse/Partner’s Earned Income

Claimant’s Earned Income


Other Means Tested items – Social
Assistance
Taxation of Benefits
Payment Ceilings Not applicable.
Non-Monetary Benefits Not applicable
Other Review December Bonus

69
Sub-Programme: Employment Support Services

2.30 Back to Education Allowance – Introduction


The Department of Social and Family Affairs operates a Back to Education Allowance
scheme which allows persons who are dependant on welfare to pursue education courses
and continue to receive their welfare payments provided they satisfy certain criteria. In
the case of access to second level courses, a person had to be over 21 years and in receipt
of a welfare payment for 6 months. In the case of third level courses, a person must be in
receipt of a qualifying payment for 12 months. The numbers participating in the Back to
Educaction Allowance is increasing each year.

2.31 Back to Education Allowance – Trends


BACK TO Expenditure Recipients Adult and Child
EDUCATION Dependents
ALLOWANCE
2002 €35.4m 5,040 2,420
2007 €64.1m 5,680 3,240
2009 €86.4m 6,150 3,510
% Change 2002 to 328% 142% 45%
2009
% Change 2007 to 151% 129% 8%
2009

2.32 Back to Education Allowance – Budget 2009


In the Supplementary Budget, two important changes to the scheme were announced, as
follows:

Earlier Access to Second Level Option


• In recognition of the special difficulties faced by a person who does not have
second level education faces it is now intended to allow access to BTEA (Second
Level Option) at 3 months instead of 6 months.

Earlier Access to Third Level Option


• In addition it is proposed to extend the position where a person can access the
BTEA (Third Level Option) at 9 months instead of 12 months when
recommended by a FÁS Employment Services Officer under the National
Employment Action Plan to Facilitators of the Department of Social and Family
Affairs. This will allow the facilitators of the Department when working with
individuals to identify appropriate progression paths to recommend earlier access
to the third level option of the back to education scheme in appropriate
circumstance.

70
2.33 Back to Work Enterprise Allowance – Introduction
The Back to Work Allowance schemes was introduced in the 1980s. It consists of two
schemes, one for people taking up employment and the second – the Enterprise strand -
for those setting up a business. In recent years, the number of participants in the schemes
has declined and this trend is continuing this year.

2.34 Back to Work Enterprise Allowance – Trends


BACK TO WORK Expenditure Recipients Adult and Child
ALLOWANCE Dependents
2002 €129.1m 24,990 33,410
2007 €71.1m 8,070 11,130
2009 €79.3m 9,010 10,700
% Change 2002 to -38% -64% -68%
2009
% Change 2007 to 11% 12% -4%
2009

2.35 Back to Work Enterprise Allowance – Supplementary Budget 2009


In order to respond effectively to the growing numbers on the Live Register, the changing
profile of jobseekers generally and the current employment situation, it was decided to
refocus all existing resources on the Enterprise strand of the Back to Work Allowance
and on a much earlier basis. To this end, the employee strand of the Back to Work
Allowance will be closed to new applicants and the duration of the Enterprise scheme
will now be up to 2 years, as distinct from 4 years. Overall, there will be no change in the
expenditure being made available in 2009. Instead, it will be refocused on support for the
establishment of enterprises who will, in due course, create further employment
opportunities.

The old schemes are being replaced by two new Back to Work Enterprise Allowance
schemes with far easier access for those made recently unemployed.

The overall purpose of the new arrangements is to financially assist those on the Live
Register to set up a business almost immediately they become unemployed, thereby
ensuring that their knowledge, skills and expertise are fully utilised at an early stage and
thereby promoting enterprise and employment in the economy. The main features of the
new schemes are:

Immediate Access to Back to Work Enterprise Allowance


• There will be immediate access to a shorter BTWEA for someone who qualifies
for Jobseeker’s Benefit and who has either 104 full rate PRSI contributions paid
in the past 2 years or who qualifies for statutory redundancy. Satisfaction of a
means test will not be a requirement. The new scheme means that instead of
receiving Jobseeker’s Benefit for up to a year, an amount equivalent to what that
person would have received each week will continue to be paid for the same
period when an enterprise is established. This measure is designed to encourage
the recently unemployed to set up in business while ensuring that a income
maintenance payment is available to the individual in the initial and most difficult
stages of getting a business off the ground.

71
Earlier Access to Back to Work Enterprise Allowance
• At the same time, the qualifying period required for access to the Enterprise
scheme generally is being reduced from 2 years to 12 months provided a person
has an underlying entitlement to jobseekers allowance. Payment will be made for
two years at 100% of their former social welfare rate in year 1 and 75% in year 2.
Again, this measure is designed to assist those who have been unemployed for a
somewhat longer period to set up a business earlier with generous support for a
two year period.

Second Chance
• Finally, persons who have previously participated in the BTWEA scheme and
exhausted their entitlement after completion of the scheme, will be allowed to
participate a second time after period of at least 5 years has elapsed since they last
accessed the scheme. This will enable former participants another chance to get
back into business.

2.36 Back to Work Enterprise Allowance – Statistics

Statistics - BTW
• At week end 13th March 2009, there were 7,507 participants availing of the back
to work scheme of which 4,331(58%) were participating in the self employed
option.

o In 2008, expenditure on the BTWA scheme was €73.14m. A total budget of


€80.4m has been allocated to the two strands of the BTW scheme in 2009.

o Figures show that 3,459 new BTWA claims were approved for the scheme in
2008 (1728 self employed strand and 1731 employee strand).

o At the end of quarter 1 this year, a total of 526 BTWA claims have been approved
of which 299 were eligible for the self employment option and 227 for the
employee option.

72
Sub-Programme: Other Schemes
2.37 Maternity Benefit – Introduction
Maternity Benefit is a payment for employed and self-employed women who satisfy
certain PRSI contribution conditions on their own insurance record. Maternity Benefit is
payable for a continuous period of 26 weeks. The weekly rate is calculated by dividing
gross income in the Relevant Tax Year by the number of weeks worked in that year. 80%
of this amount is payable, subject to a minimum (equivalent to the personal rate of Illness
Benefit plus one Qualified Child Increase) and a maximum (€280.00)

2.38 Maternity Benefit – Trends


Expenditure Recipients
€m
2002 100 9,690
2007 258 18,390
2009 357 24,200
% Change 2002 to 2009 257% 150%
% Change 2007 to 2009 38% 32%

2.39 Maternity Benefit – Options for Change


No specific options are being put forward.

2.40 Treatment Benefits – Introduction


The Treatment Benefit Scheme provides a range of benefits in the areas of dental, optical
and aural treatment for qualified PRSI contributors, who are over 16 years of age, and
their dependent spouses.

2.41 Treatment Benefit – Trends


Expenditure Recipients
€m
2002 61 609,220
2007 92 848,060
2009 92 848,500
% Change 2002 to 2009 51% 39%
% Change 2007 to 2009 0% 0%

2.42 Treatment Benefit – Recent Developments


An Inter-Departmental Working Group working on the Core Functions Programme,
examined the feasibility of transferring the DSFA scheme to the HSE. It concluded that
there was merit in doing so and subsequently in September 2007, Government directed
that detailed proposals and plans be developed for the transfer of the Dental, Optical and
other Treatment Benefit schemes and services from the Department of Social and Family
Affairs to the Health Service.
This is now in hand. Proposals are being developed for the introduction of a single
integrated computer system to allow payments to be made to service providers in respect
of persons who are entitled to services under either the PRSI or Medical Card schemes. It

73
is expected that the matter will be brought to Government for decision towards the end of
2009.

74
Programme 3 – Retired and Older People
3.1 General
The aim of this Programme is to provide and promote adequate, secure and sustainable
pensions and other appropriate supports for retired and older people
Total expenditure in this Programme in 2009 is estimated to be €6,277 million.

For the purpose of this review (but not the AOS), expenditure on the Household Benefits
Package and Free Travel scheme as well as expenditure on Widow/er’s Contributory
Pensions are included in the programme.23 The relevant schemes included here are:

o State Pension (Contributory)/State Pension (Transition) – €3,459 million


o State Pension (Non-Contributory) – €996 million
o Widow/er’s (Contributory) Pension – €1,360 million
o Household Benefits/Free Travel – €462 million

Inputs

Programme 3 : 2008 Outturn Year 2009 %Change


2008 on
Outturn
Retired and Older People € million € million € million

Programme Expenditure
- Current 5,288.0 5,430.3 5,701.5 5.0%
- Capital

- Pay 17.9 18.1 18.1 0.0%


- Non-Pay 71.7 70.0 72.0 2.9%
Total Gross Programme 5,377.6 5,518.4 5,791.6 5.0%
Expenditure
Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 418.2
- Other public servants

3.2 State Pension (Contributory) and State Pension (Transition)


The State Pension (Contributory) was first introduced in 1961 and is a social insurance
pension payable at age 66.24 State Pension (Transition) is also an insurance payment

23
For AOS purposes, part of Household Benefits and Free Travel expenditure are included in the People of
Working Age Programme. The same arises with expenditure on Widower’s Contributory pensions to those
aged under 66.
OACP was payable from aged 70 when first introduced; the qualifying age was progressively reduced to
24

66 during the 1970s.

75
which was introduced in 1970 and is payable at age 65. In order to qualify a person must
have;
o Have commenced paying insurance 10 years before pension age,
o have paid at least 260 contributions at the appropriate rate. This was increased
from 156 from April 2002 and will rise again in 2012, to 520.
o achieve a yearly average of at least 10 contributions (24 for Retirement Pension)
paid or credited from 1953 or the date they entered insurance, if later. 48
contributions are required for a maximum pension, this can also be averaged from
1979 under what is known as the average contributions test.

Applicants for State Pension (Transition) must also be retired from insurable employment
(no such restriction applies to SPC).

3.3 State Pension (Contributory) and State Pension (Transition) – Trends


Expenditure Recipients QAs/QCs
€m
2002 1,672 182,000 54,420
2007 2,834 236,860 64,090
2009 3,459 262,800 70,680
% Change 2002 to 107% 44% 30%
2009
% Change 2007 to 22% 11% 10%
2009

The rate of State Pension Contributory and State Pension Transition increased by 56%
over the period since 2002 and by 10% since 2007.

2002 to 2009
The decomposition analysis finds that 67% of the increase in expenditure in the period is
attributable to increases in rates of payment while 34% arises from the increase in the
number of recipients. However, it should be noted that this comparison is somewhat
skewed given the transfer of approximately 6,000 Invalidity Pension recipients to SPC in
September 2006.

2007 to 2009
The analysis finds that 51% of the increase in expenditure in the period is attributable to
increases in rates of payment while 52% arises from the increase in the number of
recipients.

3.4 State Pension Contributory & State Pension Transition – Recent Developments
Green Paper on Pensions and the National Pensions Framework
The Green Paper on Pensions was published in October 2007. The Green Paper outlined
the challenges facing the Irish pensions system in the years ahead, including the
sustainability of the system over the longer term in light of demographic change and the
adequacy of contribution levels and benefits. Specific issues in relation to State pensions
were also set out, as well as considerations in relation to key aspects of the system
including tax treatment, security of pension provision, the regulatory regime, public

76
service pensions and work flexibility in retirement. It also set out key questions to be
addressed in formulating the Government’s response to these challenges.

A consultation process was announced upon publication of the Green Paper.


Submissions were received from 322 individuals and 62 organisations. Six regional
consultation seminars (held in February and March 2008) were attended by over 300
people. In May 2008 an international seminar, attended by 140 people from a wide range
of organisations and interested parties, was held in Dublin.

The response to the consultation process reflected the wide range of views and interests
held by individuals and organisations throughout the country. While there was no
consensus on ways to respond to the challenges facing the pension system, it was clear
that there were significant issues and problems that people wanted addressed25.

A long term pensions framework is currently being developed to address the future of the
pensions system in Ireland. The framework will build on the strong foundation of the
State Pension and aims to encourage and support people to provide for their retirement
savings in a fair, transparent and sustainable way. It is intended that the framework will
be launched shortly.

3.5 State Pension Contributory & State Pension Transition – Options for Change
Options SPC SPT
Average Number of Recipients
Abolition /Partial Abolition of Abolish Scheme over
Scheme the next 4/5 years.
Entitlement Conditions for Scheme Raise pension age
progressively over
period from 2014 to
2032.
Introduce total
contribution approach
with pension based on
30 years for a maximum
pension
Impose upper limit on
use of credits for
qualification purposes
Conditionality
Ancillary Payments
Average Spending per Recipient
Means Testing
Spouse/Partner’s Earned Income .

