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Investigation Report on the non-payment of arrears of contributory pensions
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Published March 1997
Report of the investigation by the Ombudsman under Section 4(2) of the Ombudsman Act, 1980 of complaints from Mr. John Smith, Mrs. Ann Brown, Ms.. Helen Murphy against the Department of Social Welfare and of general issues arising therefrom.
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.
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).
11. My powers and jurisdiction, as Ombudsman, are set out in the Ombudsman Act, 1980 (as amended). In the normal course, I do not investigate a complaint unless certain specific criteria are met. Normally there will be a complainant who claims to be adversely affected by an action of a public body listed in the Ombudsman Act, 1980 as being a body subject to investigation by the Ombudsman. I have of course the power to investigate, on my own initiative, general questions of maladministration under Section 4(3)(b) of the Act. Following a preliminary examination of the case, it must appear to me that the action complained of has, or may have, adversely affected the complainant and that the action involved maladministration. In this regard, Section 4 of the Ombudsman Act, 1980 sets out a range of headings which help to determine whether or not there has been maladministration. I must decide whether the action complained of was, or may have been -
"(i) taken without proper authority, (ii) taken on irrelevant grounds, (iii) the result of negligence or carelessness, (iv) based on erroneous or incomplete information, (v) improperly discriminatory, (vi) based on an undesirable administrative practice, or (vii) otherwise contrary to fair or sound administration."
12. I had to give careful consideration to my grounds for investigating complaints involving late claims for contributory pensions. This was mainly because the Department's response at all stages has been to say that the impugned decisions are taken in accordance with law. The inference was
that it is not open to the Ombudsman to be critical of decisions taken in accordance with law. Such an inference is not correct. The separate grounds for maladministration set out in Section 4 (above) may be applied independently of one another. For example, it is possible that an action would be taken with "proper authority" but would nevertheless be found to be "contrary to fair or sound administration". The Ombudsman is , however, faced in such cases with the problem of whether or not it is possible, within the law as it stands, to recommend redress for the complainant. In many cases it is possible; the public body concerned has discretion or flexibility within the law to provide redress in the individual case. In the case of late claims, however, the Department has taken the position that it has no such discretion unless, of course, the Department itself was at fault. This is why no formal investigations have been initiated up to now. Instead, in my Office's Annual Reports the attention of the Minister and of the Oireachtas was drawn to the need to amend the law which was producing effects which were contrary to fair or sound administration by depriving insured people, year after year, and without good cause, of arrears of pension (other than for a maximum of six months prior to the actual date of claim).
13. Despite the Department's position, I decided to investigate these three individual complaints because of the failure of the Department, over a long number of years, to take any action in relation to the issue and also because of the continuing receipt by my Office of a significant number of complaints each year. I was conscious, however, that the investigation would inevitably have to deal with the manner in which the relevant time limits for claims, and the accompanying disqualification for pension arrears, have been set by successive Ministers by regulation. Section 4(2) of the Ombudsman Act, 1980 refers to actions "taken in the performance of administrative functions" and I am advised that I would be precluded from
enquiring into legislative actions. A legislative action is the making of a law; it is not the application of that law to individual cases or categories of cases. A question I may be faced with, therefore, is: may I criticise in an investigation report the particular provisions of statutory regulations? I certainly may if I consider the regulations are ultra vires the primary legislation because in such an event the decisions in individual cases would be "taken without proper authority". But what if the decisions in individual cases were fully in accordance with the provisions of the statutory regulations and did not involve the unreasonable use or withholding of Ministerial discretion? Here the position is more complex but I am satisfied that I may criticise the particular provisions of a statutory regulation if they result in decisions in individual cases which are "contrary to fair or sound administration". By this I mean that, in their application, they have an adverse effect which I consider to be unfair and unreasonable. This still leaves unresolved the dilemma of whether or not it is possible for me to recommend appropriate redress in such cases if redress can only be provided by changing the statutory regulation. There is a growing body of legal opinion that the making of Ministerial regulations is not a legislative action and, accordingly, that I could recommend in a formal investigation report that a regulation be amended. I have set out the arguments for this view in Appendix 2 because they are of general interest and of more particular interest in the context of the on-going review of the Constitution. I accept that there is a different view. In the event, and as the investigation proceeded, I discovered that, in fact, the Minister has considerable extra-statutory discretion. I have, therefore, structured my recommendations in a way which obviates the need to take a position on the legal standing of Ministerial regulations.
* Not the Complainant's real name
(1) Mr. John Smith
14. Mr. Smith reached 66 years in April 1983 and would have been paid the contributory old age pension then had he applied. Mr. Smith remained on in employment after age 66 years until October 1986. He says he assumed he could not have any pension entitlement for as long as he continued in employment. Mr. Smith says that shortly after his retirement - probably in late October 1986 - he called to the Department's public office at Oisín House in Dublin to enquire as to any social welfare entitlements he might have. It would be fair to say that he had only a limited knowledge of the social welfare system but he says he felt he must have had some entitlements now that he was retired. [In fact, Mr. Smith had worked in a public sector body all his life and had paid full-rate social insurance up to 1971 and the reduced rate thereafter. The switch to the reduced rate - which does not provide cover for the contributory old age pension - arose due to his having become "permanent and pensionable" in his employment in 1971]. He says the advice he was given at Oisín House was that he did not have any entitlement. He says the official he met asked him where he had been employed and, on being told the particular public sector body, commented that he (Mr. Smith), like her (official), would have paid reduced-rate social insurance which gave no pension entitlement. Mr. Smith says he subsequently made a second visit to Oisín House in early 1987 to query again any possible entitlement he might have. He returned, he says, because his wife felt that he must have some entitlements after a lifetime at work. He says that the response of the official who met him was, in many respects, similar to that of the earlier official, viz. that as he had been in public sector employment he would not have paid full-rate social insurance and thus would not have any pension entitlement.
15. Some years later, in 1992, his wife rang the Department and arranged for Mr. Smith to meet an official of the Pension Section. At this meeting Mr. Smith was advised of a likely pension entitlement. He applied, was found eligible and was paid from a current date with three months arrears also being paid. Mr. Smith, and more particularly his wife on his behalf, then began a series of contacts with the Department with a view to having arrears paid. Their claim then was that arrears should be paid back to the date of his retirement (1986) on the grounds that the failure to claim in time was a consequence of the inaccurate advice given (as they contended) by the officials in Oisín House. It appears that even at that stage the Smiths assumed pension arrears could not be paid for a period during which Mr. Smith was still in employment. Following detailed investigation by the Department, it concluded that arrears could not be paid. This was because there was no record of Mr. Smith having visited Oisín House during either of the periods he mentioned and because the response of the officials, as described by him, did not tally with the designated practice for staff dealing with such enquiries at the public office.
16. In fact, the relevant Principal Officer at the Pension Services Office of the Department did recommend that Mr. Smith be offered a compromise settlement of one year's additional arrears consisting of three months arrears, to be paid on a statutory basis, and a further nine months arrears to be paid by way of an extra-statutory award. It appears this compromise was based on an acceptance that, on balance, the visits to Oisín House had been made and that Mr. Smith did not get the information necessary to "enable him to assess his position". The Principal Officer also expressed the view that there was "no clear evidence of wrong doing by any officer of the Department" . In the event, this compromise was not acceptable to the relevant Director within the Department. The Director took the view that ,
even if the visits to Oisín House had been made, "the onus would have been on him to make a claim". However, the Director did approve the payment of a futher three months arrears, making a total of six months arrears, which was the maximum permitted by the relevant regulation. Two years later, in June 1995, Mr. Smith complained to this Office about the non-payment of his pension arrears. At issue here is Mr. Smith's entitlement to pension arrears for the period April 1983 to December 1991 which amount to approximately £33,000.
(2) Mrs. Ann Brown
17. Mrs. Brown had been receiving contributory widow's pension since 1970. She reached 66 years of age in December 1985 and would have been paid contributory old age pension at that time, had she applied. However, she says she did not become aware that she could claim contributory old age pension until September 1993. She applied at that point and the contributory old age pension was awarded at the maximum rate. Initially she was awarded three months arrears prior to the date of claim; subsequently, a further three months arrears were paid giving the maximum of six months arrears allowed for in the regulation.
18. Mrs. Brown complained to this Office in December 1993. She felt the contributory old age pension should have been backdated to the date of her 66th birthday in December 1985. The old age pension was then (1993) worth £6.30 per week more than the widow's pension and in 1985 had been worth £5.15 per week more. She believed the Department should pay her this difference over the entire period. Her main argument was that she was unaware of her old age pension entitlement and that the Department - particularly as she was an existing client - should have advised her of this possibility when she reached 66 years. She maintains the Department did not so advise her and she did not discover her possible contributory old age pension entitlement until a friend suggested she might be entitled in 1993. At issue in her case is her entitlement to arrears - being the difference between widow's and old age pension - over the period December 1985 to March 1993. This amounts to approximately £2,000.
(3) Ms. Helen Murphy
19. Ms. Murphy qualified for invalidity pension from the Department in October 1988. She had been receiving Disability Benefit since February 1982. Invalidity pension is a social insurance payment and is based on contributions paid while in employment. She reached 66 years in March 1990 and would have been paid the contributory old age pension then had she applied. Ms. Murphy says she did not realise she had a sufficient social insurance record for the contributory old age pension and, acordingly, she did not apply for it. She did not want to claim the non-contributory old age pension - which is means-tested - so she continued to draw the invalidity pension. In 1993 the Department contacted her and invited her to apply for contributory old age pension. She applied in October 1993 and was found eligible. The contributory old age pension was awarded then, initially with three months arrears and subsequently a further three months arrears were paid. This meant that six months arrears were paid, the maximum allowed under the relevant regulation.
