Social Welfare and Pensions Bill 2011 - Explanatory Memorandum


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EXPLANATORY MEMORANDUM

Introduction

Main Provisions

The purpose of the Bill is to give legislative effect to miscellaneous amendments to the Social Welfare Consolidation Act 2005, the National Minimum Wage Act 2000, the Comhairle Act 2000, and the Pensions Act 1990. These amendments include:

(a) restoration of the National Minimum Wage to its previous level,

(b) changes to the social welfare code arising from the Jobs Initiative announced on 10 May 2011,

(c) changes to the social welfare code arising from the EU/IMF Programme of Financial Support for Ireland,

(d) provisions to strengthen certain control measures and to facilitate the transfer of the administration of the Supplementary Welfare Allowance scheme from the Health Service Executive to the Department of Social Protection,

(e) amending provisions relating to appointments to the Board of the Citizens Information Board to include the standard restrictions on board membership where a person has been nominated or elected to the Oireachtas or the European Parliament, or a local authority, and

(f) implementation of the provisions of Article 17 of Directive 2003/41/EC on the Activities and Supervision of Institutions for Occupational Retirement Provision (IORPS Directive).

Part 1
Preliminary and General

Section 1 provides for the short title, construction and any necessary commencements.

Part 2
Amendments to Social Welfare Acts

Section 2 provides for the usual definition of the Principal Act for the purpose of this Part of the Bill.

Section 3, together with section 23, makes amendments to the provisions relating to PRSI contributions. The Jobs Initiative announced the halving of the lower 8.5% rate of employer PRSI contribution where reckonable earnings in a week do not exceed €356. The lower 8.5% rate comprises a social insurance contribution of 7.8% and National Training Fund Levy of 0.7%. Section 3 provides for the halving of the 7.8% social insurance contribution, while section 23 provides for halving of the 0.7% National Training Fund Levy. These changes apply to contributions payable from 1st July 2011 to 31st December 2013. Section 3 also amends changes made in the Social Welfare and Pensions Act 2010 in relation to the recording of weekly social insurance contributions as a result of the abolition of the employee PRSI relief on employee pension contributions, as they are no longer considered necessary.

Section 4 re-titles the widow's (contributory) pension and widower's (contributory) pension scheme following the enactment of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010. It will now be titled the widow's (contributory) pension, widower's (contributory) pension and surviving civil partner's (contributory) pension scheme.

Section 5 discontinues the Dependent Parent's Pension scheme for new applicants. This scheme, which forms part of the Occupational Injury Benefits scheme, is now effectively obsolete. No new applications have been received for the scheme since 1987. The section also provides transitional measures to enable the continuation of payment of Dependent Parent's Pension for existing recipients for the duration of those claims and for the processing of any claims for pension received before the abolition of the scheme.

Sections 6 and 7 provide for the necessary amendments to increase the State pension age in line with the Government's National Pensions Framework as set out in the EU/IMF Programme of Financial Support for Ireland, which must be implemented by the end of the second quarter of 2011. Section 6 discontinues the State Pension (Transition) for new claimants with effect from 1 January 2014. Section 7 provides for an increase in the age for qualification for the State Pension from 66 years to 67 years from 2021, and a further increase to 68 years from 2028.

Section 8 clarifies the provisions limiting the overall amount of assistance paid to a couple where Pre-Retirement Allowance is being paid.

Section 9 makes a number of amendments to the one-parent family payment to clarify the operation of the revised qualifying criteria for that payment following the introduction of the restriction on entitlement for families where the youngest child reaches 14 years. These changes are necessary to ensure that the general qualification criteria will apply to cases where one-parent family payment is retained for limited periods under transitional measures and in cases of recent bereavements. This section also ensures that payment can continue up to 16 years where the youngest child is receiving Domiciliary Care Allowance.

Section 10 provides for a number of amendments that are required to the legislative provisions relating to the Supplementary Welfare Allowance (SWA) scheme following the transfer of responsibility for the administration of that scheme from the Health Service Executive (HSE) to the Department of Social Protection. These changes include amendments to provide that decisions relating to the provision of assistance under the SWA scheme towards burials will be made by officers of the Department of Social Protection rather than the HSE. A number of unnecessary provisions are also being deleted.