25
All submissions are available on the Green Paper website at
www.pensionsgreenpaper.ie/consultation.html .
A report on the consultation process was produced in September 2008 and it is also available on the
website at
http://www.pensionsgreenpaper.ie/downloads/Green_Paper_Consultation_Report_Final_Report_final.pdf

77
Options SPC SPT
Claimant’s Earned Income
Other Means Tested items – Social
Assistance
[TEXT WITHHELD – [TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20] SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD –
SECTION 20] SECTION 20]
Taxation of Benefits
Payment Ceilings
Non-Monetary Benefits
Other Review December Review December
Bonus Bonus

3.6 State Pension (Non-Contributory)


The State Pension (Non-Contributory) was first introduced in the early part of the last
century. It is a social assistance payment for those over 66 years of age who are not in a
position to qualify for a contributory based pension and who satisfy a means test.

3.7 State Pension (Non-Contributory) – Trends


Expenditure Recipients QAs/QCs
€m
2002 537 88,400 4,870
2007 920 97,380 3,690
2009 996 97,710 3,790
% Change 2002 to 85% 11% -22%
2009
% Change 2007 to 8% 0.3% 3%
2009

The rate of State Pension Non Contributory increased by 63% over the period since 2002
and by 9% since 2007.

2002 to 2009
The decomposition analysis finds that 85% of the increase in expenditure in the period is
attributable to increases in rates of payment while 16% arises from the increase in the
number of recipients. However, it should be noted that the rise in recipient numbers over
the period is due to the decision to transfer recipients aged 66 or over of a range of non-
contributory schemes to the State Pension Non Contributory (formerly the OAP) in
September 2006. 26

2007 to 2009
26
The relevant schemes were Widow/er’s Non-Contributory Pension, Deserted Wife’s Allowance, Blind
Pension and what?

78
The analysis finds that 101% of the increase in expenditure in the period is attributable to
increases in rates of payment while 7% arises from the increase in the number of
recipients.

3. 8 State Pension (Non-Contributory) – Recent Changes


Up until the late 1980s, the non-contributory pension was the largest income support
scheme for those over 66 years of age. However, consequent on the expansion of social
insurance cover and other social and economic factors, more and more people are
qualifying for the contributory schemes. In 1980, non-contributory pensions accounted
for 57% of the total number of pensioners. At that time, there were about 130,000 non -
contributory pensions in payment and this has fallen to just over 97,000 at the end of
2008.

The principal changes to the scheme in recent years have included the changes to capital
assessment arrangements introduced in 2005 and an increase in the general means
disregard (from €7.60 per week to €30 over two years).

3.9 State Pensions (Non-Contributory) – Options for Change


Options SPNC

Average Number of Recipients


Abolition/Partial Abolition of Not an Option –Guaranteed Minimum Income for
Scheme Pensioners.
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]

Duration of Benefit
Conditionality
Ancillary Payments
Average Spending per Recipient
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
Taxation of Benefits
Payment Ceilings
Non-Monetary Benefits
Other Review December Bonus.

3.10 Widow/er’s Contributory Pension


Widows pensions have been in operation since the 1930s. At the time, widows were
required to be 60 years of age in order to qualify for a payment or, if under that age, to
have at least one dependent child. Neither of these conditions now apply.

Qualification for the contributory pension can be based on the insurance record of the
deceased or the claimant. A total of 156 contributions must be paid and an average of 39
contributions achieved over the 3 or 5 years before the deceased reached pension age or
died. Alternatively, a yearly average of 24 must be achieved since the claimant/deceased
commenced work. An average of 48 contributions is required for a maximum pension.

79
3.11 Widow/er’s Contributory Pension – Trends
Expenditure Recipients QAs/QCs
€m
2002 761 101,470 15,100
2007 1,205 110,640 13,600
2009 1,360 113,000 13,250
% Change 2002 to 79% 11% -12%
2009
% Change 2007 to 13% 2% -3%
2009

The rate of Widow/er’s Contributory Pension increased by 56 % over the period since
2002 and by 10% since 2007.

2002 to 2009
The decomposition analysis finds that 85% of the increase in expenditure in the period is
attributable to increases in rates of payment while 16% arises from the increase in the
number of recipients.

2007 to 2009
The analysis finds that 87% of the increase in expenditure in the period is attributable to
increases in rates of payment while 18% arises from the increase in the number of
recipients.

In general, overall numbers are growing relatively slowly. However, increased longevity,
greater labour force participation and the wider scope of social insurance generally means
that more persons now qualify for the State Pension Contributory in their own right.

Successive Government Programmes/Partnership agreements have sought to improve


payments for widow/ers. Qualifying conditions are already quite liberal and payment
rates (aged 66 and over) are equivalent to personal rate of the State Pension Contributory.
In terms of international comparisons the scheme is already out of line with those in other
countries which, in general, will not offer support to younger widow/ers without
dependent children.

80
3.12 Widow/er’s (Contributory) Pension - Options
Options Widow/er’s (Contributory Pension)

Average Number of Recipients


[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

Duration of Benefit [TEXT WITHHELD – SECTION 20]


Conditionality
Ancillary Payments
Average Spending per Recipient
Social Insurance – Means Testing
for Dependents
Social Insurance – Reduced Rates
Taxation of Benefits
Payment Ceilings
Non-Monetary Benefits
Other Review December Bonus.
Abolish half-rate JB/Illness Benefit entitlement.

3.13 Free Travel and Household Benefits Scheme


Free Travel Scheme:
The Free Travel scheme is available to all people living in the State aged 66 years, or
over, to all carers in receipt of Carer's Allowance27 and persons in receipt of Disability
Allowance and Invalidity Pension. 28 .

The Free Travel Scheme provides free travel on the main public and private transport
services for those eligible under the scheme. These include road, rail and ferry services
provided by semi-state companies as well as services provided by over 80 private
transport operators. The vast majority of these private contractors operate in rural areas.

The Household Benefits Package


The Household Benefits package comprises the electricity allowance, telephone
allowance and free television licence schemes. This package is generally available to
people living in the State, aged 66 years or over, who are in receipt of a social welfare
type payment or who fulfil a means test. The package is also available to carers and
people with disabilities under the age of 66 who are in receipt of certain welfare type

27
And to carers of people in receipt of Constant Attendance or Prescribed Relative's Allowance.
28
Widows and widowers aged from 60 to 65 whose late spouses had been in receipt of the Free Travel
retain that entitlement to ensure that households do not suffer a loss of entitlements following the death of a
spouse.

81
payments. People aged over 70 years of age can qualify regardless of their income or
household composition.29

Electricity Allowance
The Electricity Allowance comprises 2,400 units of electricity per annum in addition to
normal standing charges. The VAT on both the units and the standing charges is covered.
(A Gas Allowance is available as an alternative.)

Telephone Allowance
The Telephone Allowance is €26 per month.

Free TV Licence
Persons who qualify for the Household Benefits package are automatically entitled to a
Free Television Licence.

Value of the Free Schemes

Allowance Type Annual Value


Electricity Urban €539.42
Electricity Rural €574.22
Gas Allowance €540
Telephone Allowance €312
Fee Travel €160 (estimated)

3.14 Free Travel and Household Benefits Scheme - Trends


Expenditure
Expenditure Expenditure Expenditure % %
2002 2007 2009 Change Change
€m €m €m 2002- 2007-
2009 2009
Telephone Rental 73 99 108 48% 9%
Electricity 63 147 200 217% 36%
Allowance
Free Travel 46 64 76 65% 19%
TV Licence. 31 52 57 84% 10%
Natural Gas 3 15 21 600% 40%
Bottled Gas 0.11 0.12 0.12 9% 0%
Total 216 377 462 114% 23%

Recipients
Recipients Recipients Recipients % %
End 2002 End 2007 Average Change Change
2009 2002- 2007-

29
Widows and widowers aged from 60 to 65 whose late spouses had been in receipt of the Household
Benefit package retain that entitlement to ensure that households do not suffer a loss of entitlements
following the death of a spouse.

82
2009 2009

Electricity 269,410 316,720 332,280 23% 5%


Allowance
Telephone Rental 278,210 317,630 350,180 26% 10%
Free Travel 636,000 637,310 Not Not Not
available available available
TV Licence. 264,670 353,420 359,140 36% 2%
Natural Gas 20,680 31,710 36,160 75% 14%
Bottled Gas 460 380 530 15% 39%

The increase in the number of persons in receipt of Free Schemes has been driven by the
increase in the number of older persons in the population, including the extension of
entitlement to groups previously excluded (including all persons over 70 regardless of
household composition), increased utility costs and increases in the number of electricity
units covered by the scheme.

3.15 Household Benefits Package and Free Travel – Options


Options Free Schemes
Average Number of Recipients
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]

[TEXT WITHHELD – SECTION 20]


[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
Average Spending per Recipient
Means Testing
Taxation of Benefits
Payment Ceilings
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20],
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

83
Programme 4 – People with Disabilities

4.1 Introduction
Total expenditure in this Programme in 2009 is estimated to be €1,910 million. The
schemes included in this programme are:
• Disability Allowance – €1,106million
• Invalidity Pension – €701 million
• Blind Pension – €17 million
• Disablement Benefit - €86 million

The programme’s inputs are summarised in the following Tables and the main schemes
are dealt with subsequently.

Inputs

Programme 4 : 2008 Outturn Year 2009 %Change


2008 on
Outturn
People with Disabilities € million € million € million

Programme Expenditure
- Current 1,984.8 2,014.5 2,121.1 5.3%
- Capital

- Pay 8.1 8.5 9.1 7%


- Non-Pay 20.3 16.5 16.7 1%
Total Gross Programme 2,013.2 2,039.5 2,146.8 5%
Expenditure
Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 205.3
- Other public servants

4.2 Invalidity Pension


Invalidity Pension (IP) is payable to qualified insured people who are permanently
incapable of work. Invalidity Pension recipients are former Illness Benefit recipients.
Expenditure in 2009 is expected to be €701m.

4.3 Invalidity Pension –Trends


Expenditure Recipients Adult and Child
€m Dependents
2002 404 51,650 31,940
2007 618 52,860 27,690
2009 701 55,000 26,640
% Change 2002 to 74% 7% - 20%

84
2009
% Change 2007 to 13% 4% -4%
2009

The weekly personal and Qualified Adult rates of payment are equivalent to Illness
Benefit rates and have increased by 70% since 2002 and 10% since 2007.

Expenditure Drivers
97% of the increase in expenditure in the period 2002 to 2009 is attributable to increases
in rates of payment while 4% arises from the increase in the number of recipients.
However, this does not take into account the fact that approximately 6,000 Invalidity
Pension recipients were transferred to State Pension (Contributory) in 2006. 77% of the
increase in expenditure in the period 2007 to 2009 is attributable to increases in rates of
payment while 27% arises from the increase in the number of recipients.

The dependency rate has declined slightly since 2002 from 0.52 to 0.48.

4.4 Invalidity Pension - Duration


Invalidity Pension is payable as long as a person is permanently incapable of work up to
the 66th birthday. Invalidity pensioners are automatically transferred to the State Pension
(Contributory) at that stage.

4.5 Invalidity Pension – Other features


To qualify, a person must have at least 260 PRSI contributions paid since first becoming
insured; and at least 48 contributions paid or credited in the previous tax year.

In order to be regarded as being permanently incapable of work, a person must have been
incapable of work for at least one year and likely to remain so incapable for at least a
further year. In most cases applicants would have been in receipt of Illness Benefit prior
to claiming IP. Where a person can show that they are likely to remain incapable of work
for life, IP may be paid to persons who have been in receipt of Illness Benefit for less
than one year.

Increases
Payment is made up of a personal rate in respect of the claimant and additional
increases in the case of Qualified Adults and Children. An additional allowance of €7.70
is payable to those living alone and an allowance of €12.70 is payable if residing on
certain offshore islands.

Exemption
The rules of behaviour governing entitlement to Invalidity pension provide that claimants
may, subject to securing prior written approval from the Department, undertake work of
a rehabilitative nature (up to a maximum 20 hours per week) and retain their IP payment.
There are a total of 4,221 claimants currently (end of January 09 figures) in receipt of an
exemption on Invalidity Pension, of whom 2,263 are on Community Employment
schemes.

85
Income tax
Income from Invalidity Pension is assessable for income tax purposes.

4.6 Invalidity Pension – Recent Changes


 From end-September 2006, Invalidity Pension recipients are automatically
transferred to the State Pension (Contributory) at 66 years of age.

4.7 Invalidity Pension - Reviews


In September 2003, the Report of the Working Group on the Review of the Illness and
Disability Payment Schemes recommended:

 Where a DB claim lasts for at least a year, the same tax arrangements as apply in
the case of Invalidity Pension should be applied.

4.8 Invalidity Pension – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Invalidity Pension


Average Number of Recipients
Abolition/Partial Abolition of Scheme Not an option
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]
Duration of Benefit
Conditionality
Average Spending per Recipient
Means Testing

Claimant’s Earned Income


Other Means Tested items – Social
Assistance
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]

The Group may wish to note that the decision to cap entitlement to Illness Benefit to two
years for new claimants from January 2009 will increase the number of Invalidity
Pension recipients from the beginning of 2011.