20. In February 1994 Ms. Murphy complained to this Office. She felt the Department should pay full arrears of the contributory old age pension back to her 66th birthday in March 1990. At that point she was unaware that she might have claimed the retirement pension - which is payable at the same rate as contributory old age pension - at age 65 years. In her complaint, she made the point that her entitlement to contributory old age pension was based on payments she had made (social insurance) and that it was unjust to withhold the arrears. She pointed out that the Department had a copy of her birth certificate and should have been fully aware of her entitlement. Subsequently, she told this Office that she had no recollection of the Department having contacted her in regard to possible contributory old age pension entitlement at any stage prior to 1993.
21. At issue here is Ms. Murphy's entitlement to arrears of contributory old age pension/retirement pension for the period March 1989 to April 1993. The actual arrears would be the difference between the invalidity pension already received and the higher rate contributory old age pension/retirement pension. The differential over the arrears period would average about £6 per week giving a total arrears amount of approximately £1,250.
22. The primary legislative basis for all social welfare payments (including social insurance pensions) is contained in the Social Welfare (Consolidation) Act, 1993. Whereas the decisions in the three cases under investigation may have predated the 1993 Act, the then relevant provisions have been carried forward into the 1993 Act. For ease of reference, the 1993 Consolidation Act may be taken as the relevant Act for the purposes of this report. (Indeed, it is worth noting that the particular provisions of interest here have been on the statute book, virtually unaltered, since 1952). Section 205 of the Social Welfare (Consolidation) Act, 1993 provides as follows:
"(1) It shall be a condition of any person's right to any benefit that he makes a claim therefor in the prescribed manner.
(2) Regulations may provide for disqualifying a person for the receipt of any benefit if he fails to make his claim for such benefit within the prescribed time, but any such regulations may provide for extending, subject to such conditions as may be prescribed, the time within which the claim may be made".
23. Section 205 has two additional sub-sections, but they do not impinge on the issues arising here. It is clear that S. 205 bears on the case of contributory pension applications. It is clear that S.205(1) requires the Minister to prescribe by regulation the manner in which a claim is to be made. And it is clear that a person's right to a benefit (including contributory pension) is dependent upon the person making a "claim therefor in the prescribed manner". Section 205(2), on the other hand, enables (but does not require) the Minister by regulation to disqualify a person from payment where that person's claim is not made "within the
prescribed time". It is perhaps to be inferred from S.205(1) that the "prescribed manner" for the making of a claim will include a "prescribed time". Where the Minister chooses to exercise his power under S.205(2), it is further provided that the prescribed time may be extended subject to such conditions as the Minister may prescribe. There would not appear to be anything in the 1993 Act (or its predecessors) to indicate what specific conditions the Oireachtas envisaged should be met before an extension would be permitted.
24. Since 1952 successive Ministers for Social Welfare have made regulations in relation to the prescribed manner for making a claim and in relation to the prescribed time (including the extension of the prescribed time) for making a claim. The current such provisions are contained at Articles 100 - 107 of the Social Welfare (Consolidated Payments Provisions) Regulations, 1994 (the 1994 Regulation hereafter). As the provisions in the 1994 Regulation are, in all material respects, identical with those in earlier regulations since 1952, it will be taken as the relevant regulation for the purposes of this report. (Indeed, the relevant portions of the 1994 Regulation have themselves been amended twice - in 1995 and in 1996 - but these amendments make no material difference in the present context.) The key provisions in the 1994 Regulation are the following:
100. (1) "Every claim for benefit (including any increase thereof) shall be made in the form for the time being approved by the Minister or in such other manner as the Minister may accept as sufficient in the circumstances".
102. "The prescribed time for making a claim shall be -
(a) in the case of old age (contributory) pension, retirement pension andinvalidity pension, the period commencing 3 months before and ending 3months after the date on which, apart from satisfying the condition of making a claim, the claimant becomes entitled thereto,.."
104. "Subject to articles 105 and 107, where a person fails to make a claim for benefit (other than child benefit or family income supplement) within the prescribed time, he shall be disqualified for receiving payment -(a) in the case of old age (contributory) pension, retirement pension, invalidity pension, survivor's pension and orphan's (contributory) allowance, in respect of any period more than 6 months before the date on which the claim is made,.."
105. "Other than in the case of child benefit or family income supplement, where a claimant proves to the satisfaction of a deciding officer or an appeals officer that -
(a) on a date earlier than the date on which his claim for benefit...was made, apart from satisfying the condition of making a claim, he was entitled thereto, and
(b) throughout the period between the earlier date and the date on which his claim was made there was good cause for the delay in making such a claim, he shall not be disqualified for receiving payment of the amount to which he would have been entitled if the claim had been made on the earlier date:
Provided no sum shall be paid to a claimant on acount of any benefit in respect of any period more than 6 months before the date on which the claim...therefor is made."
The effect of these various provisions would seem to be as set out below.
25. Article 100(1) deals with the prescribed manner for the making of a claim. This is not particularly specific and refers to the "manner for the time being approved by the Minister". In practical terms, this generally means utilising the claim form provided by the Minister for that particular benefit or pension. But is also open to the Minister to accept a claim "in such other manner as the Minister may accept as sufficient in the circumstances." This appears to allow the Minister to accept, for example, a claim made by letter or perhaps by way of a telephone call - subject always to the required information being provided ultimately. Article 100(1) does not deal with the issue of the prescribed time for making a claim.
26. Article 102 deals with the issue of the prescribed time for making a claim. In relation to contributory old age pension and retirement pension, it provides that the prescribed time for such a claim is within the period of three months before and three months after reaching pension age. Different prescribed times are provided for different payments. For example, in the case of survivor's pension the time prescribed is the three month period following widowhood. There are two payments - Child Benefit and Family Income Supplement - for which there is no prescribed time for making a claim.
27. The Department has been unable to shed any light on the reasoning which underpinned its original interpretation of the provisions of Section 205 and which provided the basis on which the subsequent regulations are framed (see a more detailed account of this aspect at Paragraph 52). In my opinion a reasonable interpretation of that section would be that it was designed to allow the Minister, if he/she so wished, to provide a time limit for the receipt of applications, and to disqualify a person from receiving a benefit if
a claim was not made within that time frame. It also allowed the Minister to extend the time limit, subject to specific conditions as he/she might prescribe. The conditions were obviously intended to govern the extension; for example, if the applicant had good cause for not applying in time he would not be disqualified from payment. In Article 104 , however, the Minister provided that a person applying outside the time limit would receive the benefit, but would not be paid more than six months arrears. This is arguably an amelioration of the terms of Section 205 which seems to envisage full disqualification. In Article 105, dealing with the extension of the time limit, the Minister prescribed that applicants must show good cause before an extension be granted, but then proceeded to provide that, even where good cause was shown, arrears could not exceed six months. This is arguably a disimprovement in what was intended in that, while the applicant now qualifies for the benefit, there is a penalty imposed. I find it difficult to accept that the Oireachtas intended that a person whose failure to claim arose from, say, a prolonged period of psychiatric disorder should be disqualified from full payment once the cause of the delay is established. Nowhere in Section 205(2) of the 1993 Act is there any reference, as one might expect, to disqualification for such period of time as the Minister might determine, or to the imposition of penalties as part of the conditions governing the extension of the prescribed time. [ A contrasting example of the imposition of penalties, by way of stated periods of disqualification, would be those contained in the Road Traffic Act, 1961(as amended) in relation to a driving licence.] Normal interpretation of Section 205 would proceed on the basis that the provision of penalties should not be attributed to the Oireachtas unless expressly provided for in the statute.
28. In the case of the three complainants whose cases are the subject of this report, arrears were refused because of the application of Articles 104 and 105.
29. All contributory social insurance claims are paid out of the social insurance fund (the Fund). The Social Welfare Act, 1952 created the Fund as it is currently constituted. The 1952 Act created a unified fund where previously there had been a number of different funds with different controlling bodies. Significantly, the 1952 Act provided that the Fund be administered by the Minister for Social Welfare. The statutory basis for the Fund at present is contained at Sections 6, 7 and 8 of the Social Welfare (Consolidation) Act, 1993. The Fund is made up of the contributions of employees (now including self-employed people), employers and the State Exchequer. Unlike the contributions of the first two parties which are fixed by law, the State's contribution is a "residual" one designed to make up whatever shortfall may arise between the Fund's income and outgoings. The State contribution has varied considerably over time. For example, in 1965 the State contribution amounted to 39.9%; in 1985 it amounted to 28.8 % and by 1995 it had dropped to less than 2 per cent. [Source: Report of the Expert Working Group on the Integration of the Tax and Social Welfare Systems (1996) P.84]. The following description of the operation of the Fund is from Social Insurance In Ireland, a discussion document designed to promote "a full public debate on the form of Social Insurance we wish to have in future" and published by the Department in October 1996:
"The Social Insurance Fund comprises a current account and an investment account. The Minister for Social Welfare manages and controls the current account of the Fund and the Minister for Finance manages and controls the investment account of the Fund. Social Insurance contributions are paid into the current account and pension payments and other Social Insurance based benefits are paid from the
current account. In the event of there being a surplus in the currentaccount which is not required to meet Fund liabilities such as pensionpayments, the surplus is transferred to the investment account and invested by the Minister for Finance. The income arising from these investments (and in due course, the capital) is returned to the Social Insurance Fund. These arrangements are provided for in legislation". (P.9)
30. The Department's discussion document highlights in particular the "contributory principle" which underlies social insurance and which differentiates it from other forms of social security:
"Social Insurance provides certainty based on statutory entitlements built up through contributions made during working life. This is most clearly apparent in the case of Retirement, Old Age and Widow's and Widower's Pensions. The Social Insurance contributor knows that the prescribed amounts will be paid when the contingency in questionarises, that no means test or other such factor enters the picture and has a reasonable expectation that rates of payment will be regularly updated into the future" (P. 21)
31. The discussion document (P.24 - 26) deals with the much debated issue of whether social insurance is simply another form of taxation or whether it belongs more properly to the category of insurance. The Department sides with the 1986 view of the Commission on Social Welfare - and rejects the conclusion of the earlier (1982) Commission on Taxation - that social insurance has a significant insurance dimension. The Report of the Commission on Social Welfare, at P.30, quoted with approval Marshall's definition of social insurance which explicitly recognises a contractual dimension with the role of the state being that of guarantor of the
performance of the social insurance fund. The conclusion reached by the Department in the discussion document is as follows:
"A number of factors combine to make the Social Insurance system more akin to commercial insurance than to taxation. The 'contributory principle' is, of course, a key feature of commercial insurance. Also, both Social Insurance and commercial insurance operate on the basis of pooling of risk across the contributors. Contributions are made by all participants in accordance with prescribed conditions and risks to individual participants arising from defined contingencies are reduced as benefits are paid out in accordance with prescribed conditions. The Social Insurance system is not insurance in the fully commercial or actuarial sense, but it does confer an individual entitlement to particular benefits, something which is not a feature of the tax system". (P.26)
32. The Department's discussion document stresses the distinctive nature of social insurance and the predictability and reliability of its schemes which involve entitlement based on contributions paid. In its general tenor, the document appears to support the popular perception that, provided the relevant contributions have been paid and that the particular risk materialises, the Fund will meet its obligation to the insured worker. Not surprisingly, the document does not go into the detailed workings of the various social insurance payments nor does it deal with the loss of entitlement consequent on a late claim. But it does appear to support the understanding that the Fund will deal fairly and reasonably with its contributing members.
