Ireland

I. POLICY DEVELOPMENTS

1997 saw the 50th anniversary of the founding of the Irish Department of Social Welfare. During the reference period in question, a number of important policy initiatives were taken in the field of social security. These included:

• The publication, in October 1996, of a Social Insurance Discussion Document which contained an analysis of the current Irish social insurance system and set out issues and policy options regarding coverage, types of entitlements, levels of payment and rates of Pay-Related Social Insurance contributions.
• The publication of the interim report of the Commission on the Family in November 1996. As outlined in MISSOC 1995/96, the Commission was established to examine the needs and priorities of families today and to recommend how they can be strengthened and supported for the future. The interim report included the following recommendations

• the introduction of a family impact statement which would set out clearly the consequences of policies, programmes and services for families in all major areas of Government activity;

• the funding available under the Department’s scheme for local women’s and men’s groups should be increased, and that parenting skills should continue to be a priority activity eligible for funding under these schemes;
• that consideration be given to the possibility of allowing for the joint taxation of co-habiting couples, in cases where such a couple have a child mainly resident with them, as recommended by the Expert Group on the Integration of Tax and Social Welfare (see MISSOC Report 1995/96).

• The final report of the Commission will be published in mid-1998.

• Finalisation of the National Anti-Poverty Strategy (NAPS) (see also MISSOC report 1995/1996) in April 1997. This is a major policy initiative designed to place the needs of the poor and the socially excluded among the issues at the top of the national agenda. The main priority is to reduce the 9-15% of the population identified as consistently poor, to under 5-10% by the year 2007.

• Policy actions were identified across five key areas:

• educational disadvantage;
• unemployment;
• income adequacy;
• urban disadvantage; and
• rural poverty.

• The launch of a Green Paper on the Role of the Voluntary and Community Sector and its relationship with the statutory sector in May 1997 with the aim of stimulating further debate and to facilitate further engagement between statutory and voluntary sectors in relation to the issues involved. It also covers issues such as:
• suggested principles which should underpin the relationship between the State and the voluntary sector, including the matter of representation in national policy-making for;
• suggestions regarding the method and source of funding for national representative structures for the voluntary sector;
• criteria to be attached to funding generally by statutory agencies;
• issues relating to charitable status and taxation issues;
• effective consultation mechanisms already in place both nationally and at EU level and the reason(s) for their effectiveness; and
• areas which could usefully be explored where models of statutory/voluntary sector co-operation should be actively encouraged.
• The report on the Strategic Management Initiative in the Irish Civil Service, entitled Delivering Better Government which was launched in May 1996 set down a framework for change, and identified new ways of responding to issues such as poverty and unemployment across Government Departments. One of the priority areas for action highlighted in the report is customer service (see MISSOC 1995/1996). As part of this initiative, the Government published its "Principles of Quality Service for customers and clients of the Civil Service" in May 1997. The Department of Social, Community and Family Affairs (as with all Government Departments/Offices) has published a customer action plan setting out how these principles will be implemented.

II. ORGANISATIONAL DEVELOPMENTS:

• Phase 4 of the biggest IT project ever undertaken by the Department of Social, Community and Family Affairs - ISTS (Integrated Short-Term Systems) - was implemented in June 1997. This phase covered sickness benefit payments, will increase the number of claims handled by a further 50,000 and will allow for an improved client service. The new computer system was introduced for unemployment payments from February 1995, and for Supplementary Welfare Allowance, in June 1996 - already generating payments to approximately 200,000 customers in receipt of Unemployment Benefit, Unemployment Assistance and Supplementary Allowance each week. The system also supports integration of the income tax and social welfare systems by providing for taxation of social welfare benefits at source for those who have a tax liability.
• In July 1997, following the election of a new Government, the name of the Department was changed from ‘Social Welfare’ to ‘Social, Community and Family Affairs’ to better reflect its wider remit. Additional responsibilities being assumed include responsibility for marriage support services, family mediation services and progressing other issues, in particular initiatives in the community for children, arising from the final report of the Commission on the Family - see above. The new Government signalled that substantial increases in funding to the Family Mediation Services would form part of its Budget ’98 package. On an administrative level, a Family Affairs Unit has been set up within the Department.
• August 1997 saw the re-location of several units of the Department dealing with the collection of Pay Related Social Insurance for nearly 145,000 self-employed persons and 3,350 people who may not have a tax liability in Ireland - to the south-east of the country, in Co. Waterford.
• In December 1997, a Social Security Agreement was signed between Ireland and the Swiss Confederation - the main purpose of which is to protect the pension rights of people who have worked and paid social security contributions in both Ireland and Switzerland. The Irish Benefits covered by the Agreement are: old age contributory pension, retirement pension, survivors (contributory) pension, orphans’ (contributory) allowance and invalidity pension. In Switzerland, the following benefits are covered: old age pension, survivors pension, invalidity pension, sickness cash benefit and maternity cash benefit. It is expected that the Agreement will become operational in late 1998.