4.9 Disability Allowance


Disability Allowance (DA) is a means-tested payment made to people between the ages
of 16 and 66 years who, because of a specified disability, are substantially restricted in
undertaking work which would otherwise be suitable, having regard to the person’s age,
experience and qualifications. A specified disability is defined in regulations to mean an
injury, disease, congenital deformity or physical or mental illness or defect, which has

86
continued or may be expected to continue for at least one year. DA can be broadly
described as an analogous payment to the social insurance based Invalidity Pension.
Expenditure in 2009 is expected to be €1,106m.

4.10Disability Allowance - Trends


Expenditure Recipients QAs/QCs
€m
2002 408 60,000 19,380
2007 901 86,160 27,490
2009 1,106 97,700 30,640
% Change 2002 to 171% 63% 58%
2009
% Change 2007 to 23% 13% 11%
2009

The weekly personal and Qualified Adult rates of payment have increased by 72% since
2002 and 10% since 2007.

Expenditure Drivers
49% of the increase in expenditure in the period 2002 to 2009 is attributable to increases
in rates of payment while 51% arises from the increase in the number of recipients. 32%
of the increase in expenditure in the period 2007 to 2009 is attributable to increases in
rates of payment while 71% arises from the increase in the number of recipients.

Over the period since 2002, the dependency ratio per recipient has remained stable at
around 0.3. This is low in comparison with most other schemes.

4.11 Disability Allowance - Duration


Disability Allowance is payable from 16 years of age up to 66 years, as long as the
person continues to satisfy the qualifying conditions.

4.12 Disability Allowance - Other features


Increases
The rate of payment depends on the claimant’s family size, circumstances and means.
The current maximum rates of Disability Allowance are the same as the maximum
weekly rates of Illness Benefit.

Supplementary Payments
Disability Allowance recipients are entitled to the Household Benefits package, subject to
the usual conditions, Fuel Allowance, the Living Alone Allowance and the Island
Allowance. A December bonus is also payable.

Income Disregard
The scheme provides that DA recipients may earn up to €120 per week without affecting
their payment. Thereafter, earnings between €120 and €350 per week are assessed at
50%, the effect being that claimants can have a total income of some €435 per week
before entitlement to DA ceases entirely (in the case of a single person). Some 10% of
DA claimants (c. 9,500) avail of the income disregard, with c. 4,400 earning less than

87
€120. Almost 3,000 DA claimants are currently on CE schemes and in receipt of reduced
rate DA payments.

4.13 Disability Allowance – Changes in recent years


 A tapered 50% withdrawal rate was introduced where recipients engage in
rehabilitative work and have an income above the disregard of €120 and below
€350 a week.
 Entitlement to the full rate of Disability Allowance has been extended to persons
who were resident in institutions prior to 1999.
 The capital disregard for Disability Allowance was increased by €30,000, from
€20,000 to €50,000 (2007).

4.14 Reviews
In September 2003, the Report of the Working Group on the Review of the Illness and
Disability Payment Schemes was published. Some of the Group’s recommendations
included:

 Early intervention measures should also be introduced to cater for the potential
difficulties involved in paying DA to young people with disabilities.

 An examination should be undertaken of those classified as being sick and


claiming Supplementary Welfare Allowance for more than a year and of those
classified as awaiting payment of Disability Allowance, to ensure that people in
these categories are properly classified.

An Expenditure Review of this scheme is currently underway in the Department and is


expected to conclude mid-year.

4.15 Disability Allowance - Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Disability Allowance


Average Number of Recipients
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

88
Options Disability Allowance
Average Spending per Recipient
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
Spouse/Partner’s Earned Income Abolish 100% disregard of income from sources
such as Home Help Scheme, Mna Ti , etc.
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
Other Review December Bonus.

4.16 Blind Pension


Blind Pension is a means-tested payment made to blind or partially sighted people who
are 18 years and over and are so blind that they cannot perform work for which eyesight
is essential or cannot continue in their ordinary occupation. Registration with the
National Council for the Blind is usually accepted as satisfying the blindness condition.
Where a person is not registered with the National Council for the Blind, they are
required to submit a medical report from an ophthalmic surgeon.

4.17 Blind Pension - Trends


Expenditure Recipients
€m
2002 14 2,100
2007 15 1,470
2009 17 1,470
% Change 2002 to 2009 18% -42%
% Change 2007 to 2009 12% No change

The weekly personal and Qualified Adult rates of payment have increased by 72% since
2002 and 10% since 2007.

The decline in recipients since 2002 is due to the transfer of those aged 66 and over to
State Pension (Non-Contributory) in 2006.

4.18 Blind Pension - Duration


Blind Pension is payable up to the 66th birthday. Blind pensioners are automatically
transferred to the State Pension (Non-Contributory) at that stage.

4.19 Blind Pension – Other Features


Overlapping Benefits
Blind Pension recipients who have sufficient PRSI contributions may also be entitled to
receive Illness Benefit, Jobseeker’s Benefit, Maternity Benefit, Adoptive Benefit or
Health and Safety Benefit in full in addition to their Blind Person’s Pension. Blind
Pension recipients can also receive Widow/er’s and Guardian’s Payment Contributory or

89
Non-Contributory or One-Parent Family Payment in full in addition to their Blind
Person’s Pension. See Chapter xx re overlapping payments.

4.20 Blind Pension – Recent Changes


 A tapered 50% withdrawal rate was introduced where recipients engage in
rehabilitative work and have an income above the disregard of €120 and below
€350 a week.

4.21 Blind Pension - Reviews


In September 2003, the Report of the Working Group on the Review of the Illness and
Disability Payment Schemes recommended:

 In the light of recommendation ….. that concurrent payment of illness and


disability payments with all other social welfare payments should be discontinued
for new cases, the position of former blind pensioners with "preserved"
entitlement to concurrent payments should be reviewed in the event of provision
being made in the future for the additional costs of disability
 There should be one single means-tested payment for people with disabilities,
regardless of the nature of the disability. As the Disability Allowance scheme
better reflects the needs of people with disabilities, the Blind Person's Pension
should be merged into an adapted DA scheme. Existing blind pensioners who
would be better off under DA would have their payments increased, while those
adversely affected would have their existing entitlements preserved for the
duration of their claim.

4.22 Blind Pension – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Blind Person’s Pension


Average Number of Recipients
Abolition/Partial Abolition of Merge scheme with Disability Allowance for new
Scheme claimants.
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
[TEXT WITHHELD – SECTION 20]
Other Review December Bonus.

4.23 Disablement Benefit


Disablement Benefit is paid for life where an insured person suffers loss of physical or
mental faculty as a result of an accident at work or through contracting a prescribed
occupational disease.

4.24 Disablement Benefit – Trends


Expenditure Recipients
€m
2002 59 11,380

90
2007 79 12,750
2009 86 13,250
% Change 2002 to 2009 46% 16%
% Change 2007 to 2009 9% 4%

Disablement Pension by degree of disablement and by sex, Dec 2008.

Male Female Total


Rate of Payment
Under 20% 1,583 504 2,087
20% 2,289 792 3,081
30% 2,903 749 3,652
40% 1,670 359 2,029
50% 793 122 915
60% 505 71 576
70% 256 28 284
80% 206 34 240
90% 66 6 72
100% 232 24 256
Total 10,503 2,689 13,192

4.25 Other Features


The level of the payment awarded depends on the degree of loss of faculty, which is
medically assessed. Assessments of less than 20% are generally paid by way of a lump
sum (a Disablement Gratuity) and assessments of 20% or more are paid by way of a
pension (a Disablement Pension).

Overlapping Payments
Disablement Benefit differs fundamentally from other social welfare income support
payments in that it is not an income maintenance payment. Accordingly, Disablement
Benefit can be paid in addition to all other social welfare payments such as IB, IP and can
also be paid where a person continues to work.

All claimants for Disablement Benefit must be examined by a Medical Assessor to


determine the degree of disablement. Even if the person is not immediately incapacitated
as a result of the occupational accident or disease, claimants can safeguard their future
right to Disablement Benefit by notifying their employers about the accident or disease
and by applying to the DSFA for a declaration that the accident or disease is an
occupational one.

If a person is unable to work as a result of the occupational accident or disease, then


Injury Benefit should be claimed for the first 26 weeks. Disablement Benefit is not
payable during this 26 week period. However, if a person continues to be able to work
following the occupational accident or disease, Disablement Benefit can be paid from the

91
Friday after the 4th day subsequent to the accident or contraction of the prescribed
disease.

Lump Sums
Disablement assessments of less than 20% are normally paid by way of a lump sum
Disablement Gratuity. Assessments of 20% or more are paid by way of a weekly or
monthly Disablement Pension. The maximum Disablement Gratuity which is paid for
life awards of 19%, is €16,470 Proportionate Disablement Gratuities are paid for
assessments of between 1% and 18%. Proportionate Disablement Pensions are paid, in
10% bands, for assessments of between 20% and 90%. For life awards of between 10%
and 19%, a Disablement Pension can be awarded in lieu of a Disablement Gratuity. There
were 1,314 gratuities paid in 2008.

Incapacity Supplement
Increases in Disablement Pension (known as Incapacity Supplement) can be paid where a
Disablement Pensioner is permanently incapable of work and does not qualify for IB or
IP30. There were 925 Incapacity Supplement payments at end December 2008.

Income Tax
Disablement Gratuity payments are exempt from tax. However, income from
Disablement Pension is fully taxable.

4.26 Disablement Benefit - Reviews


In September 2003, the Report of the Working Group on the Review of the Illness and
Disability Payment Schemes recommended:

• “In principle, where efficiencies can be achieved through the merger of


Occupational Injury Benefit payments with corresponding social insurance
payments, such mergers should be pursued. In this regard, the Injury Benefit and
Unemployability Supplement schemes should be retained, but merged into a
single scheme catering for short-term and long-term incapacity in cases of
occupational accidents, where the claimant does not have an entitlement to either
DB or Invalidity Pension.”

4.28 Disablement Benefit – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Disablement Benefit


Average Number of Recipients
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
Entitlement Conditions for Scheme
Duration of Benefit
Conditionality

30further increases may be paid in respect of a Qualified Adult and Children. The rate of payment for US is
the same as for Disability Benefit

92
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
Average Spending per Recipient
[TEXT WITHHELD – SECTION 20] [TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
Other Review December Bonus

o About 5,200 persons whose degree of disablement is less than 30% are currently
in receipt of Disablement Pension or 39% of all recipients.
o [TEXT WITHHELD – SECTION 20]
o [TEXT WITHHELD – SECTION 20]

93
Programme 5 – Poverty and Social Inclusion
5.1 Introduction
The Poverty and Social Inclusion Programme aims to attain better outcomes in tackling
poverty and achieve a more inclusive society through the provision of income and other
support services and co-coordinating implementation of Government strategies for social
inclusion. Total expenditure in this Programme in 2009 is estimated to be €1,114 million.
The main payment schemes within the programme are:
• Fuel Allowance – €217 million
• Basic Supplementary Welfare Allowance – €228 million
• Rent Supplement – €462 million
• Mortgage Interest Supplement – €30 million
• Other SWA - €177 million (of which €92 million is Exceptional and Urgent
Needs Payments and €65 million is Administration)

The programme’s inputs are summarised in the following Tables and the main schemes
are dealt with subsequently.

Inputs

Programme 5 : 2008 Outturn Year 2009 %Change


2008 on
Outturn
Poverty and Social Inclusion € million € million € million

Programme Expenditure
- Current 828.0 774.4 1,049.7 36%
- Capital

- Pay 1.9 1.9 1.7 -9%


- Non Pay 64.7 64.7 66.5 3%
Total Gross Programme 894.6 841.0 1,117.9 33%
Expenditure
Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 28.8
- Other public servants

5.2 Fuel Allowance Scheme


The aim of the National Fuel Scheme (NFS) is to assist qualified householders who are in
receipt of long-term social welfare or health board payments and who are unable to
provide for their own heating needs. The aim of the Smokeless Fuel Scheme (SFS) is to
assist people in areas where there is a ban on the sale of bituminous coal with the extra

94
cost arising from being required to use smokeless or low smoke fuel. A smokeless fuel
allowance may be paid in addition to a fuel allowance or on its own.

5.3 Fuel Allowance Scheme – Trends


Expenditure Recipients31
€m
2002 81 259,000(Dec)
2007 158 295,800(Dec)
2009 217 300,000 (average)
% Change 2002 to 2009 168% 16%
% Change 2007 to 2009 37% 1.4%

The rate of the National Fuel Scheme has increased by 122% since 2002, from €9 to €20
per week. There was no change in Smokeless rate in the same period.
Eligibility for Fuel Allowance is subject to a means test. Eligible people on means tested
payments do not undergo a second means test – they are deemed to satisfy the means
condition for payment of fuel allowance. The means limit for people on PRSI-based
contributory payments is the relevant weekly primary payment rate plus €100 per week
(increased from €51 per week to €100 per week from January 2007).