33. In the course of these investigations I discovered that the Department has a long-standing arrangement with the Department of Finance to enable the payment of arrears of contributory pensions on an extra-statutory basis. The arrangement enables the payment, on an extra-statutory basis, of the equivalent of pension arrears where those arrears are not payable within the terms of the regulations. This arrangement came to light in the case of a widow who had failed to claim contributory widow's pension within the prescribed time and had lost very substantial arrears. She argued her case with the Department who then paid her part of the arrears on an extra-statutory basis. She then complained to my Office in relation to the balance of unpaid arrears. I found it somewhat disquieting to discover the existence of such an arrangement in this manner given that my Office has been dealing with this kind of issue since at least 1985. It is probable that at least some of the "late claims" complaints dealt with over the intervening years might have benefited from this arrangement had this Office been aware of its existence. In its formal written responses to the investigation cases, the subject of this report, the Department did refer to the existence of such an extra-statutory arrangement. The Department commented:
"These (extra-statutory payments) arise very infrequently and only under the most restricted circumstances which arise directly from a case of proven error or proven misinformation on the part of the Department or where the person was simply incapable by reason of illness of making a claim. The (present) cases have been examined in the light of these requirements and it is not considered that they meet them".
34. When I subsequently enquired into the details of this arrangement, I discovered that, in relation to the contributory old age pension, it has been in effect since April 1961. The Department had an existing sanction in operation in relation to contributory widow's pension and contributory orphan's allowance and this was extended to contributory old age pension when that pension was introduced in 1961. However, the scope of the sanction as conveyed to the Department by the Department of Finance was somewhat broader than might be understood from the Department's reference to it as set out above. In its response to the draft of this report, the Department pointed out that it had never been its intention to mislead my Office in relation to the existence of the extra- statutory arrangement.
35. The Department of Finance sanction letter provides for the making of extra-statutory payments:
"(i) where payment is claimed but not obtained within the prescribed time due to official causes;
(ii) where the paying officer, under a misapprehension or through error, fails or refuses to cash Orders presented within the prescribed time;
(iii) where, following official enquiry or change of circumstances, the beneficiary is under the mistaken belief that the title to pension has ceased or that an appeal would be influenced by accepting a lower rate of pension;
(iv) where Orders are not cashed within the prescribed time due to the mental or other incapacity of the beneficiary or his approved agent, and
(v) in any other circumstances in which the Minister for Social Welfare is satisfied that payment should be made in equity or to avoid undue hardship (provided no doubt exists as to entitlement to pension at the material time)."
36. In the present context, item (v) above is of most interest. Undue hardship and equity are presented as separate grounds on which extra-statutory payments might be made. In our interviews with senior officials of the Department, and in follow-up contacts, the thinking and practice of the Department in relation to "hardship" payments and "equity" payments were explored. (See Paragraphs 54-58.)
37. For reasons of clarity and presentation, the position of the Department in relation to these complaints will be set out under three broad headings. The first deals with the Department's position on those issues and facts which are unique to the three individual cases. The second deals with the Department's position on the broad issue of the restriction on the payment of arrears in the case of pensions claimed outside the prescribed time. The third deals with the Department's position in relation to the use of extra-statutory payments in this kind of case. The Department outlined its position (a) through its initial written responses when the complaints were first notified; (b) through its written responses to the notifications of investigation; (c) through the formal interviews which my investigation staff had with senior Department officials and (d) through on-going contacts throughout the period of examination and investigation of these cases. In addition, I had access to the relevant files of the Department. Except where necessary, the precise source of a position attributed to the Department is not cited. It is worth noting here that the underlying position of the Department in relation to all three cases is that the complainants made their pension claims outside the prescribed time; that the 1994 Regulation limits the arrears payable to a maximum of six months prior to the date of actual claim; that each complainant has been paid what is provided for in the legislation; and that these are not cases to which the extra-statutory payment arrangement should apply.
Issues and Facts Unique to the Individual Cases
(A) Mr. John Smith
38. There are two points at issue here. The first is whether it can be accepted that Mr. Smith did - as he contends - call on two separate occasions to the Department to seek information on possible entitlements. The second point at issue is whether, if it is accepted that Mr. Smith did call twice to Oisín House, the Department failed to advise him properly and that as a consequence, he failed to claim the pension at that stage. If the Department were to accept Mr. Smith's contentions then it would seem likely that Mr. Smith would benefit from an extra-statutory payment. This would be on the basis that the Department had failed in its duty to fully inform a client of possible entitlements in a situation where it had a clear opportunity so to do.
39. It proved difficult to establish that the Department has an agreed position on the question of whether or not Mr. Smith called twice to Oisín House to seek information. The relevant Principal Officer in the Pension Services Office conceded at interview that, on balance, he may have called to Oisín House, as he contends. There is no log of his having called to Oisín House. But this is not definitive evidence as not all visitors to Oisín House, during the period 1986/7, would have had their calls logged. In an internal memo from March 1993, the same Principal Officer expressed the view - following detailed enquiries by staff - that "on balance I accept that the 'visits' were made". However, the Director for Long Term Schemes expressed the view at interview that the circumstances as alleged were difficult to accept: namely that Mr. Smith was misled twice within a period of three to six months; that his failure to make a claim was as a result of this; and that he allowed the matter to rest for another five years before making a claim.
40. The Department expressed a clearer position in relation to the second component in Mr. Smith's contention. The Department argues that, even if Mr. Smith did call to Oisín House, his account of the responses he received is not realistic. The Department says that its standard practice then (and now) was "to advise any person who had paid insurance to make a claim and receive a formal decision on his entitlement". His contention as to how he was dealt with does not, according to the Department, "accord with standard procedures". There is, in addition, an ethos within the Department that, in the event of any doubt whatever, a caller will be advised to make a claim as the best way of resolving an entitlement query. In the course of the investigation my staff interviewed two officials of the Department who had worked in Oisín House during 1986/87. They felt very strongly that an official would not take it upon himself/herself to tell a caller that he/she had no entitlement to a pension
41. My investigators put it to the Department at interview that, if Mr. Smith did call to Oisín House, he must have had the intention to claim whatever entitlement he might have. The Department's position was that it would have to establish that he had been mis-advised before it could accept his calls to Oisín House as amounting to an actual claim for pension. In addition, the Department commented that Mr. Smith is a well-educated man who held a senior and responsible position within a public service body and it would be reasonable to assume that he should have been able to pursue any social welfare entitlement he might have.
(B) Mrs. Ann Brown/Ms. Helen Murphy
42. These two cases may be treated together as virtually identical issues arise.
Both complainants contend that it was lack of knowledge of the social welfare system which was primarily responsible for their failure to claim contributory old age pension on time. And both argue that the Department should have accepted their existing pension claims - widow's pension in one case and invalidity pension in the other - as satisfying the requirement to have claimed contributory old age pension at age 66 years. (In Ms. Murphy's case, the same point may be made in relation to her right to Retirement Pension at age 65 years. It would not have been to Mrs. Brown's benefit to have claimed Retirement pension at age 65 years).
43. It is the Department's position that both complainants would have been notified, in advance of their 66th birthdays, of the possibility of having entitlement to contributory old age pension. In addition to the contributory widow's pension, Mrs. Brown had been receiving a reduced-rate disability benefit for a period before reaching 66 years. The disability benefit ceased at age 66 years but, according to the Department, three months in advance of that benefit being discontinued she would have been sent a standard letter advising her that she might consider claiming either contributory or non-contributory old age pensions at 66 years. Mrs. Brown says she is quite certain that she did not receive any such letter from the Department. The Department, on the other hand, says that while it has no record or other evidence that such a letter was sent in her case, it was the standard practice at the time to issue such a letter. There is no reason why such a letter would not have been sent.
44. Ms. Murphy had been receiving invalidity pension for a number of years prior to reaching 66 years. The Department says she would have been sent a letter, in advance of her 65th birthday, advising her of the option of claiming retirement pension. And in advance of her 66th birthday she would have been sent another letter alerting her to the possibility of contributory old age pension. Ms. Murphy says she has no recollection of having received either of these letters. Again, the Department says, while it has no record or other evidence that such letters were sent in her case, it was the standard practice at the time to issue such letters. The Department also made the point that some people on invalidity pension at age 65 years might opt to stay on that pension in preference to retirement pension. This is because, whereas the latter pension is payable at a higher rate, the former carries entitlement to such additional schemes as free travel and free electricity allowance. (But on reaching 66 years this distinction would no longer apply and there would be no incentive for somebody like Ms. Murphy to remain on invalidity pension in preference to contributory old age pension).
