The Minister for Social Protection, Joan Burton TD, today (22nd May 2013) published the Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 to give effect to a number of social welfare and pensions reforms. The Bill is available to view on www.oireachtas.ie. The main provisions contained in the Bill are:
· Changes in liability for PRSI contributions which will broaden the PRSI base;
· Changes to the Jobseeker’s payment schemes;
· Enhanced identity authentication requirements for claiming social welfare payments which will help strengthen the control of welfare expenditure;
· Changes in the governance structure of the Pensions Board; and
· Facilitation of online access to the index information from the registers of births, deaths, marriages and civil partnerships.
Changes in liability for PRSI (Sections 6 and 12)
Budget 2013 announced a number of measures to broaden the income base for PRSI in order to ensure the stability of the Social Insurance Fund so that it can continue to pay the pensions and benefits required by those who need them. A number of these measures were provided for in the Social Welfare Act 2012, including an increase in the minimum level of annual contribution from the self-employed from €253 to €500. This Bill extends liability for PRSI contributions to certain civil and public sector workers who pay modified rates of PRSI (Classes B, C and D) and who also have income from a trade or profession. Such income will now become liable to PRSI at the rate of 4% but will not count towards determining entitlement to social insurance benefits.
The Bill also provides that a working director with a shareholding of 50% or more in a company is deemed not to be employed under a contract of service and will not be regarded as being insurable as an employed contributor in the company. Instead, such company directors are deemed to be employed under a contract for services and to be liable for PRSI Class S contributions (as a self-employed person).
Jobseeker’s Benefit and Jobseeker’s Allowance (Sections 9 and 10)
The Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 introduces measures to allow for the transition of lone parents to the Jobseeker’s Allowance scheme when they no longer qualify for One-Parent Family Payment due to their youngest child reaching specified age thresholds. Former recipients of One-Parent Family Payment will be exempt from a number of the conditions for Jobseeker’s Allowance for a transitional period up until their youngest child reaches 14 years of age. Lone parents who qualify for Jobseeker’s Allowance during this transitional period will be required to engage proactively with normal activation processes in order to retain their payment. In effect, the lone parents in question will be placed on a targeted version of Jobseeker’s Allowance to be known as Jobseeker’s Transition.
Separately, in recognition of the nature of their conditions of employment, the Bill also provides that retained fire-fighters will be exempt from certain conditions applying to the Jobseeker’s Benefit and Allowance schemes.
Public Services Card (Section 11)
Under existing legislation, all new applicants for a social welfare payment, a Personal Public Service Number (PPSN) or a Public Services Card are required to confirm their identity before a payment can be awarded or a PPSN or Public Services Card can issue. Where required, this involves applicants having to attend at a designated office in order to have their photograph and a sample of their signature recorded electronically. The Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 extends these identity authentication requirements to existing recipients of social welfare payments. A person who refuses without good reason to comply with these requirements will be disqualified from continuing to receive a social welfare payment.
Explaining this section, Minister Burton said: “These provisions will further assist the Department in combating social welfare fraud. Such fraud undermines confidence in the entire system and is unfair to genuine claimants and the taxpayers who fund the system in the knowledge that it is there for them when they need it.”
Personal Public Service Number (PPSN) (Section 14)
The Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 extends the list of bodies that are authorised to use the Personal Public Service Number (PPSN) for the purposes of carrying out transactions with members of the public and for sharing personal data and information for the purposes of carrying out such transactions. The additional bodies being included are:
- the Insolvency Service of Ireland;
- Quality and Qualifications Ireland; and
- Payment service providers who have been authorised by the Revenue Commissioners to collect the Local Property Tax.
Amendments to Civil Registration Act 2004 (Section 16)
The Bill amends the Civil Registration Act 2004 to facilitate online access to the index information from the registers of births, deaths, marriages and civil partnerships. In line with the National Genealogy Policy, the Department of Arts, Heritage and the Gaeltacht will enable online searching of this information through the www.irishgenealogy.ie website which is hosted by that Department. Index information in relation to adoptions and stillbirths is excluded.
Pensions-related issues (Section 17-30)
Part 4 of the Bill provides for changes to the governance structure of the Pensions Board and these changes will come into operation by way of Commencement Order.
Changes to the Pensions Board
The Pensions Board is being renamed as the Pensions Authority under Section 22 of the Bill and its governance structure is changing. The Pensions Authority will consist of an independent chairperson appointed by the Minister for Social Protection and 2 ordinary members (reduced from 16 ordinary members). The 2 ordinary members will consist of a representative of the Minister for Social Protection and a representative of the Minister for Finance.
Establishment of a Pensions Council
The changes include the establishment of a new unincorporated body called the Pensions Council. The function of the Pensions Council will be to advise the Minister for Social Protection and the Pensions Authority on pension matters on request or on its own initiative. The Pensions Council will not be a corporate body and will not have the power to spend money.
The Pensions Council will comprise:
- a chairperson;
- a representative of the Minister for Social Protection;
- the Pensions Regulator;
- a representative of the Central Bank;
- a representative of the Department for Public Expenditure and Reform;
and up to 8 other members each of whom the Minister for Social Protection considers to have the relevant skills, specialist knowledge, experience or expertise to enable them to carry out their functions under the Pensions Act.
The chairman and members of the Pensions Council will be unpaid and will be appointed by the Minister.
As well as the name of the Pensions Board changing to the Pensions Authority, the name of the chief executive of the Pensions Board will be changed to the Pensions Regulator and s/he will also be a member of the Pensions Council.
Explaining these provisions, Minister Burton said: “These provisions, arising from the recommendations of a Critical Review conducted by a steering committee chaired by Richard Hinz of the World Bank, are aimed at improving governance, ensuring greater public awareness of pensions oversight and increasing consumer trust in the pensions system.”
Other provisions of these Sections
The Pensions Board will be provided with the power to wind-up a pension scheme in circumstances where a scheme is underfunded and the trustees and employer are not in a position to adopt a funding proposal, and where the trustee of a scheme fails to comply with a section 50 direction to restructure scheme benefits.
The Pensions Ombudsman will be allowed to hold office for a period of up to six years rather than a fixed period of six years and the age on which the Pensions Ombudsman must vacate his office will be changed from 67 years to 70 years.
Part 4 of the Bill also provides for changes to be made to the fines regime which applies to Personal Retirement Savings Accounts and provision is being made for an appeal to the High Court on the point of law following a direction from the Pensions Board to restructure a pension scheme.
While the above reforms will proceed in the best interests of consumers and oversight, a number of other proposed reforms will require further detailed consideration by Government and will therefore not proceed at this time.
Specifically, it has been decided not to proceed for now with provisions to change the pensions priority order, i.e. the order in which assets are disbursed when a defined benefit pension scheme winds up.
In light of the recent decision by the European Court of Justice in the Waterford Crystal case, the Government recognises the need for a comprehensive policy and legislative response that addresses the range of
issues involved.
In addition, it is considered necessary to await the submission of funding proposals by the trustees and/or plan sponsors of underfunded defined benefit schemes. These funding proposals are due to be submitted to the Pensions Board by the end of June 2013, and will give a more comprehensive, in-depth picture of the funding position of defined benefit schemes. It will also allow for the impact of the many measures already introduced by Government to be assessed, including the potential benefits to schemes of the use of sovereign annuities/annuities.
As such, the Minister for Social Protection is keeping the situation under review and will report back to Government in the coming months on these issues. A wider package of legislative proposals and additional reforms will be considered at that stage.