Expenditure Drivers
89% of the increase in expenditure in the period 2002 to 2009 is attributable to increases
in rates of payment while 11% arises from the increase in the number of recipients. In the
period 2007 to 2009, 96% of the increase in expenditure is attributable to increases in
rates of payment while 4% arises from the increase in the number of recipients. [What
about the increase in duration?]

5.4 Fuel Allowance Scheme - Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Fuel Allowance


Average Number of Recipients
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
Conditionality
Ancillary Payments
Average Spending per Recipient
Means Testing

31
Smokeless Allowance Nos; 115,000 in 2002, 118,000 in 2007 and a projected 124,800 in 2009.

95
Options Fuel Allowance
• Spouse/Partner’s Earned
Income
• Claimant’s Earned Income
• [TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
Social Insurance – Means Testing
for Dependents
Social Insurance – Reduced Rates
Taxation of Benefits
Payment Ceilings
Non-Monetary Benefits
Other

o Each week of the fuel season costs €6.8 million in total;


o [TEXT WITHHELD – SECTION 20]
o [TEXT WITHHELD – SECTION 20]

5.5 Supplementary Welfare Allowance


Subject to the legislation, every person in the State whose means are insufficient to meet
his/her needs and the needs of his/her adult or child dependants(s) may be entitled to
Supplementary Welfare Allowance (SWA). Payment is subject to a means test (income
from employment as Home Help is disregarded in full).
SWA may be paid in a once-off payment to meet exceptional non-recurring needs or in
recurring weekly or monthly payments to meet ongoing needs. There are currently over
146,000 recurring payments made each week. 105,000 of these are supplements in
respect of particular needs, such as rent (79,000 cases) mortgage interest (9,000 cases)
diet costs (9,000 cases) and 8,000 cases in respect of a variety of other needs. The other
41,000 recurring payments are primary weekly payments in respect of basic day to needs,
such as food, clothing, heat etc. These are known as Basic SWA payments and are similar
to mainstream DSFA primary payments such as Jobseeker’s Allowance i.e.. a similar
payment structure and payment rate applies.

5.6 Basic Supplementary Welfare Allowance


There are two categories of recipients of Basic SWA. The first category is people who
fail to meet the conditions for entitlement to a weekly social welfare or health board
payment. The second category (currently the majority) are people who have applied for a
social welfare payment and are getting a basic SWA payment pending a decision on their
claim. The following Table summarises the trend in expenditure and numbers of
beneficiaries since 2002:

5.7 Basic Supplementary Welfare Allowance – Trends

96
Expenditure32 Recipients
€m
2002 145 28,500
2007 150 24,340
2009 228 34,720
% Change 2002 to 2009 57% 22%
% Change 2007 to 2009 52% 43%

At end January 2009, there were over 38,900 recipients of a weekly basic SWA payment
(40,749 on 21st February, mainly reflecting the continuing rise in the numbers
unemployed). Over 72% of these are awaiting another Social Welfare Payment (45% are
awaiting JA or JB). A further 5,200 are payments to Non Nationals with the remainder
made up of payments to persons in the Sick No Benefit category (3,400) or homeless
persons (530).

5.8 Basic Supplementary Welfare Allowance – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Basic SWA Payment

Average Number of Recipients


[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
Entitlement Conditions for Scheme
[TEXT WITHHELD – SECTION 20]
Duration of Benefit

Conditionality

Ancillary Payments

Other

Average Spending per Recipient

Means Testing

• Spouse/Partner’s Earned
Income
• Claimant’s Earned Income
• Other Means Tested items – Assess income as a Home Help.
Social Assistance
[TEXT WITHHELD – SECTION 20]
Social Insurance – Means Testing for

32
Expenditure is net of refunds received in cases where a primary (non-SWA) payment is subsequently
awarded.

97
Options Basic SWA Payment

Dependents
Social Insurance – Reduced Rates

Taxation of Benefits

Payment Ceilings
Non-Monetary Benefits
Other

5.9 Rent Supplement


The purpose of rent supplements is to assist eligible persons living in private rented
accommodation who cannot provide for the cost of that accommodation from their own
resources and who do not have alternative accommodation available to them. The
payment of rent supplement can only be made to assist with reasonable accommodation
costs. To that end, the maximum amount of rent that may be incurred is prescribed in
Regulations, by household type and county (to reflect local housing market rent levels).
The objective of the scheme is to ensure that eligible tenants in the private rented sector
have sufficient income to meet their basic day to day needs after they pay their rent. In
general, Rent Supplement is paid at a rate that results in the recipient’s total post-rent
income being €18 below the relevant primary weekly social welfare payment for a
household in their circumstances e.g.
 €180.30 for a single person,
 €206.30 for a lone parent with one child,
 €232.30 for a lone parent with two children,
 €315.90 for a couple with no children,
 €341.90 for a couple with one child,
 €367.90 for a couple with two children.

5.10 Rent Supplement – Trends


The following Table summarises the trend in expenditure and numbers of recipients since
2002:

Rent Supplement Expenditure Recipients


€m
2002 252 54,210
2007 391 59,720
2009 490 81,670
% Change 2002 to 2009 83% 42%
% Change 2007 to 2009 18% 29%

There are currently over 84,000 people in receipt of a Rent Supplement. Over the last
year, there has been a significant increase in the number of recipients over what was
previously a stable customer base.

98
5.11 Rent Supplement – Recent Changes
In the recent Budget (announced in April 2009), the following Rent/Mortgage Interest
Supplement measures were introduced:

• Entry to Rent Supplement is restricted to applicants who have been existing


tenants for six months or to those who are placed on LA housing lists after full
housing assessment
• The minimum contribution for Rent and Mortgage Interest Supplement has
increased by €6 per week to €24
• The maximum rent limits were reduced where appropriate by up to 10% for all
new tenancies/renewals and all existing rent supplements were reduced by 8%

5.12 Rent Supplement – Options for Change


The main options for change that the Group may wish to consider are summarized in the
following Table:

Options Supplement

[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]


20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]

[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]


20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

[TEXT WITHHELD – SECTION


20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]

[TEXT WITHHELD – SECTION


20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]
20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION [TEXT WITHHELD – SECTION 20]

99
Options Supplement
20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]

5.13 Mortgage Interest Supplement


The mortgage interest supplement scheme is designed to help those who have difficulty
meeting their mortgage repayment schedule where their means are insufficient to meet
their needs. The scheme provides a short-term “safety net” within the overall social
welfare scheme to ensure that people do not suffer hardship due to loss of employment.

A supplement may be paid in respect of mortgage interest only to eligible people who are
unable to meet their mortgage interest repayments in respect of a house which is their
sole place of residence.

The assessment for mortgage interest supplement scheme provides for a gradual
withdrawal of payment as hours of employment or earnings increase. Those availing of
part-time employment and/or training opportunities can continue to receive mortgage
interest supplement subject to their satisfying the standard means assessment rules.

The mortgage interest supplement scheme is administered by the community welfare


service of the Health Service Executive on behalf of the department.

5.14 Mortgage Interest Supplement – Trends


The following Table summarises the trend in expenditure and numbers of recipients since
2002:

Mortgage Interest Expenditure Recipients


Supplement €m
2002 6.4 3,300
2007 11.6 3,700
2009 40.2 9.800
% Change 2002 to 2009 528% 197%
% Change 2007 to 2009 247% 165%

The published estimate of expenditure for mortgage interest supplement for 2008 was
€14.4million. Expenditure was €27.6million in 2008.

The provisional estimate for 2009 is €29.6m. However, as the mortgage interest
supplement scheme is a demand led scheme it is now estimated that expenditure for 2009
will be €40.2m.

Numbers have increased by 1,700 since January 2009, an increase of over 20%.

5.15 Mortgage Interest Supplement – Options for Change


In view of the current economic environment, the Department has commenced a review
of the administration of the mortgage interest supplement scheme. The main purpose of

100
the review is to consider how the mortgage interest supplement scheme can best meet its
objective of catering for those who require assistance on a short-term basis with their
mortgage. Legislative and operational issues arising in the existing mortgage interest
scheme are being examined.

It is envisaged that an interim report will be produced in a matter of weeks setting out
guidance on specific and immediate operational issues for community welfare officers
operating the scheme. The full review should be completed and a final report available
by mid 2009.

5.16 Exceptional and Urgent Needs Payments – Trends


Expenditure
€m
2002 52
2007 70
2009 92
% Change 2002 to 2009 77%
% Change 2007 to 2009 31%

Exceptional needs payments by their nature can be for virtually any item that a person
may require that falls within the criteria as outlined above. Expenditure on the scheme
has increased significantly over the last number of years; in 2002 expenditure was €52m
and the projection for 2009 is approx. €92m. The table below gives an outline of the type
of expenditure incurred in ENPs in 2007.

Expenditure on Exceptional Needs Payments, Other Exceptional Supplementary


Welfare Allowance Payments and Urgent Needs Payments, 2007
Type of Payment Expenditure Total Expenditure
€000 €000
Exceptional Needs Payments
& Other Exceptional SWA
Payments
Housing
New Accommodation Kit 12,513
Household Appliances 6,647
Rent Deposit 4,549
Furniture 3,049
Floor Covering 1,974
Bedding 1,667
Repair/Maintenance 1,451 31,849

Clothing
Adult Clothing 7,603
Child Clothing 4,710 12,313

Funeral

101
Funeral Expenses 3,747
Burial Expenses 456 4,203

Child Related
Pram/Buggy 1,179
Cot 915 2,094

Bills
Rent/Mortgage Interest Arrears 4,486
Household 2,016 6,502

Illness
Confinement Costs 988
Hospital Requirements 343 1,331

General
Other 33 5,545
Travel Costs 2,452
Insufficient Means 1,989
Heating 1,050
Lost/Stolen Money 160
Household Budget 82 11,278

Urgent Needs Payments 259 259

GRAND TOTAL 69,828

5.17 Exceptional Needs Payments – Options


Options Exceptional Needs Payments (ENPs)
Average Number of Recipients
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SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
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[TEXT WITHHELD – SECTION 20]
[TEXT WITHHELD – SECTION 20]
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SECTION 20]

33
This includes €0.92m in payments in respect of homeless people made on behalf of local authorities and
subsequently re-imbursed. It should be noted that some of the totals are not equal to the sum of the parts.
This is due to rounding.

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Options Exceptional Needs Payments (ENPs)
Duration of Benefit
[TEXT WITHHELD – [TEXT WITHHELD – SECTION 20]
SECTION 20]
Ancillary Payments
Average Spending per Recipient
Means Testing
• Spouse/Partner’s Earned
Income
• Claimant’s Earned Income
• Other Means Tested items –
Social Assistance
Social Insurance – Means Testing
for Dependents

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Programme 6 – Identity Management and Secure Access to Services

Introduction
6.1 The goal of this programme is to establish and authenticate customer identity for
public services and to support the development and deployment of a public
service-wide identity policy framework.
6.2 Grouped under this programme are a group of services which the Department
provides not just for its own use but also for other public service providers. These
include:
• the maintenance and enhancement of the central database of personal
identities and data;
• the allocation and maintenance of the Personal Public Service Number
(PPSN);
• personal data matching and validation services for individuals, departmental
schemes and for other public service bodies;
• the development and provision of identity services including the Public
Services Card, and
• services provided by the General Register Office (births, marriages and
deaths).
6.3 Inputs
Programme 6 : Estimates Outturn Estimates %Change
2008 2008 2009 on
Outturn
Identity Management and € million € million € million
Secure Access to Services

Programme Expenditure NIL NIL NIL


Administrative Expenditure
- Pay
6.5 8.1 6.0 -25%
- Non-Pay
11.0 6.6 8.1 21%

Total Gross Expenditure 17.5 14.7 14.1 -4%


Number of Staff employed on
Programme (whole time
equivalents) as at end year.
- Civil servants
129.5
- Other public servants