45. The Department says it accepts the general proposition that its clients will want to claim whichever social welfare payment is most to their advantage. However, the Department says that the only way it can establish an entitlement is by way of an examination of each case, in response to a claim made, followed by a decision of a deciding officer. Further, the Department says it attempts to be as flexible as possible in treating a claim for one payment as satisfying the requirement to have applied for some other (more advantageous) payment. For example, a claim for non-contributory old age pension will be converted into a claim for contributory old age pension (and vice versa) where necessary. The same would apply between contributory and non-contributory widow's pensions or between deserted wife's benefit and lone parent's allowance. The main point here is that one claim is, broadly speaking, in respect of the same contingency as the other. The Department is clear that it will not accept a claim made a number of years previously in respect of one contingency (eg invalidity) as being a valid claim now in respect of a different contingency (eg old age). The Department argues that the flexibility inherent in Article 100(1) of the Regulation, in relation to the prescribed manner for making a claim - ("...or in such other manner as the Minister may accept as sufficient in the circumstances") - is not as extensive as is inferred from the two complainants' argument. At the same time, the Department accepts that all information relevant to the contributory old age pension entitlement of both complainants was already available to it at their 66th birthdays; the only obstacle to their being paid arrears is the absence of a specific claim in respect of contributory old age pension.
General Restriction on Payment of Pension Arrears in Late Claim Cases
46. In its written response to the investigations, the Department explained its overall position in the following terms:
Rationale for Legislation
Provisions requiring claims to be made within prescribed times are a feature of social security legislation in this country and elsewhere. The prescribed time varies having regard to the nature of the scheme and the level of supervision and control which is appropriate. In many cases payments must be claimed immediately [e.g. Old Age (Non-Contributory) Pension, Carer's Allowance...]. In the case of contributory pensions, more generous terms apply, allowing claims to be made within 3 months and within 6 months where there is good cause for the delay.
The regulation of the claims process in this way, apart from the supervision and control aspect, is also necessary for sound financial management and public expenditure purposes. Non-contributory payments are financed out of general taxation while contributory payments are financed on a pay-as-you-go basis from PRSI income and an Exchequer subvention. Provision for social welfare payments in overall Government spending would become much less predictable if significant accumulations of liabilities were allowed by departing from the prescribed time principle. Proper control of claims would also be adversely affectedwith consequential prejudice to the Exchequer and the Social Insurance Fund if claims could be made long after the contingencies arose which gave rise to entitlement. It should be realised that claimants' ongoing entitlements are constantly and frequently reviewed as part of the Department's dedicated control functions. This function yields savings ofover £100 million a year and is an integral part of any modern socialsecurity administration. It is because controls cannot in general be applied retrospectively, or only with great difficulty, that theprincipleof timely claim application was embedded in the legislation by the Oireachtas......
Insurance Principle
The complaints relate to benefits which depend on social insurance contributions. A pleading common to the complainants is that payment should be made in full because the payment is insurance based. However, social insurance contributions differ in many crucial respects from commercial insurance as follows:
It should be mentioned that in fact both insurance based payments and their corresponding non-contributory means-tested equivalents are equally statutorily based giving statutory entitlement as of right on fulfillment of the various statutory conditions. The latter include conditions which govern the time limits within which claims must be made. This principle applies equally to both insurance based and non-contributory schemes."
47. In the interviews with senior officials of the Department the position, as set out above, was discussed in detail. In relation to the issue of sound financial management and public expenditure control, the officials made the following points. Social insurance payments operate on a "pay-as-you-go" basis and, unlike commercial insurance companies, there is no invested fund. Being able to predict accurately the level of demand on the Fund is a key requirement. Under present arrangements the Department - which manages the Fund - is reasonably placed to predict outflows for each succeeding year. To have debts accruing - in the form of unclaimed pension entitlement - would hinder the ability of the Department to predict the level of liability in any year. The Department has made some effort to estimate the additional liability in the event of its abolishing the late claim rules. On the basis of a limited exercise in relation to the level of late contributory pension claims (old age, survivor's and retirement) received in one month, the Department reckons a rough estimate of the potential cost of a full relaxation of the rule might amount to £5.6 million per year.
48. The Department argues that it is difficult to exercise proper control of claims which are made late. By this is meant that, in the case of a late claim, it may not be possible to acquire accurate information in relation to the various eligibility requirements. This is perhaps most obvious in the case of means-tested payments where it can be difficult to conduct a means test retrospectively. In relation to contributory pensions claimed late, the officials accepted that there is no particular problem in establishing personal rate entitlements. However, there could be problems in establishing entitlement to adult dependant payments (was the spouse a dependant during the arrears period?) and, in the case of a survivor's pension, establishing that the claimant was not cohabiting during the arrears period. Overall, it is the Department's position that claims made outside the prescribed time cause significant administrative problems.
49. The Department's written response refers to annual savings of £100 million arising from the application of its "control functions". It appears these savings arise primarily in the area of means-tested payments. In relation to social insurance payments, the control function does yield some savings in the areas of unemployment benefit, disability benefit and invalidity pension; but there is no significant saving made in relation to contributory old age pension, retirement pension or survivor's pension.
50. The officials made the point that social insurance is a scheme based on law and that the law provides for certain eligibility requirements. These include a requirement to claim at a particular time with the concomitant loss of potential pension where a claim is not made in time. The officials argued that the three complainants have each received their entitlement in law; what they are seeking now is more than their legal entitlement.
51. The role of the Department, as the manager of the Fund, was discussed at the interviews. In particular, the officials were asked if the role of the Department was to act as guarantor of the rights of the contributors. The officials made the point that social insurance is not a savings scheme or an insurance scheme (in the ordinary meaning of that term). The Department's role is to administer the Fund in accordance with law. It is not for the Department to make that law. This is a matter for the Oireachtas. The question then arises of whether the Oireachtas ever intended that arrears be limited to six months in the case of late claimants. The officials respondedthat the Oireachtas intended that the Minister would set whatever limit should apply. They accepted that the Oireachtas would expect the Minister to act reasonably in setting a limit on arrears.
52. Unfortunately, the Department could not shed any light on the basis for the original decision to limit arrears to a maximum of six months. The present rules are essentially the same as those first made by regulation in 1952; it appears the limits set then have been retained through a series of amendments and consolidations over the intervening 44 years. The Department's file on the original 1952 regulation is no longer available. The Department says there is nothing on file in relation to the subsequent amendments and consolidations to indicate the thinking behind the setting of the six month limit. The Department's files in relation to the Social Welfare Act, 1952 - which is the authority for the 1952 regulation - are available but the Department says they shed no light on the decision to set a limit of six months on the payment of contributory pension arrears. In effect, the Department has continued a particular restriction in operation over a 44 year period but is no longer able to explain why that particular restriction (for example, why not a twelve month limit, a three year limit or a five year limit?) was originally decided upon.
53. Finally, the Department informed me that it is in the process of reviewing the arrangements in relation to the backdating of late pension claims. However, the officials did point out that any change of practice would have cost implications. For this reason, the review would have to take account of other proposals across the full range of the Department's activities and any decision would be in the context of overall budgetary considerations.
Use of Extra-Statutory Payments Arrangement
54. Interest here focuses in particular on the sanction to make extra-statutory payments where the Minister is satisfied this should be done "in equity or to avoid undue hardship".
55. In general, the Department will not initiate enquiries in order to ascertain that undue hardship exists. If a client seeks arrears and argues hardship as a ground, then the Department will look into the case. Even though people may not be aware of this hardship clause, the Department takes the view that if there is real hardship then this will be brought to its attention. In the cases of Mrs. Brown and Ms. Murphy, the Department did not consider the hardship clause as the issue was not raised by the claimants. The issue of hardship arose indirectly in the case of Mr. Smith but the Department concluded that, as he had a pension of about £18,000 per year, there were no grounds for using the clause. Overall, the Department appears not to have any specific criteria for deciding on hardship. It suggested that an income below the Supplementary Welfare Allowance rate - the lowest level of social welfare payment - would be taken as an indication of hardship. 56. In relation to the equity clause, none of the officials interviewed could recall a specific case where an extra-statutory payment was made on that basis. Subsequently, the Department produced details of a number of instances where non-contributory pension arrears had been paid extra-statutorily and on the basis of equity. Unfortunately, the most recent instance dated from 1958, the amounts involved were all inconsiderable, and no general approach could be inferred from the examples. Indeed, it seemed reasonable to conclude that reliance on equity, as a basis for paying pension arrears extra-statutorily, had effectively been abandoned. But in its response to the draft of this report, the Department argued that the instances cited did point "to a construction on the 'equity' issue". Furthermore, the Department said that it could not accept the view that reliance on equity in such cases has been abandoned. The Department noted that in 1996, in relation to retirement and contributory old age pensions, twelve such payments had been made at a total cost of £52,550. Five of these payments arose because of "Departmental error" (costing £6,200), six arose because of "medical reasons" (costing £43,450) and one arose because of "hardship" (costing £2,900).
57. At interview, the Department officials found it difficult to define what constituted equity and how it might be applied in the present context. Where a failure to claim in time arises from some failing on the part of the Department, then this would be likely to result in a payment of arrears based on equity. But the Department appears not to have any criteria for deciding when it might be equitable to treat a claim, made late, as having been made in time - other than the instance where the failure to claim arises from the Department's own mistake.
58. At interview, one definition of equity was put to the Department, viz. that equity is about ensuring fairness and justice in the individual case even if this conflicts with the rigid application of the law. In response, the Department pointed out that the law (in the vast majority of cases) is laid down in statute or in a regulation in a precise and detailed manner by way of conditions which, by their very specific nature, allow of little or no discretion in their interpretation or application. On the basis of the definition suggested, it argued, almost all pension arrears lost because of late claims would be paid extra-statutorily on the basis of equity. The Department stressed that equity should not be used "to drive a coach and four" through the Regulation. Any resolution of the issues raised in these cases will, according to the Department, have to be achieved on the basis of law rather than on the basis of an extra-statutory arrangement.