III. ILLNESS

In October 1996, responsibility for the administration of the Disabled Person’s Maintenance Allowance was transferred to the Department of Social, Community and Family Affairs from the Department of Health and Children. This integration with the income maintenance payments of the Department of Social, Community and Family Affairs aims to simplify and streamline the provisions for sick and disabled people generally. At the same time as the scheme was transferred it was also renamed Disability Allowance.

The Commission on the Status of People with Disabilities (CSPD) published its report in November 1996 which contained a wide range of recommendations of interest in the context of this MISSOC update. Of the 402 recommendations contained in the Report, 60 were identified as having relevance to the Department of Social, Community and Family Affairs. The main recommendations are:

• the establishment of a non-means tested payment to compensate for loss of income due to an incapacity for full-time work or work to full potential, to be known as a ‘Disability Pension’. This payment would replace the existing Disability Allowance, Invalidity Pension and Blind Person’s Pension;
• the establishment of a graduated payment to meet the additional costs associated with disability;
• changes in the financial support available to carers;
• the payment rates (in real terms) recommended by the Commission on Social Welfare (in 1986) to be achieved as a matter of priority; and
• the transfer of responsibility for some existing schemes from the 8 regional Health Boards to the Department of Social, Community and Family Affairs.

Arising from the findings contained in the Report, the Government decided to prepare a Plan of Action on the rights of people with disabilities. An Inter-Departmental Task Force has been established to prepare the Government’s Action Plan. In addition, a separate Monitoring Committee has been established to oversee the implementation of the Commission’s recommendations. This committee comprises representatives from organisations dealing with people with disabilities, their families and carers and service providers. The social partners and Government Departments are also represented.

Provision was made in 1997 for a part-payment of Disability Allowance for those in part-time residential care and the payment of an additional allowance equivalent to 50% of the Carer’s Allowance to carers looking after more than one person.

In addition, the 1997 Budget provided for a standardisation of the amount of earnings from rehabilitative employment which may be disregarded for means test purposes in the case of Disability Allowance, Blind Person’s Pension and Supplementary Welfare Allowance. 1,000 places have also been designated for people with disabilities on the Back-to-Work Allowance.

The earnings limit for entitlement to Dental and Optical Benefits was abolished in April 1997. Prior to that, those with earnings in excess of IEP 35,000 per annum were not entitled to such benefits. Also, from April 1997, qualified adult dependants who take up employment will retain entitlement to these benefits until they qualify in their own right.

In line with the new Government’s ‘Action Programme for a New Millennium, an October 1997 cross-Departmental initiative - involving the Departments of Social, Community and Family Affairs / Health and Children / Justice, Equality and Law Reform - extended funding of IEP 5 million to a programme of investment to ensure that people with disabilities and other groups (particularly older people) can more fully participate in society.

One gap in social assistance cover which has existed over the years is cover during temporary periods of illness of disability. The income needs of people with disabilities are met through the Disability Allowance scheme. However, this scheme is payable only in respect of people whose employment capacity is substantially restricted because of their disability and there is no specific social assistance cover for periods of temporary illness. Accordingly, the income needs of such people were met through the Supplementary Welfare Allowance scheme. However, this payment, which was originally designed to provide a residual and support role within the overall income maintenance structure, was not regarded as an appropriate income support mechanism in these circumstances.

The Social Welfare Act, 1997, contained legislative provision for a new payment - Sickness Allowance - which will operate along the same lines as the contributory-based Disability Benefit scheme, with a requirement that in order to qualify a person must be incapable of work due to illness. Payment of the new allowance will also be subject to medical certification from a General Practitioner and claimants may be required to attend for an examination with a Medical Examiner from the Department. While originally envisaged that the scheme would commence in 1997, its introduction has been deferred due to preparations in the Department’s computer-based systems for Y2K. A review on this position will be undertaken later in 1998. In the mean-time, all those who would have qualified for the Sickness Allowance payment are currently being catered for through other social welfare payments.