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Central Records System (CRS), the PPS Number and INFOSYS
6.4 The Central Records System (CRS) is the primary source of customer identity and
social insurance contribution data needed to provide the full range of social
welfare services. The key to each record is the Personal Public Services Number
(PPSN) which is a unique number that is used by a person throughout life in all
their dealings with the Department, the Revenue Commissioners and many other
public sector agencies. DSFA is responsible for the legislation governing the
use of the PPS Number across the public service.
6.5 The primary purpose of the CRS is to support the processing of claims for social
welfare benefits. It has a primary role in establishing the accuracy and validity of
data associated with each claim for benefit submitted to the Department. As such
it is central to the Department’s efforts to ensure efficient processing of claims,
good levels of service to the customer and control of fraud and abuse of the
benefit schemes.
6.6 The CRS is also used to maintain records of a person’s social insurance
contributions that will allow them to establish an entitlement to a variety of
benefits and allowances. A history of events is built up on the system, e.g.
employment details, income, contributions, means test results, to facilitate
efficient decision-making when a claim is made.
6.7 Practically everyone in the country has a record on the Central Records System.
These records are established when someone first applies for a PPS Number as an
adult or when a new born child’s birth is registered with GRO. The records are
kept up to date with each person’s history of dealings with the Department e.g.
receipt of Child Benefit payments, when claiming for a benefit, when they make
PRSI contributions as employees or self-employed persons to the Social Insurance
Fund, registration of marriage or death. Considerable effort goes into ensuring
the accuracy and currency of the data.
6.8 The volume of records on the system has increased considerably in recent times
due to the influx of immigrants and their families into Ireland. Generally such
immigrants have to acquire a PPS Number to enable them to interact with national
administrative systems such as PAYE, driving licences, opening bank accounts,
etc. Immigrants or other persons needing a PPS Number have to register in
person at designated DSFA Local Offices. Documentation and proofs of identity
up to the so called “SAFE level 2” have to be provided in support of registration.
Staff are specially trained to detect fraudulent applications. Instances of use of
forged documents (mainly passports) are reported to the Garda for prosecution.
6.9 The Department’s information system (INFOSYS) allows enquiries to be made
across all the main departmental computer systems’ for information relevant to
client identity, eligibility and payment details. INFOSYS, with over 5,000 users,
provides information from the main Department’s computer applications on
client, employer, claim, eligibility, payment and employment details. It is
available to all staff who need it within the Department and externally to bodies
such as the HSE, Local Authorities and FAS. Its primary uses are to support
efficient service delivery; to validate accuracy of personal data and to assist in

105
control of fraud. . The Department intends to replace access to Infosys as soon as
possible with more modern and secure facilities.

CRS Systems modernisation


6.10 In addition to ensuring the accuracy of the data from a business point of view, the
Department is also engaged in a major programme of modernising the technical
computer systems on which the data is held and managed.
6.11 This programme referred to as “the Customer Object Development” project has
three aims. It was primarily to move the Department’s customer information to a
new technical platform – the existing systems are nearing the end of their useful
lives and are not compatible with the new systems which are gradually taking
over the bulk of the claim and information processing. The project also involves
an organisational review of the customer registration and related procedures, as
well as integration with the management of the proposed new Public Services
Card.
6.10 The current status (April 09) is that the data has been moved to the new technical
platform (although the old version will also continue in parallel until all the
interlinked old systems are themselves converted to the new processing system).
The Organisational Review has been completed and the Department is awaiting
Dept of Finance approval to sign the contract with an external managed service
provider for the production and management of the new Public Services Card. A
separate software development project will be needed to complete the integration
between the external service provider’s systems and the Department’s and to cater
for the new registration process.
6.11 The COD programme will continue by means of follow-on projects designed to
improve the management and integration of the extended customer record.

Data Matching and Identity Services


6.12 Legislation provides for the use of the PPS Number as a key identifier for the
delivery of public services and for the sharing of data between public service
agencies for specified purposes. The Social Welfare Act, 2002, defines a Public
Service Identity (PSI) dataset. This dataset contains a limited number of data
items (Name, Address, PPSN etc) that are used to help authenticate a person’s
identity when seeking services from the Public Sector. Departments and specified
public service agencies are authorised to ask their customers to supply their PSI
dataset in support of requests for services. The Department assists these agencies
in validating the data submitted by validating it against the CRS PSI dataset.
6.13 Under this framework, the Department routinely processes requests from public
sector agencies to match their customer data files with those on CRS. These
matching exercises are of great benefit in validating the accuracy and currency of
data held by those agencies and in particular serve to extend the use of the PPS
Number as the unique identifier across the public service. They are of particular
value in assisting agencies in establishing proof of identity of persons in the area
of immigration and issue of official documents such as passports.

106
6.14 Examples of the purposes for which data are matched and validated by DSFA
include:
• determining entitlement to specified social services (e.g. social welfare
benefits, medical card, free legal aid);
• sharing of information between Department of Education and Science,
schools, Department of Social and Family Affairs and FAS for the purpose
of tracking early school leavers;
• validating personal data for the Garda National Immigration Bureau
(GNIB), the Irish Nationalisation and Immigration Service (INIS) and the
Passport Office;
• sharing of information with local authorities in relation to rented dwellings
covered under the Rent and Mortgage Interest Supplement payable under
the SWA scheme, for the purpose of monitoring compliance with fire and
safety standards; and
• bulk updating of public service agencies’ databases with relevant PPS
Numbers.
6.15 There is considerable clerical work involved in processing the data matching and
validation requests in the absence of a standard secure automated system by
which the requests can be made and processed.
6.16 The Department undertook the development of an online PSI service in 2004. The
service was deployed in 2005 in support of the online customer registration
service provided by the Public Services Broker developed and operated by the
former Reach Unit. However, this service was suspended when the Department
of Finance took over responsibility for the activities previously performed by
Reach in early 2008, following an interdepartmental review in 2007/2008.
6.17 The Department is considering proposals for reviving an online secure system by
which public service agencies can submit requests for data matching of personal
data.

SAFE/Public Service Card


6.18 The department is also a leading participant in the Standard Authentication
Framework Environment (SAFE) programme. The objective of this program is to
define and implement a unified registration process for the customer across the
public sector. The customer will be registered to defined SAFE levels of certainty
in relation to their identity and services available will be matched against the
SAFE levels – the higher the SAFE level of registration the greater and deeper the
extent of services that will be available to the customer. The customer will also be
issued with a token to represent their SAFE registration level.
6.19 The first issue of the PSC will be in the form of a secure card with a chip, encode
data and a photograph. The first group targeted for issue is the Free Travel
Scheme customers where it is planned that the Integrated Ticketing capability will

107
be also loaded onto the chip to allow customers avail of the full range of public
transport.
6.20 The Department is awaiting approval of the Department of Finance to proceed
with signing of the contract with the preferred bidder to produce and issue the
cards.

General Register Office Services


6.21 The General Register Office reports administratively to the Department since
January 2008. Its systems continue to be operated separately.
6.22 The Department receives electronic notification of births, deaths and marriages
from the GRO and allocates PPS Numbers where appropriate. It proactively
issues Child Benefit entitlements upon receipt of birth information.
6.23 Previously GRO provided a service through Reach for distribution of death event
notices to interested public bodies. This service is now provided by a direct link
to the Department of Finance. It is particularly valuable for fraud control and
customer service purposes. For example, payments to doctors for patients on the
GMS system can be terminated quickly on receipt of notice of the death of the
person.

108
Programme 7 – Operational capabilities and modernisation
7.1 Introduction
The objective of this programme is to develop an effective, adaptable and capable
organisation and a culture of excellence. It draws together the main administrative
support functions which cut across all the Department’s activities and support the front
line scheme areas.

7.2 Inputs
Programme 7 : 2008 Outturn Year 2009 %Change
Estimate 2008 on
Outturn
Operational Capabilities and € million € million € million
Modernisation

Programme Expenditure

- Current 30.9 30.5 29.1 -5%

Administrative Expenditure

- Pay 40.4 41.8 42.2 1%

- Non-Pay 63.8 54.6 69.3 27%

Total Gross Expenditure 135.0 127.0 140.7 11%


Number of Staff employed on Programme (whole time equivalents) as at end year.
- Civil servants 767.5
- Other public servants

7.3 Overall administrative expenditure


The Department has a small administrative cost base as a proportion of total expenditure.
Total administrative expenditure this year, including administrative expenses incurred by
the HSE in administering the SWA scheme (in Programme 5), will come to €552 million
or just 2.6% of total expenditure.

The Department operates an administrative budget system which involves delegating


responsibility for certain areas such as over-time and travel and subsistence to line
managers. Other areas of expenditure are assigned to central budget holders. Where
possible, the Annual Output Statement links administrative expenditure to the
programmes to which it relates. However, it is not possible to break down most areas of
central support expenditure across programmes except on a notional basis. It is
considered more appropriate to group the core support functions together as this provides
a clearer picture of the administrative effort involved in providing services to the public.

109
This administrative effort can be quantified as the administration of some 50 separate
welfare schemes and services. This involves a considerable level of interaction between
staff and the public. In any given year these interactions include:
• around 2 million claims/applications;
• 6.5 million telephone calls;
• 68 million payments;
• 360,000 assignments conducted by inspectors
• the promotion and distribution countrywide of 87 different information
booklets/ leaflets and a wide range of forms; and
• publishing the main information booklet (SW4) in 10 languages.

7.4 Central Support Units


The central support units covered by this programme include:

 Information Systems Division (ISD) which oversees and develops the


Department’s ICT infrastructure including the operation of its claims
management and payment systems
 Personnel and Staff Development Unit which provide HR management and
training
 Accounts Branch
 Facilities Management Unit which centrally manages the Department’s
accommodation and associated services such as waste management cleaning
and security
 Legislation, estimates, statistics, procurement and corporate development
units

The staffing and functions of the various central support units are regularly reviewed by
the Department with a view to identifying redundant or non-business-critical posts or
activities which could be eliminated or where a restructuring and more efficient
distribution of work could release staff for reassignment elsewhere. In recent months, a
number of changes have been made in order to release staff for front-line areas to address
work pressures associated with the increasing Live Register.

7.5 Human Resources


The Department is one of the largest employers in the Civil Service with nearly 5,000
staff.
Since 1994 the Department has engaged in a continuous systematic review of the staffing
levels of its main business areas to ensure that the optimum level of resources is
allocated. An internationally recognised work measurement methodology,
Administrative Productivity Training (APT), is used to measure routine work processes.
In recent years APT reviews have been undertaken in such business areas as Child
Benefit, Treatment Benefit, Maternity Benefit, Carer’s Allowance, Family Income
Supplement, Respite Care Grant, PRSI Refunds and ISTS Help-Desk as well as 33 Local
Offices.

In addition to APT, the Department also undertakes business process improvement (BPI)
projects. Projects have been undertaken in Family Income Supplement; Carer’s
Allowance and Child Benefit (EU Section). The benefits of BPI take time to be realized

110
but are best achieved where a culture of continuous process improvement is embedded in
the business area. BPI has also been adopted as an integral preparation for business areas
where the SDM programme is being deployed.

As explained in Chapter 1, the rapid increase in the Live Register during the later half of
2008 has put the Department under unprecedented pressure. We have made serious
efforts to keep the staffing requirements to a minimum through process improvements,
restructuring work, reorganising business divisions and moving work to less pressured
areas. Despite this, major backlogs of work have built up in many business areas,
particularly in the local offices. As a result the Government has agreed to assign from
Departments which had identified surpluses in their staffing numbers. This process is
ongoing as the Live Register has continued to increase.

7.6 Information and Communications Technology (ICT)


The Department is highly reliant on ICT to deliver its services and has invested heavily in
the sector in recent years through the development of the Service Delivery Modernisation
(SDM) programme. SDM is a multi-annual programme of work involving both a new
ICT platform (Business Object Model implementation) and new work practices. The
objective is to enable the Department to respond more rapidly to strategic changes and to
deliver a high quality, pro-active personalised and integrated service to customers.

Priority issues for IS Division include


1. Maintenance and development of two full production environments (migration to
new production environment as soon as possible)
2. ICT Security/Data protection
3. Provision of ICT support to Local Offices in particular
4. Development of electronic links to partner agencies in Ireland and EU
5. Development of internal capacity
6. Major projects at present include:
a. Migration to electronic payments
b. Continuous implementation of the Department’s Business Object Model –
includes:
i. Local Office – various projects, including accessibility
ii. Development of Medical Referral Case Management
iii. Client Eligibility – various projects, including Means
c. Office Systems modernisation – various projects
d. Infrastructure projects (e.g. security programme)
e. Administrative systems development (Financials, HR)
f. Payment and Reconciliation Project (PARP) to replace the existing highly
manual accounts processes and legacy systems with an integrated
reconciliation solution which will have the ability to reconcile all DSFA’s
payment instruments and the associated bank/agency accounts
reconciliation and reporting
g. Public Service Card (awaiting D/Finance approval)

7.7 Accommodation and Facilities

111
The Department operates from 15 headquarter offices in 7 different geographical
locations across the country (Carrick-on-Shannon, Dublin, Dundalk, Letterkenny,
Longford, Sligo and Waterford) with another office coming on stream in Buncrana in late
2009 as part of the decentralisation programme. There is a nationwide network of 137
regional, Local and Inspectors Offices.