1) Mr. John Smith
59. The issues for consideration here are the following:
60. In relation to (a), there is no reason why Mr. Smith's account should not be accepted as broadly accurate. The Department is not in a position to say that the visits did not take place. Mr. Smith's accounts of these visits, as given to my staff, have been consistent, and there are no grounds for doubting his personal integrity. Whereas there is, in my view, some ambivalence within the Department on the matter it would seem that, overall, the Department is not disputing these visits. But the Department finds it difficult to accept that the delay in claiming arose because Mr. Meeehan was misled on two occasions.
61. In relation to (b), Mr. Smith's accounts seem plausible. This is particularly so regarding his contention that he was asked about his former employment and, on informing the officials that he was a retired public servant, that he was advised that he would have no entitlements on that account. It is possible that an inexperienced official might come to the wrong conclusion and assume that, as a retired public servant, Mr. Smith could not have a record of full-rate social insurance. His account of one of the officials telling him that he was in the same position as herself - a public servant with limited social insurance cover - has the ring of truth. As a person with a very limited grasp of the social welfare system, it is difficult to envisage Mr. Smith fabricating a detail like this. I accept that the Department's general practice in relation to enquiries would be to advise the enquirer to claim a pension in a case of any doubt as to entitlement. However, there is always the risk that standard practice is not adhered to, perhaps because the individual official is inexperienced or insufficiently trained or for other reasons. The Department's own investigation opened up the possibility that Mr. Smith may have gone to a hatch in Oisín House which dealt with general enquiries as opposed to a hatch which dealt with specific benefits eg a pensions enquiry hatch. In any event, it seems entirely implausible that Mr. Smith would have neglected to make a claim if the advice was that he should do so.
62. The general plausibility of Mr. Smith's contentions is strengthened by the contentions of another complainant which are remarkably similar to his. This other complainant reached pension age (66 years) in January 1986. She says she called in person to Oisín House in the second week of January 1986 to enquire as to possible pension entitlement. She says that, after asking some questions, the official told her that as she had not worked for the previous 15 years she would not be entitled to the contributory old age pension. She says the official told her that, if she did not hear further from the Department, then she could take it that she had no entitlement. She did not hear from the Department, she says, and thus concluded that she had no entitlement. In 1995, having read a newspaper advice column, this woman realised that she might have a pension entitlement after all. She applied and was found eligible with six months arrears being paid. Like Mr. Smith, she believes she should be paid arrears. I have reached no conclusion in relation to this other complaint. But the similarity with the account given by Mr. Smith, and the fact that both episodes are said to have occurred within very close temporal proximity to one another, is perhaps more than coincidence.
63. In relation to (c), I have little doubt but that Mr. Smith's inadequate understanding of social welfare matters would have contributed to the failure to advise him properly. The Department has made the point that, as an educated and relatively senior public servant, Mr. Smith should have been better informed. Perhaps so. But when a person of Mr. Smith's position is shown to be confused in relation to social welfare, does this not suggest that the system is inherently confusing for many? For example, in his Annual Report for 1986 my predecessor reported on two cases where widows of civil servants had failed, over lengthy periods, to claim their contributory widow's pension entitlement. The then Ombudsman felt that these cases suggested a wider problem of lack of awareness, among civil servants and their spouses, of their being covered for contributory widow's pension. The Ombudsman drew this to the attention of the Department of the Public Service which made specific arrangements to ensure that civil service widows would be informed of this potential entitlement.
64. It may be that Mr. Smith did not volunteer the type of information which would have guided the officials in the right direction. From the contacts my investigators have had with him, this seems a plausible conclusion. On the other hand, is it not the job of the officials to elicit that information which will lead in the right direction? I recognise that it may well have been difficult to advise Mr. Smith properly, particularly where he may not have had full details available. I also recognise that mistakes will inevitably occur in even the best-run service. If mistakes do occur, for whatever reason, for which the organisation is responsible, it seems reasonable that clients should not suffer as a result of those mistakes. Where mistakes occur for which the claimant is responsible one must carefully consider, in the particular circumstances, whether, or to what extent, the claimant should be penalised.
65. Finally, in relation to (d), and following on from the comments immediately above, I feel it is not unreasonable to conclude that Mr. Smith's failure to claim pension in the 1986/7 period may be attributed to the failure of the Department adequately to advise him. In approaching the Department, as he did, one must assume that his intention was to claim whatever benefit might be available to him. Where, following two visits to the Department, he still had not claimed a pension, one can reasonably conclude that this failure was directly linked to the manner in which he was dealt with by the Department.
(2) Mrs. Ann Brown/Ms. Helen Murphy
66. Again, these two cases may be taken together as the same issues arise in both. The relevant issues are:
67. In relation to (a), the fundamental point is that the Department has no specific record that a notification was sent to either complainant. Even if there were a record of its having been sent, this would not necessarily mean that it was received. Both complainants assert categorically that they did not receive any such advice. As a general point, I consider that where entitlements are concerned, the onus is on public bodies to send a reminder to people who have not replied to the original notification. The Department has suggested that Ms. Murphy might have opted not to have claimed retirement pension at age 65 because it would have been to her advantage so to have done. This implies she had a relatively good understanding of social welfare matters. But if this were the case, it is implausible that Ms. Murphy would neglect to claim the old age pension at 66 years - following receipt of the Department's letter, as it contends - since it would have been to her advantage to have done so. There seems no good reason to reject the assertions of these complainants that they did not receive any written advice from the Department in relation to possible pension entitlement.
68. In relation to (b), the main point to note is that the relevant provision at Article 100(1) is sufficiently flexible to allow the Department to accept a claim for one payment as having been made on account of another payment. The sub-article provides that a claim shall be made in the manner "for the time being approved by the Minister or in such other manner as the Minister may accept as suficient in the circumstances". Clearly, it is a matter of judgement as to what are the circumstances in which the Minister may accept a claim made in a non-standard manner. I feel the Department may not have given sufficent consideration to the circumstances which resulted in the failure of these complanants to claim on time. One must take account of the following: their lack of hard information in relation to their entitlements; the fact that the Department may not have advised them of a possible pension entitlement; a presumption on the part of social welfare recipients that the Department will advise them of any alternative, higher rate payment to which they might have an entitlement. It is worth remembering also that the arrears amounts involved in this kind of case are not that substantial from the point of view of the Fund. Finally, one must take account of the nature of social insurance and the implicit contract it involves. Contributors should not, it seems to me, lose out on the basis of a technicality where it is possible to circumvent that technicality.
69. Accordingly, my conclusion in relation to (b) is that the Regulation is sufficiently flexible as to allow the Department to have accepted a claim for widow's pension or invalidity pension - though made some years back - as having been made on account of contributory old age pension. In the circumstances of these cases, it is my conclusion that the Department should have availed of that flexibility in the best interests of their clients.
70. In its response to the draft of this report, the Department informed me that the cases of Ms. Murphy and Mrs. Brown had been reviewed in the light of my draft report "and of the improvements being made to the back-dating situation"(See Appendix1). As a consequence, the Department decided to award arrears of contributory old age pension in both cases back to the pensioners' 66th birthdays. The Department said that it was "deeming the claims in payment at age 66 as claims for Old Age Contributory Pension in the particular circumstances of each case." The Department pointed out that the award of retirement pension retrospectively would not be to the advantage of either pensioner as it would affect other entitlements at that time. On a wider note, the Department informed me that the Minister has now decided that a person in receipt of one weekly payment may have that claim accepted as a claim for another related weekly payment. "This initiative" says the Department, "will give greater flexibilty to the awarding of claims to persons already on the social welfare system."
71. It is important to be clear that the decisions complained of arise as a direct consequence of the provisions at Articles 102, 104 and 105 of the Social Welfare (Consolidated Payments Provisions) Regulations, 1994 (SI No. 417 of 1994). It is true that the Oireachtas has delegated to the Minister for Social Welfare the authority to make rules in relation to the prescribed time for claiming a pension; in relation to disqualification "for the receipt of any [pension]" where the claim is not made within the prescribed time; and for the extension of the prescribed time subject to such conditions as the Minister may prescribe. As pointed out in Paragraph 27, it is in this latter context that the Minister - and successive Ministers since 1952 - have provided for the six month limit on arrears payments in the case of a contributory pension claimed outside the normal prescribed time. It is important to recognise, also, that the disqualification of late applicants, in accordance with the provisions of Articles 102, 104 and 105, for any arrears in excess of six months, even where good cause exists for the delay in applying, is not based on any specific provision in the governing Act.
72. Indeed, an examination of the provision now at Section 205 (2) of the Social Welfare (Consolidation) Act, 1993 - see text at Para. 22 - suggests that a disqualification "for the receipt of any benefit", in the event of failure to claim within the prescribed time, is not necessarily required by the Act. In other words, it seems that the Minister is not required - but may if he so chooses - make regulations under Section 205 (2). The Minister might, it would seem, have opted to prescribe the manner of making a claim, as required under Section 205 (1) but then have decided not to make any regulation in relation to the prescribed time for a claim or for partial disqualification in the event of a claim made outside the prescribed time.
This is largely what has happened in the case of child benefit. The Minister has not , by way of a regulation under Section 205(2), set a prescribed time for a claim. In the case of a claim for child benefit made after the earliest potential date of qualification, full arrears of benefit may be paid provided it can be shown that there was "good cause" for the delay in making a claim. It is noteworthy that such an arrangement has been decided upon in the case of child benefit, which is totally funded from the Exchequer and which is a universal, non-means tested payment, whereas equivalent arrangements have not been made for social insurance pensions.