Section 11 amends certain means assessment provisions as a consequence of the abolition of the income levy and the health contribution. In addition, the provisions of the Family Income Supplement scheme, which is calculated by reference to the net income of the family, are being amended to include the Universal Social Charge in the list of deductions when determining the net income of the family.

Section 12 extends the Minister's existing powers to make Regulations specifying information to be provided by claimants for social welfare benefits that would be useful in determining entitlement to that benefit or in assessing the training or other educational or development needs (i.e. for profiling purposes). This extension will allow such information to be provided also by existing recipients.

Section 13 extends the powers of Social Welfare Inspectors to investigate employers, contractors and sub-contractors who are found to be employing people and to investigate those workers and provides for more practical arrangements where Social Welfare Inspectors form part of multi-agency checkpoints with the Gardai and Customs Officers.

Section 14 clarifies the provisions relating to the allocation of Personal Public Service Numbers (PPSN) so as to allow parents and guardians to apply for PPSNs for children under 18 years and personal representatives to apply for a PPSN where a person is unable to act (e.g. because of a severe disability).

Section 15 strengthens the provisions relating to the use of Public Services Cards by providing for the cancellation and surrender of these cards where evidence becomes available that the card is being used illegally. This section also makes it an offence to fail to surrender a Public Services Card, without reasonable excuse, when requested to do so.

Section 16 makes changes in relation to the National Internship Scheme. This section excludes the Tax Acts from the provision of the Social Welfare and Pensions Act 2010 which deemed participants on the then Skills Development and Internship programme, not to be employees for the purposes of labour legislation (other than the Safety, Health and Welfare at Work Act 2005). Section 16 also provides for a number of amendments to the operation of the social welfare means testing arrangements following on from the replacement of the Skills Development and Internship programme with the National Internship Scheme. It also ensures that a person who participates on the National Internship Scheme for periods of shorter than a week (e.g. 3 days) will not be able to claim social welfare benefits for the remainder of the week.

Sections 17 and 18 provide that where a fraudulent social welfare overpayment occurs, any other social welfare benefits to which that person may have qualified for during the period in which that overpayment occurred will not be offset against the amount of the overpayment to be recovered.

Section 19 clarifies that the Domiciliary Care Allowance is not assessable as means for Supplementary Welfare Allowance purposes.

Section 20 extends the list of bodies that are specified in the Social Welfare Consolidation Act 2005 as being authorised to use the Personal Public Service Number (PPSN) for the purposes of carrying out transactions with members of the public, for sharing personal data and information amongst themselves for the purposes of carrying out relevant transactions, and for exchanging data. Two additional bodies are now included — the Probate Office and the Sustainable Energy Authority of Ireland.

Part 3
Amendment and Modification to other Enactments

Section 21 amendments the Comhairle Act 2000 to apply the standard exclusion from membership of the Citizens Information Board where a member of the Board has been nominated for or elected to the Oireachtas or the European Parliament or becomes a member of a local authority. Section 21 also applies the standard provisions relating to staff of the State Boards and Agencies who are nominated for or elected to the Oireachtas, the European Parliament or to local authorities, to the staff of the Citizens Information Board. The provisions of this section will apply to Board and staff members who are nominated for or elected to the Oireachtas, the European Parliament or to a local authority on or after 1 July 2011.

Section 22 amends the National Minimum Wage Act 2000 to restore the National Minimum Wage to its previous level by setting a national minimum hourly rate of pay of €8.65.

Section 23 makes an amendment to the National Training Fund Act 2000 to provide for a reduction in the National Training Fund Levy in certain circumstances.

Section 24 provides that section 7 of the Official Languages Act 2003 does not apply in relation to this Act. The text of this Act will be made available electronically in each of the official languages as soon as practicable after its enactment. This will enable any necessary Orders and Regulations that need to be made under the Bill by early July to be made without having to wait for the Irish translation of the Act to be made available.

Part 4
Amendments to Pensions Act 1990

Chapter 2 of Part 4 of the Bill provides for the amendments to the Pensions Act 1990 necessary to implement the provisions of Article 17 of Directive 2003/41/EC on the Activities and Supervision of Institutions for Occupational Retirement Provision (IORPS Directive).