The management of this number of buildings and the provision of appropriate facilities
and office supplies to staff is a significant body of work. The unprecedented public
demand for services in these offices in the current economic climate has, of its nature,
brought about a whole set of new challenges for the Department. New offices are
required in a number of large population centres which did not have one previously and a
number of others need to be adapted in order to cater for greater numbers of staff and
claimants. In order to ensure that this work is undertaken, a special capital provision for
buildings has been provided in the Department’s Vote this year (in Programme 2). This
provision was sourced from savings elsewhere in the Departments Vote.

The transfer of the Community Welfare Officers from the HSE to the Department will
pose significant challenges in terms of property management as, at present CWOs operate
out of 878 locations throughout the country, the vast majority of which are owned or
leased by the HSE.

7.8 Procurement
The Project Governance Committee (PGC), a sub-group of the Management Board
chaired by the Director General, oversees the procurement process in the Department,
including reviewing and approving all RFTs, and has responsibility for translating DSFA
strategy into operational initiatives. The PGC approves all initiatives and projects
involving ICT, external service provision or consultancy, approves budget and resource
allocation, ensures that structures and processes are in place to enable project delivery
and provides overall strategic guidance to initiatives and projects. The PGC also
monitors progress on projects to ensure they deliver required outputs.

The Department has undertaken significant reforms in recent years in the procurement of
essential goods, services and products with a view to generating greater efficiency and
economy in the use of resources. These initiatives include:

 Contract Cleaning and Waste Removal: The Department has recently


consolidated its contract arrangements for office cleaning and waste removal into
a set of manageable contracts which cover a number of geographical areas which
roughly mirror the Department's regional structure. The benefit of this
consolidation is to remove the extensive administrative burden associated with
multiple contracts and to standardise the approach to the provision of these
essential services across the network of offices.

 Stationery supplies: As part of the rationalisation of supplies of stationery to its


network of offices, the Department has contracted for the online ordering and
direct delivery of supplies to all offices. This reduces the administrative burden
that existed both centrally and locally, provides a more efficient and auditable
supply chain and achieves economies through reduced pricing and delivery

112
charges.

 Office Supplies & Consumables: The department has a drawdown contract in


place, valid for 2 years, for the supply of 25 categories of office consumables -
over 200 different items. When tendering, the department provided the volumes
of usage of these items over the previous two years. This gives greater value for
money than procuring these items on an ad hoc basis. A similar contract is in
place for all stationery supplies.

 Printing: The Department sources all of its printed materials through a set of
printers, each specialising in specific printing lines, following a competitive
tendering process. In each case cost of delivery is encapsulated in the overall
price, thereby assisting in further reducing expenditure. The Department,
building on the experience of the past two years, is now renewing its print
contracts while also examining the possibility of including future logistical
arrangements into the equation, such as storage and distribution nation-wide.
This initiative will secure staff savings and assist in providing enhanced data on
distribution and stocking, enabling improved targeting of resources.

 The Department also operates a shared service with Revenue, whereby bulk print
of communication to customers is undertaken centrally by Revenue.

 Envelopes: Previously the Department made bulk purchases of printed envelopes


which necessitated significant monetary advances together with considerable
storage needs. This practice has been changed and contracts are in place for
envelopes to be delivered just-in-time. This has the advantage of spreading the
expenditure profile and of minimising storage requirements.

 Electricity/ Energy: The Department is a significant user of electricity and was


instrumental, through the NPPPU, in establishing a centralised purchasing tender
which delivered substantial savings in expenditure. The Department continues to
be involved in the centralised purchasing tender. The Department is also actively
promoting a culture of energy efficiency among staff and is participating in an
OPW sponsored initiative involving staff in the process of identifying energy
efficiencies in Department Offices.

 Transport: Following a competitive tendering process the Department has


engaged a transport company which provides a collection and delivery service of
equipment, post and packages on an inter-office basis. This service considerably
reduces delays, maximises efficiencies and minimises staff overheads.

 Information Services (IS): Information Services Division has embarked on a


number of initiatives in recent years to reduce and/or contain procurement costs.
All initiatives also reduce the procurement related administrative overheads for
the IS Division. Significant initiatives include:
o Computer Hardware – we are availing of the interdepartmental
Framework agreements for PCs and Laser Printer
o a Framework Agreement is in place for the provision of Servers

113
 Telecommunications: The Department is availing of the new Mobile Framework
agreement to avail of a fixed monthly charge in respect of all local, national calls
and text messages on mobiles.

 Training: The Department has its own in-house trainers who provide most of its
training needs. However, about 10% of the training budget is spent on specialised
programmes which must be sourced externally. The approach adopted is to buy
in expertise to develop training in the particular area and to skill up internal
resources as part of this process, who then provide ongoing training in the subject
area. The Department also avails of places on courses provided by the CSTDC
(Dept of Finance) and liaises closely with other Departmental Training Officers in
order to achieve value for money and efficiencies by offering places on respective
courses in each Department.

7.9 Payment Services


For some time the Department has been moving away from paper based methods of
payment to electronic methods and since September 2007 new clients have only been
offered a choice of either EFT to a bank account or electronic information transfer (EIT)
at Post Offices. Personal Payment Orders (PPO) will cease to be used from the end of
September 2009 and it is intended to phase out cheque payments by the end of 2010.
Instead customers will receive their payments electronically. This will result in savings
in printing costs (production of PPO books are estimated to cost €1.4 million in 2009);
less fraudulent encashment of cheques; administrative efficiencies such as more
streamlined procedures for changing customer data, more timely implementation of
budget changes and reduction in the amount of paper to be handled by staff carrying out
maintenance duties.

114
CHAPTER 5
CONTROL OF SOCIAL WELFARE FRAUD AND ABUSE

5.1. Control Strategy


The Department has a broad-ranging and comprehensive control strategy, which aims to
keep fraud and abuse to a minimum. The emphasis is to minimise risks of fraud and
eliminate incorrect payments. The approach can be summarised as follows:

o Prevention - having systems and procedures in place that prevent and minimise
the risk of fraud, abuse and error;
o Detection - detecting fraud, abuse and errors at the earliest possible stage, and
detecting unpaid Pay-Related Social Insurance (PRSI) contributions by employers
and the self-employed;
o Deterrence – to develop an anti-fraud culture among staff and the public by
ensuring that the public is aware of the risks and penalties of defrauding the
Social Welfare system and dealing decisively with cases of fraud and abuse
detected;
o Debt Recovery – to actively pursue the recovery of all debts.

Key elements of the Department’s control strategy include:

 systematic risk analysis


 surveys of the levels of fraud and error within schemes,
 scheme specific review policies,
 data matching initiatives with both external and internal parties and
 investigation of anonymous reports.

5.2 Risk Management


In conjunction with Control Division scheme managers undertake fraud risk assessments
to identify the risks of fraud relevant to their scheme and determine the extent to which
existing control practices are sufficient to counter them. Managers then prepare action
plans to deal with the identified high risks that fall within their remit and to amend or
devise procedures which were identified as being inadequate or require improvement.

In 2007, risk assessments were completed on Employment Support Scheme(s),


Widow(er)’s (Contributory) Pension, Disablement Benefit and Supplementary Welfare
Allowance. In 2008 risk assessments were completed on Family Income Supplement and
Household Benefits. In 2009 risk assessments will be undertaken on Child Benefit and
Maternity Benefit.

5.3 Fraud & Error Survey’s


A key element in the development of performance indicators for control activities
involves the Department undertaking fraud and error surveys to establish baseline fraud
and error levels for social welfare schemes. The process involves:

115
 Inspectors reviewing a random sample of claims to assess the underlying levels of
fraud and error,
 action being taken by scheme managers to address the fraud and error risks
identified and
 further surveys being undertaken using the first survey as a benchmark.

Fraud & Error surveys have been undertaken on the following schemes:
2004 Child Benefit & Family Income Supplement schemes.
2005 Disability Allowance.
2006 Illness Benefit Scheme and the PPSN allocation process.
2007 State Pension (Non Contributory) Scheme.
2008 State Pension Contributory scheme.
2009 Surveys are planned for Jobseekers and Carers, subject to availability of
resources.

5.4 Review Policies


Review policies are designed to focus control activity on the high risk areas within
schemes and on claims that have been identified as having a higher risk of fraud and
abuse. In 2007 a revised review policy was introduced for the Jobseeker and One-Parent
Family schemes. In 2008 a review policy was introduced for Child Benefit. This year a
review policy for Disability Allowance was finalised and work is ongoing on Carer’s and
the State Pension Non-Contributory schemes.

5.5 Data Matching Exercises


Section 261 of the Social Welfare Consolidation Act, 2005 permits the Minister to share
data with another Minister for the purposes of the administration of the Social Welfare
Acts. The Department receives data from a wide range of Departments and agencies to
assist in its control activities. These include:

a) The Revenue Commissioners


On a monthly basis, the Department runs a programme of Revenue Commencement of
Employment data against the Jobseeker, Illness Benefit and Supplementary Welfare
Allowance, Disability Allowance, Invalidity Pensions and Carers Allowance schemes to
identify claims where an investigation is warranted.

b) Department of Education & Science


Student matching project: Third level institutions are obliged to supply the Department
with details of students registered for full-time daytime education. The student details are
then matched against the Jobseeker, Disability Benefit and HSE databases. Cases
identified with open claims are referred to the relevant areas for investigation.

c) Department of Environment, Heritage & Local Government


Local Authority Housing Allocations: Dublin and Cork Councils supply data on housing
allocations which are matched against the Department’s systems to identify claims for
review e.g. possible co-habitation. This initiative is being extended in 2009.

116
d) Department of Justice
The Irish Prison Service supply Control Section with a quarterly list of prison inmates
from prisons countrywide who are in custody.

e) Department of Agriculture and Food


Since 2007, Control Division receives data from the Department of Agriculture & Food
on the total grant payments issued to farmers.

f) General Registrars Office:


Life event data is now obtained from the GRO on all births, deaths and marriages within
the State.

In 2008 data for fraud/ error detection was received from:


Department of Transport: taxi/ hackney licence holders.
Department of Environment: Private Rental Tenancies Board data on landlords.
Department of Justice: The Private Security Authority data on licence holder’s.
Department of Communications: Salmon Hardship Scheme payments.
Department of Agriculture: Irish Greyhound Board – winnings over €10,000.
In addition on-line access to the Probate office was set-up for relevant schemes.

In 2009 the following datamatches are being targeted.


Criminal Injuries Compensation Tribunal – data was received in Q1.
Department of Environment: County Councils housing data.
Revenue: capital assets information as recorded on 'Form ST 21' which is completed by
solicitors when conveyancing properties
Personal Injuries Assessment Board- payments agreed in 2007 & 2008

5.6 Anonymous reports of fraud


There has been a marked increase in the number of anonymous reports of social welfare
fraud. The breakdown of anonymous reports received in Control Division in the first
three months of 2007, 2008 and 2009 for comparison is as follows:

Reports received
Jan - Mar 2007 Jan - Mar 2008 Jan - Mar 2009
Type of report:
Working and claiming 70 65 481
Cohabitation 23 29 274
Outside RoI 3 7 103
How to report fraud 9 14 20
Other 35 41 221
Total 140 156 1099

Scheme breakdown for Jan - Mar 2009:

117
Jobseekers cases (JA & JB) 457
SWA 197
One Parent Family cases (including Widows) 151
Illness 132
Child Benefit 34
Other 51

5.7 Control Activities


Measures to control fraud and abuse include desk reviews of claim papers, home visits,
the issue of mail-shots to selected customers, periodic certification, database checking
and medical reviews in the case of illness payments etc.

Controls are exercised at both the initial claim stage and at subsequent stages during the
claim life cycle. Claims are reviewed on a regular and targeted basis. Means tested
payments are reviewed at certain intervals or when there are indications that changes in
circumstances have not been reported to the Department. Those in receipt of illness
payments are called for a medical examination by the Department's Medical Assessors.

Customers in receipt of jobseeker’s payments are checked on an ongoing basis to verify


continued compliance with such requirements as being available for and genuinely
seeking employment.

The Department also has a programme of employer inspections to ensure that accurate
records of employees are kept; the correct class of PRSI is being deducted and remitted,
employees are not concurrently working and claiming social welfare payments and that
employers are aware of their responsibilities with regard to Social Welfare and Tax
legislation and incentives available to employers.

5.8 Recent challenges and response to same


The rapidly changing economic environment with large increases in the levels of
unemployed poses challenges for the control of schemes. Since the beginning of
September 2008, the Live Register has increased by 136,000 or over 55%. In particular,
there was an increase of almost 40% in the number in receipt of a Jobseekers Allowance.
The increased workload associated with the means assessment for this scheme has had a
direct impact on the work of the general Social Welfare Inspectors. As a result of this,
our capacity to undertaken control work was greatly reduced. Most of the ongoing
control activity is now undertaken by the Special Investigation Unit which is dedicated to
control work. example in the last six months of 2008 Social Welfare Inspectors who had
been concentrating on anti-fraud activity had to be diverted to means testing applicants so
that claims could be processed faster.