73. I have already referred (Paragraph 6 and see also Appendix 2) to the situation whereby there is no longer any effective parliamentary scrutiny of statutory instruments. This is an unsatisfactory situation. Some of the issues relating to this question were considered by the Constitution Review Group, particularly in the context of a suggestion that the Oireachtas should "have power to authorise by law the delegation of power to either the Government or a Minister (but no other body) to legislate, using the mechanism of a statutory instrument, in relation to the substance of the parent legislation..." [Report of the Constitution Review Group (1996) P.40]. The Constitution Review Group urged that change in this area should be approached with great caution and that adequate safeguards would be essential in order to ensure that the "legislative supremacy of the Oireachtas" would not be undermined. I fully accept the validity of what the Review Group has to say in relation to any change in the present arrangements. But irrespective of any change in the powers of the Oireachtas to delegate the making of legislation, it is essential that the present powers to make statutory instruments should equally be subject to adequate safeguards which will ensure the "legislative supremacy of the Oireachtas". It strikes me that the Regulation in question in these investigations appears not to have had the benefit of oversight by a
Committee of the Oireachtas in a manner which would place its acceptability to the Oireachtas beyond dispute. I am raising this not only as a point of interest in relation to regulations generally but also because, as pointed out in Paragraph 27, the penalties imposed in this particular Regulation are not expressly provided for in the governing statute.
74. I recognise that the Department has a legitimate interest in relation to the control of claims and in relation to maintaining the financial viability of the Fund. This may well require the application of some time limits and the imposition of some penalty in the case of claimants who claim outside the prescribed time without good cause. There is no reason, however, why the Department could not factor into its annual budget a contingency provision for late claims. In any event, this may well prove to be a declining contingency, over time, as the public becomes better informed on welfare rights and as the Department further develops its capacity to notify insured people directly of their potential entitlements. It is also legitimate for the Department to seek to operate in a manner which is admininistratively convenient. But at the heart of these complaints is the question of the balance to be struck between the requirements of the Department, on the one hand, and the rights of social insurance claimants on the other hand. In addition, there is the overiding requirement to avoid any practice which might serve to undermine public acceptance of social insurance and of the implicit contract which is involved.
75. Social insurance is not just another statutory income maintenance service. It is a tripartite arrangement - bipartite in the case of the self-employed - involving at least an implicit notion of contract and a strong sense of social solidarity. The Minister for Social Welfare, in his Foreword to the recent discussion document Social Insurance in Ireland, referred to these aspects of social insurance:
"This expression of social solidarity between groups and generations is part of an ongoing social contract between government, employers,employeees and the self-employed. [Social insurance's] primary purpose is to provide social protection".
In the context of these investigations, it is reasonable to ask whether the decisions in question - based as they are on the Department's own regulation - serve to support and foster the principles upon which (as the Department asserts) social insurance in Ireland is based. 76. All three complainants say that they were poorly informed about their social insurance rights. The experience of my Office over 12 years has been that the vast majority of such late claimants say they were poorly informed about their social insurance rights. For example, a retired civil servant is among those who have complained about the loss of pension arrears because of a late claim (for survivor's pension, in his case). In his letter of complaint this man specifically argues that the Department failed to advertise adequately the introduction of survivor's pension for men - and for civil service widowers in particular - and claims that his failure to apply in time arose "through ignorance, due to the State's inadequate information process". People will almost universally wish to claim their entitlement from the earliest date possible. Despite genuine advances in the Department's information services over the past decade, and despite the efforts of the Citizens' Information Centres and the National Social Service Board over twenty years, it remains the case that many people are ill-informed in relation to social insurance matters. Perhaps the simple explanation for this is that the social insurance system is extraordinarily complicated and it may be unreasonable to expect people to inform themselves adequately. The Department has been taking the line that it is doing its best to inform people but that, ultimately, ignorance of the law is not an acceptable excuse for having failed to claim in time. I feel that, in the context of social insurance, this is not a reasonable position to adopt. This is particularly so given that the parent statute does not require the Department to apply such strict penalties on late claimants.
77. In any case, it would seem that the penalty imposed in the case of late claims is not something which has been particularly well publicised. The Department's main information booklet is its Guide to Social Welfare Services which is published every few years. The most recent editions of the Guide do not point out explicitly that a failure to claim in time may result in substantial loss of arrears. The current edition (1994) and the preceding edition (1991), for example, tell people they should apply for the pension three months in advance of reaching pension age. But they do not go on to point out the consequences of a failure to claim in time.
78. The Courts have developed a range of tests to be applied when the question of the validity of a particular regulation is raised. One of these tests arises from the presumption that, in delegating the right to make a regulation, the Oireachtas would expect the rule-making body to exercise its functions "with basic fairness, reasonableness and good faith" (Source: Burke v Minister for Labour [1979] IR 354). A delegated discretion is not as absolute as the text of the statutory delegation might otherwise suggest. This is a test which is particularly appropriate in the present context.
79. Against a background of a complex social insurance system and a less than perfect information service, one must seriously question the "basic fairness and reasonableness" of the present regulations. In particular, it is clear that these regulations, as they are applied in individual cases, take no account whatever of the individual circumstances which resulted in the failure to claim on time. For example, I am currently examining a complaint where a woman failed to claim contributory widow's pension when she was widowed in 1992. The woman died two years later without having made her pension claim. Only after her death did the members of her family learn that she had an unclaimed entitlement to contributory widow's pension for the previous two years. The woman was already suffering from Alzheimer's Disease when she was widowed in 1992 and, according to her family, was not able to manage her affairs. The family applied retrospectively for the pension and explained that, during the period since being widowed, their mother had not been able to manage her affairs (because of her illness) and the family were then unaware of the entitlement. The Department awarded the pension but paid out only for the six months prior to the widow's death. The Department decided that this was not the type of case which merited an extra-statutory payment, whether on the grounds of equity or otherwise. In particular, the Department felt that as the person had died before the claim was made, the question of avoiding hardship did not arise. I have not yet concluded my examination of this particular complaint but I have noted the position of the Department as set out above.
80. As regards the payment of the remaining arrears (18 months pension) in the case cited in the preceding paragraph, the Department's position is that, irrespective of the circumstances which led to the failure to claim on time, the Regulation does not allow for the payment of these arrears for more than the six months already paid. This cannot be regarded as either fair or reasonable. The proposed change in the legislation - which will increase the maximum arrears period from six months to twelve months - will not, unfortunately, provide the flexibility to look on a case by case basis at the reasons why a claim was made late. I shall deal with the proposed legislative amendment later (see Para. 88)
81. A related test, one which is already an established feature of EU law and increasingly becoming a feature of Irish constitutional and administrative law, is that of proportionality. The principle here is that where a sanction is imposed by a public body, in its dealings with an individual, then that sanction must be a proportionate sanction. More specifically, the punishment imposed must not be greater than what is necessary to protect the interests of the public body. Proportionality is one of the Principles of Good Administration which I described in some detail in my 1995 Annual Report. I also indicated there that I would take these principles into account in examining complaints which come before me. The principle of proportionality recognises that public bodies must be allowed use a system of sanctions in its dealings with the public in order to operate efficiently and effectively. But there must be some proportionate relationship between the detriment caused to the body by the individual's failure and the loss to that individual as a result of the sanction. The relative strengths of the parties is also a consideration. The fact that John Smith applied for the pension in 1992, when he should have applied in 1983, did present problems for the Department. But these problems cannot have been insurmountable. His insurance record was already available; his age was easily verifiable and perhaps the only real problem would have been the demand for substantial arrears which the claim represented. It is worth noting that the Fund had the benefit of Mr. Smith's pension during the nine years in question. The sanction in Mr. Smith's case was the loss of about £33,000 in arrears. While acknowledging the legitimate requirements of the Department in such cases, one can hardly conclude that the sanction here is a proportionate one.
82. The principles of proportionality, and indeed of equality before the law, also encompass the concept that, where rigid adherence to the letter of the law results in manifestly inequitable treatment, then steps should be taken to mitigate the consequent effects. Indeed it is common practice in Ombudsman Offices in other countries to regard instances of such rigidity as maladministration. The Department of Social Welfare has always argued that the law requires it to act as it does in these cases. In a sense, the Department presented the case that it was just as much the prisoner of the law as the claimant. In the individual case, the Department has always had the option of recourse to an extra-statutory payment in order to mitigate the effects of rigid adherence to the letter of the law where that produces manifestly inequitable treatment. But the extra-statutory arrangement has not been much used nor has its existence been publicised. Indeed, to the best of my knowledge, the existence of the extra-statutory arrangement may not even have been referred to in the Oireachtas. On a broader level, it has always been open to the Department to change the law, by amending the regulations, in order to minimise the incidence of inequitable treatment. Yet the Department has not taken the opportunity, despite the matter having been raised regularly by the Ombudsman and others, to amend the rules. Accordingly, one can only conclude that the Department's actions here offend against the concept outlined above.
83. Finally, I feel some comment on the use of the extra-statutory payment arrangement is warranted. At interview, the Department's officials were strongly of the view that the extra-statutory arrangement should not be used on a widespread basis. The existing extra-statutory arrangement does allow the payment of arrears on the basis of equity. On this basis, arrears could well be paid in a very substantial number of the late claims cases. The officials felt that it would be driving a "coach and four" through the Regulation were equity to be relied upon to any extent. While I appreciate its point of view, clearly the solution here is to amend the Regulation in a manner which allows for the circumstances of each individual late claim case to be assessed on its own merits and to provide specifically for proportionate penalties where it is considered that there was no "good cause" for the delay in making the claim. But pending an appropriate amendment to the Regulation, there may be no alternative but to rely on the extra-statutory arrangement in order to achieve equitable outcomes.
84. The findings of my investigations are set out below, firstly, in relation to the three individual cases and, secondly, in relation to the broader issues raised.