4. REVIEW OF RATES OF SOCIAL WELFARE PAYMENTS

All weekly social welfare payments and adult dependent allowances were increased by at least 4% from mid June 1997.

As a result of these increases more recipients are now at, or very close to, in real terms to the levels recommended by the Commission on Social Welfare, and in the case of some payments have exceeded these target rates. Those receiving contributory-based pensions are at 113% of the target rate, those on Invalidity Pension have reached 100%, while most other recipients, who were at 95% of the target rate, now move up to 98%. People in receipt of Supplementary Welfare Allowance and short-term Unemployment Assistance move up to 95% from 92%. This is very much in line with the commitment of successive Governments, given in national pay agreements with the social partners - the most recent, Partnership 2000, was concluded earlier in 1997.

5. PENSIONS

In line with the recommendations of the Task Force on Security for the elderly (see MISSOC 1996), a mailshot issued to 320,000 pensioners, co-ordinated by the Departments of Social, Community and Family Affairs and Justice, Equality and Law Reform. The purpose was to provide people with specific information and advice on how to improve personal security both inside and outside their homes. A short-term freephone helpline was also established to facilitate pensioners who had queries regarding security or social welfare issues.

As indicated in MISSOC 1996, the final report of the National Pensions Board (1993) recommended that actuarial reviews of the projected costs of Social Welfare pensions be carried out at least every 5 years. The first such review, carried out by the Department of Social, Community and Family Affairs, was completed by June 1997 and is based on population projections for the 60-year period from 1996 to 2056. It sets out the future costs and financing implications under different scenarios and assumptions concerning population and labour force trends and economic growth. The most important conclusions contained in the Actuarial Review are:

• the proportion of those over 65 relative to those of working age will initially reduce slightly and then increase steadily to the end of the projection period (1996-2056);
• if pensions are indexed to prices, spending on the Social Welfare pension system will fall relative to GNP, from 4.8% in 1996 to 2.6% in 2056;
• if pensions are indexed to wages, spending on the Social Welfare pension system will rise relative to GNP, from 4.8% in 1996 to 8.0% in 2056;
• if the subvention from general taxation to the Social Welfare pension system is frozen at its present level of 5% of total contributions, contribution rates would have to increase by 19% if pensions were indexed to prices, or by 227% if pensions were indexed to wages.

The findings of this review are being fully taken account of by the National Pensions Policy Initiative, the first stage of which commenced in February 1997 with the publication of a Consultation Document jointly sponsored by the Department of Social, Community and Family Affairs and the Pensions Board. This initiative was launched to find the most appropriate methods of ensuring that workers are adequately protected in their retirement, and is intended to promote debate on the future of overall pension policy for Ireland. The second stage of the initiative involves the gathering of responses to the Consultation Document and further discussion of specific ways forward, leading to a report and recommendations to the Minister for Social, Community and Family Affairs by mid-1998.

A new pro-rata Old-Age (Contributory) Pension was introduced in November 1997. Under the new arrangements, reduced rate payments are now made to people who have a yearly average of between 10 and 19 contributions over the relevant period. A new Widower’s (Non-Contributory) Pension was also introduced in 1997 for widowers who are not raising children - those who are will continue to be entitled to claim the new One Parent Family payment - see below. The new pension is subject to a means-test and is available to widowers on the same basis as widows. As in the case of the Widow’s (Non-Contributory) Pension, a man whose marriage has been dissolved and whose former wife subsequently dies, will be entitled to claim the new payment subject to satisfying the means test.