The Department’s response to these challenges is to target control activity at high risk
categories of claimants. For example:

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 Since 2008 the Special Investigation Unit is undertaking more regular interviews
of jobseeker recipients, particularly those with high risk ratings.
 Small scale control initiatives involving the intensive deployment of inspectors
on home visits has indicated that there is scope to achieve significant savings on
JA and JB and this approach will be rolled out further, as resources become
available.
 Border regions have put an increased emphasis on controls on claims from
applicants with a previous address in Northern Ireland.
 Inspectors have participated in multi-agency checkpoints with involving Revenue
(Customs), the Health & Safety Authority, the Road Safety Authority, the Waste
Management areas of Local Authorities, along with Garda National Traffic
Corps.
 One Parent Family recipients with earnings are targeted for review.
 The frequency of issue of mail shots to validate continued entitlement to Child
Benefit has been increased to 3 monthly intervals for EU worker customers and
resident non-national customers.
 Data matches are being agreed with additional external bodies on an on-going
basis.

As a preventative measure, in 2008 the option to receive payments by Electronic Fund


Transfer (EFT) was removed for new claimants for jobseeker payments. They must
attend in person at the post office each week thus confirming their continued residency in
the country. Their claim is automatically suspended where two consecutive payments are
not collected.

5.9. 2008 Control Savings


In 2008 almost €476 million in social welfare payments was saved through fraud and
error control measures which is an increase of €29million on the previous year. Over
560,000 social welfare claims were reviewed and over 1,000 reports of possible fraud
were received from members of the public. A full breakdown of savings achieved in
2008 was as follows:

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2008 Savings 2008 Reviews
Scheme Target €m Actual €m % Target Actual %
Jobseekers 150.000 100.639 67% 105,000 167,040 159%
Illness 88.500 72.776 82% 151,800 170,329 112%
OFP 157.500 141.972 90% 49,000 64,782 132%
Pensions (inc HHB)
41.000 81.270 198% 29,500 39,458 134%
Child Benefit 30.000 48.595 162% 100,000 87,850 88%
Carers 8.000 6.951 87% 3500 2790 80%
FIS 13.500 9.881 73% 18,000 28,902 161%
SWA 13.000 7.697 59% n/a n/a n/a
PAYE/PRSI 10.000 6.190 62% 7000 3203 46%
Total 511.500 475.971 93% 463,800 564,354 122%

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5.10 2009 Control targets
Control targets set at the beginning of 2009 and progress to end-March are as follows:

Yr to date savings 2009 Target Yr to date reviews


2009 Target
€m
Scheme Target €m Actual €m % Target Actual %
Jobseekers 37.503 13.653 36 150.000 37,500 31,468 84 150,000
Illness 19.944 20.597 103 79.500 41,748 42,811 103 167,000
OFP 30.747 32.124 105 77.500 21,000 15,298 73 87,000
Pensions (inc
HHB)
20.379 26.018 128 127.000 8,850 7,635 86 32,400
Child Benefit 16.248 21.667 133 65.000 37,998 65,560 173 152,000
Carers
1.998 2.086 104 8.000 624 852 137 2,500
FIS 2.625 3.932 150 10.500 5,748 6,051 105 23,000
SWA

2.499 1.609 64 10.000 n/a n/a n/a n/a


PAYE/PRSI 1.589 1.207 76 7.000 1,135 403 36 5,000

Total 133.532 122.893 92 534.500 154,603 170,078 110 618,900

In the context of the Supplementary Budget, the Government decided that an additional
€82m would be saved this year from control activities. These will arise mainly from
Child Benefit (€30m) and Jobseeker’s payments (€52m).

However, the achievement of these savings will be dependent on the necessary staff
resources being made available immediately. In the short term, until additional
staff is assigned to the Department, 30 of the existing job facilitators (50% of the
cohort) will be temporarily redeployed from activation to control activity in order to
ensure that more home inspections can begin without delay.

In the Supplementary Budget a range of measures were introduced to reduce the


public service pay bill including incentives for early retirement, career breaks and
shorter working hours. It has yet to be seen what impact these arrangements will
have on the Departments services but it should be noted that a large number of staff
engaged on control activities would be eligible to apply for these schemes,
particularly the early retirement scheme.

5.11 Staffing Structure


In the normal course, over 600 staff were involved at local, regional and national level in
control activities including a dedicated section dealing with identity fraud in PPSN
allocations. These staff are mainly deployed as follows:

Control Division: promotes control as an essential element of scheme administration, co-


ordinates and reports on all control activities across the Department. The objective is to

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ensure that control and review work is targeted at those schemes and areas within
schemes, which present the highest risk of fraud and error.
Scheme Control Units: each scheme section has dedicated Control staff who initiate and
undertake control activities within their respective areas. Child Benefit, State Pension
Contributory /State Pension Transition and Widow(er) schemes have moved to a new
computing platform. The new system provides enhanced controls of claim management
and processing with built in validation and supports. The system checks validate the
accuracy in the decisions and ensure correct rates of payment.
Regional Structure: facilitates a more co-ordinated approach to the control of Social
Welfare schemes, including employer inspections and greater efficiency in the use of
control resources. Control work is undertaken by both local office staff and general
inspectors.
Special Investigative Units: carry out a wide range of control duties which include
reviewing means tested claims and entitlement of recipients; carrying out employer
inspections; and investigating fraud and abuse. One of these units, the Joint
Investigation Unit works in conjunction with Revenue staff.
Activation and Control Teams (ACTs): operate at each of the Department's Local
Offices. They ensure that all control activities are being vigorously applied and augment
them with particular approaches based on local knowledge and circumstances.
Medical Assessors: carry out medical review examinations, medical assessment
examinations and desk reviews/ assessments of medical reports in order to provide a
second medical opinion for the guidance of Deciding and Appeals officers.

5.12 Prosecutions
Criminal prosecutions are taken against persons who defraud the social welfare payments
system and employers who fail to carry out their statutory obligations. This is an
important measure in deterring fraud.

In 2008:-

• 357 cases were referred to the Chief State Solicitor’s Office (CSSO) for court
proceedings

• 328 cases were finalised in court

• 960 cases were on hands with the CSSO/Local state solicitors at various stages of
the prosecution process and

• a further 26 cases of possible personation cases were referred by Social Welfare


Inspectors to the Gardai for follow up investigation.

In the first three months of 2009

• 41 cases were forwarded to the CSSO to initiate legal proceedings

• 113 cases were finalised in court and

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• 882 cases were on hands with the CSSO/Local state solicitors at various stages of
the prosecution process

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Chapter 6 – Agencies

1. Citizen’s Information Board


1.1 Agency functions, rationale and prioritisation
The Citizens Information Board is a statutory body which supports the provision of
information, advice and advocacy services to members of the public on a wide range of
social and civil services. This is delivered through a 3 channelled approach; the Citizens
Information website, the Citizens Information Phone Service and the nationwide network
of Citizens Information Services. There are 42 Citizens Information Services (CISs)
operating 111 full or part-time centres and 151 outreach services.

The Board’s mandate, as defined by legislation is to:


 ensure that individuals have access to accurate, comprehensive and clear
information relating to social services;
 assist and support individuals, in particular those with disabilities, in identifying
and understanding their options;
 promote greater accessibility, co-ordination and public awareness of social
services;
 support, promote and develop the provision of information on the effectiveness of
current social policy and services; and to highlight issues which are of concern to
users of those services; and
 support the provision of or directly provide advocacy services for people with a
disability.

Due to budgetary constraints, it has not been possible to proceed with the introduction of
a personal advocacy service at this stage. However, the Board continues to support a
range of community based advocacy initiatives for people with disabilities, and provides
mainstream advocacy services which are also open to people with disabilities.

2007 2008 2009


€ million Outturn Estimate
€ million € million

Programme Expenditure: 19,379 20,063 20,273

Administration and Other Support


- Pay 5,568 5,867 6,029
- Non-Pay 3,731 4,176 2,432
TOTAL GROSS EXPENDITURE 28,678 30,106 28,734

Public service numbers for Programme 2007 2008 2009


(Whole Time Equivalents): WTE WTE WTE
- Civil Servants
- Other Public Servants 91.6 87.6 91.6

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1.2 Opportunities and obstacles for rationalising the staffing resources in this Agency
(incl. any work practice, mobility issues)

The pay and posts included above relate to staff in the CIB corporate function and do not
relate to staff in the Citizens Information network. There is limited capacity to reduce
pay costs further in CIB while maintaining the administration supports, including HR,
finance, website, corporate strategy and policy development, corporate governance, and
advocacy services.

Rationalising services in the Citizens Information Services network, including the


Citizens Information Phone Service, would impact directly on delivery of front line
services at a time when they are experiences increased demand. Nearly 68,000 calls
were made to the phone service in the first three months of 2009, which represented an
80% increase over the same period last year. [TEXT WITHHELD – SECTION 20 &
SECTION 21]

1.3 Options for abolishing /amalgamating this Agency, or assimilating back into
parent Department: include assessment of impact etc.

The Government has already decided to assign responsibility for the Money Advice and
Budgeting Service (MABS) to the Citizens Information Board. The relevant legislative
provisions are contained in the Social Welfare (Miscellaneous Provisions) Act, 2008. It
provides for the transfer of the administration of the disbursement of the funding for the
53 MABS companies from the Department to the Citizens Information Board and for
additional responsibilities in relation to information, financial education and research.

Transition arrangements are currently being implemented with a view to having the
process finalised by July 2009. Four administrative support posts have been transferred
from the Department to the CIB for the management of the MABS.

It is considered that this amalgamation will provide strong management support to the
local voluntary MABS companies in the provision of a high quality service to meet the
needs of people encountering debt difficulties. Cost efficiencies will be realised in the
medium term through premises co-location and the integration of support services such as
administration and IT. These potential cost efficiencies have not been quantified. [TEXT
WITHHELD – SECTION 20 & SECTION 21]

1.4 Other options for reducing expenditure or enhancing efficiency/effectiveness

At present there is a centralised contract for all Government Print Media Advertising.
This contract is held by the OPW and covers all Government Departments and Agencies
including the CIB. As a result, the Exchequer benefits from a large discount because of
the volume of the contract and there is also greater efficiency as each Government
Department and Agency does not have to undertake its own procurement exercise.

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Consideration should be given to centralising in one contract other services which are
currently procured separately by Departments and Agencies such as translation and
interpretation services, advertising or design contracts etc.

Alternatively a Framework Agreement could be established for a number of contract


services. This would

(a) provide enhanced efficiency / effectiveness


(b) reduce the cost due to the volume discount that maybe achieved
(c) provide additional payroll saving, with less staff resources being deployed
overall
(d) speed up the procurement process for all parties concerned.

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2. The Money Advice & Budgeting Service
2.1 Agency functions, rationale and prioritisation
The Money Advice and Budgeting Service (MABS) provides assistance to people who
are over-indebted and need help and advice in coping with debt problems. There are 53
independent MABS companies employing some 250 money advice staff operating the
service nationwide. The MABS is not a separate agency. Each MABS is an independent
legal entity, being a company limited by guarantee with a Board of Directors drawn from
local voluntary and statutory services and community groups. The Department has
overall responsibility for the management of the MABS programme, including the
monitoring of the local MABS Services, financial administration and policy in relation to
the development of the service. Each company has a 3 year contract with the Department
which covers funding and service delivery commitments.

From mid-2009, the Citizens Information Board will take over the role currently
exercised by the Department in relation to the MABS. The Department will retain
responsibility for policy development in relation to the MABS
Inputs

2007 2008 2009


€ million Outturn Estimate
€ million € million
Programme Expenditure: Nil Nil Nil
Administration and Other Support

- Pay €10.37 €11.27m €12.00m


- Non-Pay €4.21m €4.95m €5.93m

TOTAL GROSS EXPENDITURE €14.58m €16.22m €17.3m


Public service numbers for Programme 2007 2008 2009
(Whole Time Equivalents): WTE WTE WTE
- Civil Servants
- Other Public Servants MABS staff are not public servants- they
are employed directly by the independent
MABS companies

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3. Family Support Agency
3.1 Agency functions, rationale and prioritisation

The Family Support Agency (FSA) was established on the 6th of May 2003. It has a
statutory role in relation to support services for families and family policy. The Agency
brings together programmes and services introduced by the Government which are
designed to promote local family support; support ongoing parenting relationships and
help prevent marital breakdown.