Findings - Individual Cases
85. Arising from my investigations, I find as follows in relation to Mr. John Smith: - that, on the balance of probabilities, he did call to the Department at Oisín House on two separate occasions, as he contends;
- that, again on the balance of probabilities, the officials he met at Oisín House failed adequately to advise him in relation to his pension entitlement;
- that he did himself, to some extent, contribute to this failure to get adequate advice;
- that his failure to claim a pension in 1986/87 may be attributed both to his general lack of knowledge in relation to social insurance and to the failure of the Department adequately to advise him;
- that his failure to claim a pension in April 1983, when he reached pension age, may be attributed to his lack of knowledge of the social insurance system;
- that the Department has discretion under existing arrangements to provide appropriate redress in Mr. Smith's case.
86. In relation to Mrs. Brown and Ms. Murphy, I find as follows:
- that, on the balance of probabilities, neither of them received a written advice from the Department, in advance of reaching their 66th birthday, in relation to possible contributory old age pension entitlement;
- that the Regulation is sufficiently flexible as to allow the Department to have accepted a claim, in payment, for widow's pension or invalidity pension - though made some years back - as having been made on account of contributory old age pension; and that in the circumstances of these cases the Department should have availed of that flexibility in the best interests of their clients;
- that the failure to claim contributory old age pension at age 66 years may, in both cases, be attributed to their lack of knowledge of the social insurance system.
Findings - General
87. Arising from my investigation of these three cases, I make the following general findings:
- that the decisions complained of, in the three cases, arose as a direct consequence of the provisions currently at Articles 102, 104 and 105 of SI No. 417 of 1994;
- that the regulatory provisions at Articles 102, 104 and 105 reflect decisions taken by the Minister for Social Welfare, and by his predecessors since 1952, but that the precise grounds for the specific penalty of loss of pension arrears (other than for the six month period prior to the actual date of claim), irrespective of the reasons for the delay in claiming, are not entirely clear;
- that, given the complexity of social insurance in general, and given that people of all backgrounds are liable to be ill-informed in relation to it, the Department has not adequately publicised the penalties in operation in the case of contributory pension claims made late;
- that the application in individual cases of the provisions at Articles 102, 104 and 105, irrespective of the circumstances of each individual case, does not comply with basic fairness or reasonableness, nor does it satisfy the requirements of the principle of proportionality, and is accordingly contrary to fair or sound administration;
- that the general approach of the Department to late claims, especially those where there is good cause for the delay, reflects a failure to mitigate the effects of rigid adherence to the strict terms of the Regulation, produces manifestly inequitable and unequal treatment and results in decisions which are contrary to fair or sound administration;
- that the ongoing failure of the Department to take action to ameliorate such unfair and inequitable decisions, whether by using the extra-statutory discretion granted to it or by moving to amend the Regulation (the basis of which is no longer entirely clear) is itself contrary to fair or sound administration.
88. I have considered the implications of Section 32 of the Social Welfare Bill, 1997 (as initiated) for these findings. If that Section becomes law, it will significantly ameliorate certain decisions which are at present clearly unfair and inequitable. Late applicants who apply within one year of the due date will now receive full retrospection automatically and without having to plead special circumstances. While I welcome this, I am concerned that Section 32 makes no provision for any Ministerial discretion to deal with individual cases, which are outside the limits, on their merits. Such cases will have to be dealt with exclusively by way of extra-statutory payments despite the Department's stated reservation about making them. In the interests of fair and sound administration, the Bill should give the Minister discretion (to be spelled out by regulation) to deal with individual cases on their merits within specified parameters. Hopefully, consideration will be given to this during the passage of the Bill.
Recommendations - Individual Cases
89. In the light of the Department's decision, following its consideration of a draft of this report, to pay arrears of pension in the cases of Mrs. Brown and Ms. Murphy, it is not necessary for me to make a recommendation in relation to those two cases. Similarly, as the Department has also adopted a new approach in relation to the treating of the receipt of one payment as satisfying the requirement to have claimed for another related payment - see Paragraph 70 above - it is not necessary for me to make a general recommendation of this nature arising specifically from the complaints of Mrs. Brown and Ms. Murphy.
90. In relation to the case of Mr. John Smith, I recommend as follows:
- that the Department of Social Welfare pay Mr. Smith the equivalent of contributory old age pension arrears (including appropriate adult dependant allowances) for the period April 1986 to December 1991 and that compensation for the delay in making this payment be paid in accordance with the arrangements sanctioned by the Department of Finance (letter of 18 December 1986 from the Department of Finance to the Department of Social Welfare).
I have decided not to make any deduction from the recommended payment despite my finding that Mr. Smith did, to some extent, contribute to the failure to get adequate advice on his pension entitlement. Even following my recommendation, Mr. Smith will still have lost out on pension entitlement for the period April 1983 to April 1986.
Recommendations - General
91. Arising from the three cases generally, I make the following recommendations:
(i) - that the Department of Social Welfare continue to develop its information services with a view to maximising the public's understanding of the scope and application of social insurance entitlements; and that particular attention be paid to ensuring the public is aware of the requirement to claim payments at particular times and of the penalties imposed where there is a delay in making a claim.
(ii) - that the Department of Social Welfare provide all late applicants, who are not receiving full arrears, with information on the circumstances in which pension arrears may be paid on an extra-statutory basis. (The extra-statutory arrangements will have to be published in any event when the proposed Freedom of Information Bill is enacted.)
(iii) - that in addition to the information measures mentioned above, and in the course of developing its computer systems, the Department of Social Welfare aim to be in a position to notify all potential contributory old age pension recipients of a possible entitlement in advance of reaching pension age.
(iv) - that in the case of delayed contributory pension claims, the Department of Social Welfare should, in the absence of an appropriate amendment to the Regulation, exercise its present extra-statutory discretion to pay arrears of pension, up to the level of full arrears, where (a) the delay arises due to an error for which the Department has some culpability; (b) failure to pay the arrears (or some portion thereof) would result in hardship for the claimant; (c) the delay arises due to some mental or physical incapacity on the part of the claimant, or as a result of events or circumstances (including situations of force majeure) outside of the claimant's control and where to withhold arrears would be inequitable.
(v) - that the Department of Social Welfare should, as a matter of urgency, and no later than six months from the date of this report, give further and serious consideration to cases not falling within the categories in Recommendation (iv) above with a view to mitigating the adverse effects on late claimants so that any penalty suffered would be more in proportion with the failure (whether through ignorance or bad advice) to claim on time.
92. I have made Recommendation (iv) above in the context that it can be implemented using the present extra-statutory arrangement and without amending the Regulation. I share the Department's expressed view that, preferably, exceptions of the kind recommended should be set out in the Regulation with the extra-statutory arrangement being used to deal with those exceptional cases which will still inevitably occur but cannot be anticipated.
93. I am, therefore, surprised and disappointed with the approach being adopted in Section 32 of the Social Welfare Bill, 1997 (as initiated). On the one hand, there is the welcome extension of the period for which arrears will be paid. On the other, there is the solidifying into primary legislation of the rigidity and fundamental inequity of the present Regulation. I would draw attention to the Council of Europe's handbook Principles of Administrative LawConcerning the Relations Between Administrative Authorities and Private Persons (1996). One of the substantive principles of
Administrative Law is equality before the law and the Council has this to say:
"The principle of equality before the law does not mean that the administrative authorities should not carefully and fairly consider each individual case by reference to the applicable laws and rules. The laws and rules should not be drawn up so as to prevent the administrative authorities from treating every case in a manner appropriate to its circumstances."
94. I have structured General Recommendation (v) above to reflect my view that the substantive principle of proportionality should be brought into the treatment of arrears cases. I recognise, however, that the Regulation would have to be amended to do so. Again I quote the Council of Europe handbook:
"The observance of the principle of proportionality constitutes an all-embracing requirement in a State governed by the Rule of Law. According to that principle, public authorities may curtail the rights of citizens vis-a-vis the State only to the extent which is indispensable for the protection of the public interest. There must be a reasonable relation between the means chosen and the purpose pursued...
Moreover, the burden imposed on the private person must stand in a reasonable relationship to the benefit which that private person and the general public will draw from the act...
The prohibition against using excessive means obliges the public authorities to use milder means where more stringent means are not more promising, as regards the achievement of the purpose pursued."
95. I am strongly of the view that a system imposing proportionate penalties, which would still be severe in many cases, would not in any way weaken the Department's ability to regulate the claims process so as to ensure proper administration and sound financial management.
KEVIN MURPHY OMBUDSMAN
14 MARCH 1997
Oifig an Runai,
An Roinn Leasa Shoisialaigh,
Aras Mhic Dhiarmada,
Sraid Storais, Baile Atha Cliath l.
Office of the Secretary,
Department of Social Welfare,
Aras Mhic Dhiarmada,
Store Street, Dublin l.
Tel: (01 ) 8748444. Fax: (01 ) 7043721
Your Ref: .
Mr. Pat Whelan
Director
Office of the Ombudsman
52 St. Stephen's Green
Dublin 2
26 February 1997
Dear Mr. Whelan
Re: Mr
Mrs
Mrs
Thank you for your letter of 17 January enclosing the draft report on the Ombudsman's investigation in these cases. I appreciate the extension to the time limit for my response which has facilitated fuller consideration of the draft report and the issues which it has raised.
There now follows information on a number of significant developments relevant to the matters you have raised, that I would like to touch on briefly as well as some general comments. Detailed comments on the various paragraphs in the report are also attached.
Review of provisions
The Department's view in relation to the back-dating issue, which is at the heart of the complaints under investigation, has always been and continues to be that there has to be a cut-off point for the making of claims in general, both insurance and non-contributory, for reasons which we have already elaborated. The general rule prescribed in Regulation, has been to allow claims for up to six months; this was regarded over the years as a reasonable period of time for persons to make claims.
As you are aware, the whole back-dating issue has been the subject of a review by the Department since May 1995. This review took into account, inter alia, various concerns expressed by the Ombudsman in his annual reports; the considerations arising from the ongoing review of customer service; the practical administrative concerns relating to the proper control of scheme management and scheme expenditure; and the overall cost implications in the light of the many demands on the social security system arising from the needs of various groups and individuals.