V. PRO-EMPLOYMENT MEASURES

Measures introduced to maintain/stimulate employment included;-

• an increase in the number of places available under the Back-To-Work Allowance scheme by 5,000 to 22,000. Of these, up to one thousand (20% of the new placements) are earmarked for people on the Disability Allowance. (The Back-To-Work Allowance enables qualified people to retain 75% of their social welfare payment for the first year, reducing to 50% and 25% respectively over the second and third year). An independent evaluation of the Back-To-Work Allowance, carried out by social and economic consultants in November 1997, found that, in the case of the self-employed, the post scheme survival rate was estimated at over 60%.
• the conditions for requalifying for Unemployment Benefit, which will help, in particular, casual and part-time workers were eased from April 1997. Since 1992, workers who have exhausted their entitlement to unemployment benefit, were precluded from requalifying for unemployment benefit until they had a further 13 PRSI (pay-related social insurance) contributions paid. The new measure will mean that the 13 weeks of PRSI contributions can be paid at any time after the 156th day of unemployment rather than the 390th day as at present. Approximately 10,000 people will benefit under the revised arrangement.
• the income thresholds for entitlement to Family Income Supplement (FIS) were increased by IEP 10 from June 1997, ensuring that virtually all current recipients will receive an increase of IEP 6 per week. In addition, FIS entitlements are now determined on the basis of gross income less any social insurance (PRSI) contributions and levies payable - this is the first step towards meeting the Government's commitment to move the calculation of FIS on to a net income basis;
• The Child Dependent Allowance is now retained, for a 13 week period, by Social Welfare recipients who take up employment immediately following their participation in a Community Employment Scheme or who take up employment under the Jobs Initiative scheme.

VI. FAMILY POLICIES

As outlined above, the final Report of the Commission on the Family is due in mid-1998 and will be outlined in further detail in the next MISSOC update.

Universal Child Benefit was increased, in September 1996, by 7% approximately for the first two children and by some 6% for each other child. Taking the two years of 1995 and 1996 together, the value of this payment has increased by 45% and 36% respectively. In addition, the new grant for Twins (referred to in MISSOC 1995) came into effect - i.e. IEP 500, payable at birth and at ages 4 and 12. The 1997 Budget targeted larger families with net monthly increases of IEP 1 per child for the first two children and IEP 5 per child for the third and subsequent children. Over the past three Budgets, a three child family has received a 52% increase in their Child Benefit payments and a five-child family 54%.

Other measures introduced during the period under review which will impact favourably on the position of families include:

• As mentioned in MISSOC 1995, the Lone Parent's Allowance and Deserted Wife's Benefit schemes were replaced by a new One-Parent Family Payment from January 1997 for new claimants. The new scheme is designed to facilitate one parent families who wish to enter or return to the workforce. Instead of being means-tested, this payment will be earnings related, thereby permitting recipients to have earnings within certain limits while retaining entitlement;
• From June 1997 the Maternity Benefit and Adoptive Benefit schemes were extended to women in insurable self-employment who satisfy the prescribed social insurance contribution conditions. In order to qualify, the self-employed contributor must have at least 52 contributions paid in the last complete contribution year or the second last complete contribution year in the benefit year in which the maternity leave commences;
• From June 1997, those who cease to be entitled to a Carer’s Allowance or the One Parent Family Allowance, because they no longer provide care and attention or have a qualified child, can transfer directly to the Pre-Retirement Allowance scheme. Previously, such people were required to wait 15 months before transferring to this payment;
• In November 1997, legislation was brought into effect providing for the tapered withdrawal of the adult dependent allowance for those receiving Unemployment Benefit, Unemployment Assistance, Disability Benefit, Disability Allowance, Pre-Retirement Allowance, Injury Benefit and Unemployability Supplement. Highlighted by the Expert Working Group on the Integration of Tax and Social Welfare as a poverty trap, the previous provisions did not permit payment of an increase for a spouse or partner as a dependent if their earnings or income were in excess of IEP 60 per week. Up to 10,000 families are expected to benefit under the changes at an annual cost of IEP 9.7 million.

7. FINANCING SOCIAL INSURANCE

The exemption limits and ceilings for payment of social insurance contributions were increased from April 1997;-

• the earnings ceiling for employees' contributions was increased from IEP 22,300 to IEP 23,200 per annum (up by IEP 900);
• the earnings threshold for the reduced rate of the employers' contribution (8.5%0 was increased from IEP 250 to IEP 260 per week with effect from April 1997. (The standard rate of 12% applies to any week where earnings exceed IEP 260);
• the earnings ceiling, over which the employers' contribution ceases to be payable, was increased by IEP 1,100 from IEP 26,800 to IEP 27,900 per annum;
• the earnings ceiling for the self-employed was increased by IEP 900 from IEP 22,300 to IEP 23,200 per annum.