The main programmes administered by the Agency are:

• Funding to community based Family Resource Centres (€18.047m in 2009)


• Funding to marriage and bereavement counselling organisations (€11.864m in 2009)
• Provision of Family Mediation Service (€3.305m in 2009 mainly pay)
• Research & Information Programme (€0.560m in 2009)

Inputs
2007 2008 2009
€ million Outturn Estimate
€ million € million
Programme Expenditure:
- Current 29.155 30.463 30.471

Administration and Other Support


- Pay 2.208 2.232 2.223
- Non-Pay 1.865 3.286 3.013
TOTAL GROSS EXPENDITURE 33.228 35.981 35.707

Public service numbers for Programme 2007 2008 2009


(Whole Time Equivalents): WTE WTE WTE
- Civil Servants 15.71 (1) 15.71 (1) 1.5 (1)
- Other Public Servants 26.98 26.98 41.19

Note: The FSA’s HQ currently comprises 18 WTE staff posts (2) (including the CEO),
the balance of 24.69 WTE posts are in the Family Mediation Service. These include the
part-time services of 21 professional Mediators and their necessary supervisory and part-
time administrative support staff.

3.2 Opportunities and obstacles for rationalising the staffing resources in this Agency
(incl. any work practice, mobility issues)

Opportunities availed of :-

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The FSA has already reviewed its work processes and staff resources following which 1.5
posts were saved. However, further rationalising of staffing resources would impact
directly on service provision.

3.3 Other options for reducing expenditure or enhancing efficiency/effectiveness

• The FSA has 16 FMS offices nationwide. The cost effectiveness of each office is
currently being reviewed, taking account of the demand for service, accommodation
costs and lease obligations.

• A fundamental review of the FMS is currently being completed and this will identify
options for further improvements in efficiency and effectiveness.

3.4 List of Recommendations and Options for abolishing /amalgamating this Agency,
or assimilating back into parent Department: [include assessment of impact etc]

Option 1: No change – continue with current situation


Pros
• The original objective in setting up the FSA continues to be valid i.e. bringing
together the main programmes and services to support families introduced by the
Government in recent years. Splitting of services ccould lead to loss of synergies in
terms of the various supports.
• The Agency has had just almost six years to establish itself. Much of the earlier part
of this period was devoted to establishing processes e.g. processing of grant
applications and reviewing of organisations funded, while more recently time is now
being devoted to developing a more strategic focus in terms of objectives and
identifiable outcomes.
• Recognition of the Agency and the work it is involved in is growing; the Agency is
becoming increasingly identifiable to the public as a body providing support to
families; greater linkages are being developed with other agencies and organisations
e.g. Barnardos & Treoir.

Cons
• There is considerable work involved on the part of the Department in its governance
role in overseeing the work of the Agency. The Department also continues to answer
parliamentary questions, provide briefings, speeches etc. on behalf of the Agency,
which involves significant time input from the Family Affairs Unit of the
Department. Some support is also provided to the Agency by the Estimates, HR and
IS services divisions in the Department.
• The Department is represented at Principal level on the Board of the Agency and on a
number of sub-committees of the Board. While this is important in terms of oversight
and governance, again, this is time consuming.
• The corporate service and governance requirements are onerous on the Agency and
could be seen as duplication of the services already established in the Department.

Option 2: Abolish the FSA and move all of its functions to the Department of Social

129
and Family Affairs

Pros
• The ‘family’ element of the Department would be strengthened.
• Some of the work involved on the part of the Department in its governance role
would be avoided.
• The Department would have hands-on access to information for answering PQs,
preparing briefings/speeches etc.
• There would be some savings (approximately €225,000) on items such as legal/audit
fees, accountancy/payroll support and Board costs, including travel and subsistence.
However, these savings would be offset by some DSFA costs for providing similar
services and the disruption costs of disbanding the agency.
• There would be a saving in terms of some of the staff posts in respect of corporate
services if this work was merged into the corporate functions of the Department.
Currently there are approximately 5 posts (1 AP, 2 HEO, 1 EO, 1 CO) involved in
Corporate/HR/Finance work on behalf of the Agency. Some of these posts would
have to be assigned to the relevant Accounts/Personnel sections in the Department.
• There would be some saving in terms of the CEO post.

Cons
• The disbandment of the Agency would be mischievously interpreted as a withdrawal
of support for families as the establishment of the Agency at the time was portrayed
as a strengthening of supports to families.

• Considerable time, staff and financial resources have been provided in assisting the
Agency to establish itself. The full transfer of payroll and accountancy functions
only took place from January 2007. An investment of resources, though not of the
same magnitude, would be required to disband the Agency and move the various
programmes back into the Department.

• The Minister has appointed Board Members with strong connections to the delivery
of family services throughout the country and the work of the Board is structured to
take best advantage of their substantial knowledge and expertise. This expertise
would be lost if the Agency was disbanded. However, a type of Advisory Group
could be established to mitigate this effect, if deemed necessary.

• There could be some loss of expertise and familiarity with the various counselling
organisations, Family Resource Centres and the Family Mediation Service due to the
possible loss of staff contracted to the Agency.

Impact on main FSA Programmes


• The Department is experienced in processing large volumes of claims as part of its
core work and the administration of the Counselling Grants scheme could be
absorbed back into the Department with minimum disruption to the scheme.

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• The nature of the Family Resource Centre programme is different to claims
processing as while there is financial support provided on a quarterly basis to each of
the 107 centres there is also a lot of ongoing support and liaison with the individual
FRCs, their regional support agencies and the National FRC Forum. The Forum and
the individual FRCs could have a concern if the Agency was subsumed into the
Department. It is their view that they are well supported by the FSA. However, this
Department established the FRC Programme and supported 63 FRCs before the FSA
was established.

• The Family Mediation Service is a longstanding service, established in 1986 and


originally under the auspices of the Department of Justice. The service is run by
24.69 whole-time equivalent staff – part-time professional Mediators and
administrative support - who are in 16 locations throughout the country. The Service
is different from the core work of the Department. However, it was managed directly
by the Department before the establishment of the FSA.

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4. Pension Ombudsman

4.1 Agency functions, rationale and prioritisation

The Pensions Ombudsman is a statutory office established in 2002 to investigate


complaints of financial loss due to maladministration and disputes of fact or law in
relation to occupational pension schemes and Personal Retirement Savings Accounts.
The Pensions Ombudsman is completely independent in the performance of these
functions and acts as an impartial adjudicator.

Inputs
2007 2008 2009
€ million Outturn Estimate
€ million € million
Programme Expenditure: Nil Nil Nil

Administration and Other Support


- Pay 0.649 0.698 0.723
- Non-Pay 0.409 0.261 0.251
TOTAL GROSS EXPENDITURE 1.058 0.959 0.974

Public service numbers for Programme 2007 2008 2009


(Whole Time Equivalents): WTE WTE WTE
- Civil Servants 9 10 10
- Other Public Servants

4.2 Opportunities and obstacles for rationalising the staffing resources in this Agency
(incl. any work practice, mobility issues)

The Pensions Ombudsman is fully funded by the State. At present, staffing levels consist
of the Pensions Ombudsman and nine other staff. These nine posts consist of one
Director, four investigators, one EO support for the investigators, an office manager at
HEO level and two support staff. There is limited capacity to reduce these numbers
given the workload of the Office and the fact that several staff are on secondment from
the Department.

Central support services in relation to salaries and accounts are provided by the
Department.

4.3 Options for abolishing /amalgamating this Agency, or assimilating back into
parent Department: include assessment of impact etc.

Issues raised with the Pensions Ombudsman can involve interaction with the Financial
Services Ombudsman and the Financial Regulator as elements of a complaint can involve

132
issues relevant to the remit of both Ombudsmen. Both Ombudsmen each have sole
responsibility for deciding whether a complaint falls within their jurisdiction. If either
decides that a complaint he has received does not come within his jurisdiction and
therefore cannot be accepted for investigation by him, he will consider whether the
complaint seems to come within the remit of the other Ombudsman. Broader issues of
consumer protection are the responsibility of the Financial Regulator. A memorandum
of understanding is in place between the two Ombudsmen and the Financial Regulator to
promote cooperation and direction.

In the longer term, consideration could be given to the amalgamation of the Pension
Ombudsman with the Financial Services Ombudsman. The Financial Services
Ombudsman is funded by levies payable by financial service providers. It is significantly
larger than the Pensions Ombudsman and deals with a larger volume of complaints.

The arguments in favour of an amalgamation include:

• A single point of contact for members of the public seeking redress especially in
cases where it is not currently clear which Agency has responsibility.
• Efficiences in shared corporate services and shared procurement
• A reduction in overall management and administration

Arguments against an amalgamation include:

• The role of the Pensions Ombudsman is specific to pensions and provides


members of the public with a recognisable point of contact for complaints
regarding financial loss due to maladministration in pension schemes or PRSAs.
Complaints made to the Ombudsman have increased significantly in recent years.
• Services such as accounts and salary payments are already centrally managed by
the Department.

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5. The Pensions Board

5.1 Agency functions, rationale and prioritisation:

The Pensions Board was established under the provisions of the Pensions Act, 1990 (as
amended). The main functions of the Board are:

• to monitor and supervise the operation of the Pensions Act and pensions
development generally, including Personal Retirement Savings Accounts
(PRSAs);
• to issue guidelines, codes of practice and advice on training for trustees of
occupational pensions and providers of PRSAs; and
• to advise the Minister for Social and Family Affairs on all matters relating to
functions assigned to the Board under the Pensions Act and on pensions
generally.

The Board is responsible for oversight of some 100,000 occupational pension schemes as
well as over 150,000 PRSAs, with total assets estimated at approximately €65 billion.

The Board is self-financing through the receipt of fees levied on occupational pension
schemes and PRSAs. These fees yielded over €5 million in 2008. In 2009, it will receive
about €0.642 million in Exchequer funding in respect of media campaigns to raise and
promote public awareness of pensions (€500,000) and the recoupment of superannuation
expenses to the Board (€142,000).

The Department no longer pays a subvention to the Board in relation to the regulatory
costs of PRSAs. It was decided, with the agreement of the Department of Finance, to
write off the €8.1 million in payments made from 2001 to 2007. In addition, the Pensions
Board agreed, with effect from 1 January 2009, to increase the contribution it makes to
the Exchequer in respect of its pension scheme – to 25% for staff recruited after 1995 and
30% for pre-1995 staff.

5.2 Opportunities and obstacles for rationalising the staffing resources in this Agency
(incl. any work practice, mobility issues)

The Board has 44.1 full-time equivalent posts. Contracts are issued to all staff, some of
whom are of a permanent/indefinite duration and some on temporary contracts of definite
duration. Salaries are paid directly from Board resources and, as outlined above, the
Board now pays pension contributions that amount to the economic cost of providing
these pensions. The major priority, as set out in the Board’s Operational Review, is to
increase the capacity and ability of the Board to supervise and monitor occupational
pension schemes through an increase in the number of staff. The Department has
supported this request. The second priority area which the Board wishes to focus on is
the area of policy advice, given the increasing attention being paid to pensions at both EU
and national level. It is worth noting that the UK Pensions Regulator, which regulates
some 84,000 schemes and has no policy functions, has a staff complement of 310.

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5.3 Options for abolishing /amalgamating this Agency, or assimilating back into
parent Department: include assessment of impact etc.

There are already strong connections between the Board and Financial Regulator - the
Pensions Board regulates occupational pension schemes and Personal Retirement Savings
Accounts (PRSAs) while the Financial Regulator regulates the companies (such as banks
and life assurance companies) that provide personal pension plans and PRSA's.

The Financial Regulator is charged with helping consumers to make informed financial
decisions in a safe and fair market and fostering sound dynamic financial institutions and
markets in Ireland, thereby contributing to financial stability. Their remit covers financial
institutions both national and cross-border, such as banks, credit unions, insurance
providers covering products such as hedge funds, securities and the health insurance
market. Their staff complement is 350, with some 200 directly employed on
prudential/supervisory duties.

Amalgamation of these two regulatory authorities could result in a number of advantages:

• Efficiences in shared corporate services and shared procurement


• A larger pool of supervisory expertise
• A reduction in the need to procure external policy and technical expertise
• A reduction in overall management and administration
• Reduction in overlap and potential duplication e.g. both agencies are now
providing public information on pensions
• A single point of contact would provide greater transparency for the public

However, a number of issues would have to be addressed if this option was to be


considered further:

• The overall approach to pensions policy may become fragmented. Pensions


policy and regulation includes both social welfare and occupational/personal
pensions and there are strong interdependencies between the two.

• The question of whether the Pensions Board would continue to have a policy
advisory role would need to be clarified.

• The pensions industry and other stakeholders are currently represented on the
Board. In the absence of a separate Pensions Board, the nature of future
representation would need to be clarified.

• Given the publication of the Green Paper and the ongoing development of the
pensions framework, any move in this area might be precipitous and take up
valuable staff resources.

• The current turbulence in the financial and pensions sectors make this an
inappropriate time to make fundamental changes to the supervisory environment.

135