I am glad to say that a number of proposals for significant improvements to the current arrangements have now emerged from the review which I am confident will be welcomed and which will be relevant to your report and recommendations.
6 Month Period
The six month period has come in for particular criticism in the recent past in particular from the Ombudsman's Office. In this connection, I am glad to report that, as part of this year's Budget package, the Minister for Social Welfare is extending, for new claims made on or after 1 January 1997, the six month' period to twelve months for Social Insurance pensions- viz Old Age (Contributory), Retirement and Widow(er)s Pensions and Orphans (Contributory) Allowance.
Status of the regulatory provisions
The Regulations governing back-dating have existed for many years and have been applied under successive Ministers for Social Welfare. Their continued existence may reasonably be interpreted as an acceptance of the provisions. The question has been raised, however, concerning the appropriateness of having these provisions in secondary legislation and the Minister has decided, with Government approval, to put the provisions into primary legislation. The necessary amendments are included in this years Social Welfare Bill which has just been published and which, if passed, is expected to be enacted before the Easter recess. This measure should help remove any doubt your Office may have about the intention of the Oireachtas in relation to this matter.
Deeming claims made where person is already in receipt of related social insurance payment
The Department has been considering the question of deeming claims as being made where the person is in receipt of a related payment. This arises where, say, a person is in receipt of a Widow's or Invalidity Pension and fails, for whatever reason, to 3 claim an Old Age or Retirement Pension. The legislative provisions, as you know, allow for acceptance by the Minister of claims in such manner as he may accept as sufficient in the circumstances. The Minister has now decided that in all cases where a person is in receipt of a related weekly pension, this may be accepted as a claim and the claim processed on that basis. This initiative will give greater flexibility to the awarding of claims to persons already on the social welfare system.
Information on entitlements
The Department has been examining the issue of providing as much information as possible to potential claimants. This arises in part as a result of the Department's on-going review of customer services under the Strategic Management Initiative. The provision of information to people is one of the areas that is being developed and a number of initiatives have been taken over the years.
The Department provides information to people about possible entitlements at pension age. However, there is no audit trail of such information. To remedy this, the Department is putting in place arrangements for the future to ensure that a record is kept of such notifications. In addition, it will use advertisements to reach those who are not benefiting and also anyone who fails to claim in response to the direct mailshot(s).
Extra-statutory authority
The question of the existing authority to make extra-statutory payments has also been raised. I think it is important to point out that this authority was granted nearly 40 years ago. The general intention was to ensure that where difficulties arose due to official errors, hardship or equity considerations and which were not covered by the legislation, then the matter could be resolved by way of extra statutory payment. This authority has been used on many occasion over the years and the total amounts are included in the Appropriation and Social Insurance Fund Accounts for the Department each year. The authority to make an extra statutory payment in any other case where the Minister is satisfied that payment should be made in equity or to avoid undue hardship has been used over the years where there were recognised cases of hardship or where there was a case in equity. It was never intended that it would have wide-spread use and to do so would be to diminish the authority and undermine the statutory framework within which the schemes operate. Wide-spread use of the authority would inevitably call into question the authority itself. Nevertheless the application of this authority will be re-assessed in the light of the experience to be gained from the above-mentioned improvements to the back-dating issue generally.
Costs
As a final general observation I should point out that the costs of making improvements in social welfare schemes must be considered in the wider context of the overall economic and social policy of the Government and the constraints imposed by international obligations etc. This inevitably gives rise to choices having to be made between competing demands. The particular restrictions which are at the heart of the complaints in these cases are, as the draft report brings out, of long standing, applying from the inception of the OACP and Retirement schemes in 1961 and 1970 respectively. Any further amelioration of the position would give rise to additional costs and would have to be considered in an overall budgetary context. In this regard I would point to the tripartite nature of the funding of Social Insurance payments which involves an Exchequer subvention to meet the deficit in income over expenditure. Accordingly, cost-increasing changes in contributory benefits will, in the ordinary course, add to the level of Exchequer funding required to meet the deficit.
Cases in question
The three cases in question have been, once again, reconsidered and reviewed in the light of your draft report and of the improvements being made to the back-dating situation.
It has been decided in the light of all these circumstances to award the claims in the case of Mrs to her 66th birthday in December 1985 and in the case of Ms to her 66th birthday in March 1990. Payment of Retirement Pension at age 65 would not be in their interests, affecting as it would other entitlements at that time. We are deeming the claims in payment at age 66 as claims for Old Age Contributory Pension in the particular circumstances of each case.
In relation to Mr. , the proposed amendments to the primary legislation (which have yet to be debated in the House) and extension of the 6 month back-dating to 12 months will not, in their present form be relevant as they are intended for application to new claims arising from 1st January of this year. Also, it is not considered to be a suitable case for application of the extra-statutory authority as it is applied at present.
E. McCUMISKEY
Secretary
It is generally held that statutory instruments, often referred to as "secondary legislation" or "delegated legislation", are "law" in the strict sense of that term. It would follow, therefore, that the making of such instruments constitutes law-making. For a number of reasons this may be an incomplete description and there are arguments to support the view that statutory instruments might not constitute "law" in the strict sense of that term.
Firstly, Article 15.2 of Bunreacht na hÉireann explicitly confers the "sole and exclusive power of making laws for the State" on the Oireachtas. That article also provides for the creation by law of "subordinate legislatures" but this has never been done. Secondly, the definition of "statutory instrument" as given in the Interpetation Act, 1937 says it "means an instrument made, issued, or granted under a power or authority conferred by statute". The Statutory Instrument Act, 1947 provides a virtually identical definition of "statutory instrument" viz. "..an order, regulation, rule, scheme or bye-law made in exercise of a power conferred by statute". What is clear from these definitions is that a statutory instrument involves the exercise of a power conferred by statute where "statute" is defined as an Act of Parliament (whether of the Oireachtas or of its predecessors).
The Constitiutional aspects of this issue are dealt with in some detail in the analysis of Article 15.2 contained in The Irish Constitution (3rd edition, 1994) by J.M. Kelly. Many of the judgements reported in Kelly relate to cases where it was argued that the delegation of powers of regulation to a Minister, by the Oireachtas, was unconstitutional because the delegation was one to make legislation and was thus contrary to Art. 15.2 of the Constitution. The essential points to emerge from these cases might be summarised as follows :
No provision has been made in law for the creation of "subordinate legislatures".
Where the Oireachtas gives to an administrative authority (including a Minister) the power to make regulations, these bodies are not "law makers" nor do they constitute "subordinate legislatures".
Other than by creating subordinate legislatures (which it has not done), the Oireachtas may not delegate the power to make, repeal or amend the law.
The power to make a regulation is no more than the power to put into effect the views of the Oireachtas. A regulation is no more than the mere putting into effect of the principles and policies of the Oireachtas as set out in the statute itself.
Where the Oireachtas appears to give wide discretion to a Minister, but fails to give clear guidance as to the exercise of this discretion (policies and principles), then the delegation by the Oireachtas is likely to be unconstitutional.
In exercising powers delegated by the Oireachtas under an Act, a Minister must act "with basic fairness, reasonableness and good faith".
The fact that the Dáil or Seanad may annul a regulation provides some measure of control by parts of the Oireachtas; it does not amount to control by the full Oireachtas.
The effect of all these points, taken together, is to question the notion that a statutory instrument is "law" in its own right. Indeed, this line of thinking is not particularly new. Basil Chubb's A Source Book of Irish Government deals with this very question and reproduces a short article entitled "The Constitution and Delegated Legislation" by Paul Jackson from Public Law (1962). Jackson's conclusions in 1962 were virtually identical with those set out above. Jackson begins his article with the following: (1st ed. 1964)
"To speak of delegated legislation, except as a convenient name for ministerial and other administrative regulations, orders, schemes, rules etc., is, in the light of the 1937 Constitution, a complete misnomer"
There is also the argument that the making of statutory instruments involves the exercise of both administrative and legislative functions. In this approach, the two functions are not necessarily mutually exclusive. An interesting observation on this issue - in the UK context - is provided in Wade's Administrative Law (5th ed.) which opens its discussion with the comment:
"There is no more characteristic administrative activity than legislation. Measured merely by volume, more legislation is produced by the executive government than by the legislature"(P. 733)
Wade goes on to observe that "there is only a hazy borderline between legislation and administration, and the assumption that they are two fundamentally different forms of power is misleading". Commenting on the position of the UK Parliamentary Commissioner (Ombudsman), Wade notes that the Commissioner was initially hesitant to criticise regulations but was induced to change his position by the Select Parliamentary Committee. For as long as the Commissioner did not deal with regulations the anomalous situation was that, as Wade puts it, "what was maladministration if done once apparently ceased to be so if done repeatedly under a rule". The Commissioner, according to Wade, eventually overcame "these conceptual controversies" and treats maladministration "as meaning simply bad administration, i.e. any action or inaction by government departments which he feels ought to be criticised, including anything which is unreasonable, unjust or oppressive".
There is one further consideration of relevance. This is the fact that, in general terms, there is no effective parliamentary monitoring of statutory instruments and the opportunities for Oireachtas members to amend or rescind them are inadequate. It is true that certain instruments require a positive motion of acceptance by the Dáil and Seanad; but these are a minority of statutory instruments. Most regulations are required to be laid before the Houses of the Oireachtas and they come into effect automatically unless they are rejected by motion of the Oireachtas. There is no longer any Oireachtas Committee dedicated to the examination of statutory instruments and it appears the mechanisms for raising such instruments in the Oireachtas - even if the volume of such statutory instruments allowed - are far from ideal. In any event, failure to lay a statutory instrument before the Houses of the Oireachtas might not, it appears, necessarily invalidate it - see Administrative Law in Ireland (2nd edition) by G. Hogan and D. Morgan at Page 25 (Note 68). This suggests that the validity of a statutory instrument might not be dependent on the approval of the Oireachtas as is the case with primary law.