The Pensions Act makes provision for the certification by the Pensions Board of certain policies or contracts of assurance (Annuities) as being suitable for pension purposes. Chapter 3 of Part 4 of the Bill clarifies the responsibility of the Pensions Board in relation to the certification of such contracts or policies.

Chapter 1 of Part 4 (Section 25) provides for the definition of Principal Act for the purpose of this Part of the Bill.

Sections 26 to 28 insert some new definitions and amend some existing definitions as they apply to Part 4 of the Bill.

Section 29 specifies the timeframe for the preparation and submission to the Pensions Board of an actuarial funding certificate by a regulatory owns funds scheme. It specifies the "effective date" on which the actuarial funding certificate must be prepared. The trustees of a regulatory own funds scheme must prepare this certificate on an annual basis and must submit it to the Pensions Board within three months of the "effective date" of the certificate.

Sections 30 to 32 exempt regulatory own funds schemes from the requirement to submit funding proposals or to restructure scheme benefits where a scheme fails to satisfy the funding standard under Part IV of the Act. The requirement to submit funding proposal and to restructure scheme benefits as applicable to regulatory own funds schemes is set out in the new Part IVB of the Act, which is being introduced by section 35.

Sections 33 and 34 amend the Pensions Act to:

  • ensure that the actuary appointed to a regulatory own funds scheme has the required qualifications;
  • include regulatory own funds trust Retirement Annuity Contract (RAC) technical provisions certificates and regulatory own funds certificates, prepared by an actuary, within the meaning of actuarial work for the purpose of compliance with the Act.

The existing provisions in Part IV of the Pensions Act require defined benefit pension schemes to satisfy a funding standard by maintaining sufficient assets to enable them discharge their accrued liabilities in the event of the scheme winding up. Where schemes do not satisfy the funding standard, the sponsors/trustees must submit a funding proposal to the Pensions Board to restore full funding within three years. This period can be extended at the discretion of the Pension Board. Section 35, which implements the substantive elements of Article 17, builds on this process to secure the additional reserves required to implement Article 17 of the IORPS Directive. This section inserts a new Part IVB into the Pensions Act which provides for the following:

  • Definitions for the purposes of the new Part IVB of the Act,
  • Application of this Part to regulatory own funds schemes and to regulatory own funds trust RACs with certain exceptions provided for under Article 5 of the IORPS Directive,
  • Preparation and submission to the Pensions Board of a regulatory own funds trust RAC technical provision certificate,
  • Requirement to hold additional reserves,
  • Amount of regulatory own funds required,
  • Certification of the regulatory own funds requirement,
  • Notification of the regulatory own funds status,
  • Failure to satisfy the funding standard, technical provision requirement or regulatory own funds requirement,
  • Provision of discretion to the Pensions Board to request a supervisory regulatory own funds certification as may be required,
  • Enabling the Pensions Board to determine whether or not a scheme is a regulatory own funds scheme or regulatory own funds trust RAC.

Section 36 provides for the appointment of a scheme administrator to perform the functions specified in Part IVA of the Act in relation to a small trust RAC which is a regulatory own funds trust RAC and to enable the exchange of information between the scheme administrator, the actuary and the trustees of a regulatory own funds trust RAC.

Section 37 requires the pension scheme administrator of a regulatory own funds trust RAC including where such a trust RAC is "frozen" to prepare an annual report. In the normal course, a scheme would prepare and submit an actuarial funding certificate every three years and include an inter-valuation statement in the annual report in the intervening years. This provision will not apply to regulatory own funds schemes as these schemes are required to submit funding certificates on an annual basis.

Section 38 requires the trustees of regulatory own funds schemes and regulatory own funds trust RACs to prepare audited accounts and valuation reports.

Section 39 provides that a person shall not perform the core administration functions for a small trust RAC, which is a regulatory own funds trust RAC, unless that person is registered with the Pensions Board as a registered administrator.

Part IVA of the Pensions Act provides for the approval of policies or contracts of assurance (annuities). Sections 40 to 43 alter this Part of the Act to clarify the position of the Pensions Board in relation to these policies or contracts of assurance and provides for the certification by the Pensions Board of these policies or contracts of assurance rather than the approval of such policies or contracts.

Last modified:07/06/2011
 

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