MAIN FEATURES OF OMBUDSMAN INVESTIGATION REPORT
BACKGROUND
Entitlement to pensions such as the contributory old age pension and the contributory widow's pension is created on the basis of social insurance contributions paid during one's working life and on criteria set, in law, by the Oireachtas.
In the vast majority of cases, people claim their pension entitlement on reaching pension age or on being widowed. But in a minority of cases people fail to claim their pension at the earliest opportunity. There are many reasons why this might happen. It might be because the person was unaware of having an entitlement; or because the person was sick and unable to look after his or her affairs; or it might be because the person was given bad advice or misleading information; or because the person had the correct information but did not understand it. Irrespective of the reason for the delay in claiming, the Department limits arrears payments to a maximum of six months prior to the actual date of claim. This means that some people lose out on arrears for the period outside the six month limit, even though there may be good reasons why they failed to claim on time.
THE REPORT
The report shows that the Department's practice in relation to pension arrears derives from a series of regulations made by successive Ministers for Social Welfare since 1952. But the precise grounds for the specific penalty of loss of pension arrears (other than for six months) are no longer clear. In this context the Ombudsman expresses concern at the extent of regulation making by Ministers. The power to make a regulation is one given by the Oireachtas to a Minister (or other public authority) and involves the filling in of the detailed requirements of a particular statute. The Ombudsman expresses his concern that there is often no effective scrutiny of regulations by the Oireachtas even though (as in the present case) they may have far-reaching consequences for the public. In the course of the investigation it emerged that the Department has had an arrangement with the Department of Finance, going back to 1961 in the case of the old age pension, whereby it can pay pension arrears outside of the six months limit on an extra-statutory basis. The arrangement covers a range of situations, many of which would have been relevant to complaints made to the Ombudsman since 1985. In his report, the Ombudsman records his disquiet to have discovered this arrangement at such a late stage given its relevance to cases dealt with over the years.
FINDINGS - SPECIFIC CASES
One of the cases involved a man who should have claimed contributory old age pension in 1983. Because he was still working, he (mistakenly) did not do so. In 1986, after he had retired, he says he enquired with the Department regarding possible entitlements but (he says) was told he had none. He says he repeated these enquiries in early 1987 and was again told he had no entitlement. Eventually he applied for, and was awarded, pension in 1992 following another approach to the Department. However, only six months arrears were paid. The Ombudsman found that, on the balance of probabilities, this man had made contacts with the Department in 1986 and 1987 and that his failure to apply at that time might be attributed both to his general lack of knowledge in relation to social insurance and to the failure of the Department to advise him adequately. On this basis, the Ombudsman recommended that the Department pay him arrears of pension to 1986 as well as paying compensation for the delay in making that payment. The Department accepted this recommendation and paid a total of approximately £33,000 to the man.
The other two cases involved women who were already receiving social welfare payments when they reached pension age. These payments (invalidity pension in one case and widow's pension in the other) were payable at a rate less than the contributory old age pension to which they would have been entitled at 66 years. In one case seven years had elapsed before the woman realised she could have been on the higher rate old age pension; in the other case, three years had elapsed. The Department refused to pay (other than for six months) the difference between the higher and lower rate payments over the periods in question. The Ombudsman found that, even within the terms of the regulation, there was sufficient flexibility to allow the Department to pay the relevant arrears. The Department accepted this even in advance of the finalisation of the report and arrears - £2,200 in one case and £1,230 in the other - were paid to the women. In addition, the Department changed its general approach and henceforth will treat a claim for one payment as satisfying the requirement to have claimed another (higher rate) payment.
FINDINGS - GENERAL
Among the general conclusions of the report were the following:
that, the Department has not adequately publicised the penalties imposed on late claimants;
that the failure of the Department to have regard to the reasons why a person was late in claiming, and its rigid application of the penalties, does not comply with basic fairness or reasonableness, does not satisfy the requirements of the principle of proportionality and, accordingly, is contrary to fair or sound administration;
that the Department's practice reflects a failure to mitigate the effects of rigid adherence to the regulation, produces manifestly inequitable and unequal treatment and results in decisions which are contrary to fair or sound administration;
that the Department's ongoing failure to take action to ameliorate such unfair and inequitable decisions is itself contrary to fair or sound administration.
Arising from these findings, the Ombudsman made a series of recommendations to the Department in relation to improvements in its information service and its ability to advise people of potential pension entitlements; in relation to making public the details of the arrangements for paying arrears on an extra-statutory basis; in relation to the manner in which it might avail of the extra-statutory arrangement (pending an amendment to the regulation governing late claims). Finally, the Ombudsman recommended that the Department should give serious and urgent consideration to mitigating the penalty imposed on late claimants where the only reason for the delay in claiming is lack of knowledge of the social insurance system. The Department accepted all of these recommendations.
NOTE
The Social Welfare Act, 1997 (enacted subsequent to the completion of the Ombudsman's report) contains a number of amendments relevant to late pension claims. Firstly, the Act provides that the maximum arrears payable is being increased from six months to twelve months in the case of contributory pension claims made late. Secondly, the Act enables the Minister to make regulations to pay arrears beyond the new twelve month limit in certain prescribed circumstances. Regulations under this provision have not yet been made.
Any enquiries in relation to this summary, or requests for further briefing, may be made to Michael Brophy or Fintan Butler at 01-6785222. Copies of the report are available on request.
April 1997