1. This report deals with my investigation, under Section 4 of the Ombudsman Act, 1980, of three separate complaints against the Department of Social Welfare (the Department). The complaints all arise from the refusal of the Department to pay full arrears of pension to the complainants who, for varying reasons, were late in making their claims. In technical terms, the complainants made their claims outside the "prescribed time". The lost arrears of pension are significant in all three cases; but in one case, John Smith, the arrears may be as great as £33,000. The pensions in question are the contributory old age pension and the retirement pension. Entitlement to these pensions arises from having paid social insurance contributions and they are not means-tested. I have decided to report on all three cases together because, as will be seen, the fundamental issues arising are common to all three cases. There are some circumstances and issues unique to each of the three cases and these will be dealt with within the overall report.
2. The three specific cases are particular examples of a type of complaint which has arisen, year in and year out, since my Office was established in 1984. At the time of writing, I have 59 other such cases currently on hands. This report, therefore, must inevitably deal with the wider issue of the grounds on which the Department has refused to pay full pension arrears. It is important to explain why these particular cases, and the wider issue, are now the subject of investigation some twelve years after the matter first came to the notice of the Ombudsman.
3. The position in brief is that a person who, for whatever reason, is late in claiming a contributory social insurance pension (whether for old age, widowhood or retirement) will be paid arrears for a maximum of six months prior to the actual date of application. This practice derives from statutory instruments made by successive Ministers for Social Welfare. To take once again the example of Mr. John Smith, he applied for the contributory old age pension in 1992 whereas he should have applied in 1983. His pension was awarded with arrears being paid for a period of six months prior to the actual application but arrears for the period 1983 - 1991 remained unpaid. This example is at the more extreme end of the range of such cases raised with my Office since 1984.
4. My predecessor, Michael Mills, expressed concern on a number of occasions regarding the non-payment of arrears in such cases. He highlighted the issue in a number of Annual Reports. Commenting on the issue for the first time in his 1985 Annual Report, he drew attention in particular to the fact that the Department does not generally have the practice of notifying insured people of their entitlement to contributory pensions. He pointed out that the social security institutions of many of our fellow EU member states do advise people approaching pension age of their entitlement. He observed: "I think it only reasonable that people having paid contributions should be informed, in advance, of their entitlements". In his final Annual Report, for 1993, Michael Mills identified this issue as one on which, regrettably, no progress had been made over the years. Significantly, he drew attention to the principle of proportionality and how it might bear on the manner in which payment of contributory pension arrears is restricted. This is what he had to say:
"I am (also) of the view that pension entitlements, based on social insurance contributions, should not be lost simply because there was failure to apply in time, without due regard to the reasons for the failure to apply. I can accept that it is desirable that claims should be made as close as possible to the point when entitlement first arises. However, I find it hard to accept that the penalty imposed should, in many cases, be so severe. It would appear that the penalty being imposed in this kind of case is totally out of proportion to whatever 'fault' may have occurred. The principle of proportionality is a feature of European Union law and one which may well evolve as a feature of our public law. The present arrangements would appear to be out of step with this principle".
5. I share the concern expressed by my predecessor. In my Annual Report for 1995 I reiterated many of his comments and added:
"...I remain concerned that pension entitlements, based on social insurance contributions, can be lost simply because there was a failure to apply in time without due regard to the reason for the failure to apply. In my view, the penalty imposed by the regulations is, in many cases, too severe. Some of these complainants say that they were unaware of their entitlements. It seems to me that the social welfare system has now become so complex that it may no longer be sufficient for the Department to put the onus on ordinary citizens to be aware of their rights and entitlements."
6. I am also concerned, in a more general way, with the extent of regulation-making in relation to primary legislation where this regulation process is not itself subject to any realistic or effective monitoring and control. It is now standard practice for the Oireachtas to delegate to the relevant Minister (or other relevant authority) the power to fill in, by way of statutory instrument, the detailed requirements of a particular statute. This is entirely understandable, having regard to the heavy demands which are placed on the legislature. But it is a matter of concern that there is very often no effective scrutiny by the Oireachtas itself of these statutory instruments which, in many cases, can have far-reaching consequences for the public.
Oireachtas members themselves have drawn attention to this defect on a number of occasions.
7. My decision to investigate these cases, and the wider underlying issue, arose from two considerations: (1) the fact that the Department had not introduced any change in this area despite a series of suggestions from my predecessor and myself over a period of ten years; and (2) the fact that my Office has continued to receive a significant number of such cases each year.
8. The investigation process involved the formal notification to the Department of my intention to investigate three specific cases. The Department then gave its written response in each of the three cases and this was followed up with a series of interviews with senior officials of the Department. These interviews provided an opportunity for the Department to elaborate on its position and also allowed my Office to seek the Department's views on a number of specific points. The Department made available all files relevant to the particular cases and also files of a more general nature relating to restrictions on the payment of pension arrears. In accordance with my normal procedure, I made a draft of this report - including my findings but not my recommendations - available to the Department for its comments. I sent the draft report to the Department on 17 January 1997. Finally, I am pleased to acknowledge the full co-operation extended to me by the Department in the course of these investigations.
9. The Department sent me its comments on the draft report on 26 February 1997. The comments consisted of an overview statement, set out in a letter from the Secretary, along with a series of specific comments on some individual paragraphs of the draft report. I took account of the specific comments to the extent I felt this to be necessary.
10. The text of the Secretary's letter is contained at Appendix 1. The Secretary dealt in his letter with the issue of the six month restriction on the payment of arrears in the case of contributory pensions claimed late. He referred to the announcement "as part of this year's Budget package" that, in the case of new contributory pension claims made after 1 January 1997, the maximum arrears payable is to be extended from six months to twelve months. The Secretary also dealt with the "appropriateness" of having the provisions restricting the payment of pension arrears in secondary legislation and conveyed that the relevant provisions are to be covered by primary legislation - at Section 32 of the Social Welfare Bill, 1997 (as initiated).