Dan Boyle (Cork South Central, Green Party)
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Question 47: To ask the Minister for Social and Family Affairs the actions which have been taken by his Department to implement the recommendations of the Pensions Board review of the conditions and regulations of income continuance schemes. [23162/06]

Séamus Brennan (Dublin South, Fianna Fail)
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The Pensions Board was asked to review, in consultation with the Department of Enterprise, Trade and Employment, the position and regulation of income continuance plans. These products often interact with occupational pension schemes and it was considered necessary to establish the facts of the situation and to clarify the position for the bodies with an interest in this area, namely, my Department, the Department of Enterprise, Trade and Employment and the Pensions Board. The report was compiled by consultants Watson Wyatt and Matheson Ormsby Prentice Solicitors and was published on the Pensions Board website in December 2005.

Income continuance plans provide cover to individuals in the event of long-term illness or disability which prohibit the person from following his or her normal occupation. These plans are insurance policies and the financial regulator regulates the providers of the products since May 2003.

Different types of products are available in the market — those sold directly to individuals by insurance companies and those that are employer sponsored. I am aware of issues arising with the latter type of product relating to avenues of redress in the event of problems or complaints arising.

As the employer is the beneficial owner of the policy underpinning the income continuance arrangement, there is no access for the individual to the Financial Services Ombudsman. The consultants' report suggested that corporate income continuance plans should be brought within the remit of the Insurance Ombudsman, now the Financial Services Ombudsman, and my Department has raised this issue with the Department of Finance with a view to making progress in this area.

In general, the report found that lack of adequate disclosure has been the most significant source of misunderstanding in the interaction of income continuance plans and related pension plans. To overcome this it was suggested that the Department of Enterprise, Trade and Employment should introduce regulations to improve the flow of information to employees on income continuance arrangements. The consultants have also suggested that guidance notes on disclosure requirements on occupational pensions need to be strengthened to cover some aspects of the income continuance arrangements.

In this regard, I have recently signed into force new disclosure of information regulations for occupational pension schemes. The Pensions Board is drafting the guidance notes in respect of these regulations and, in this context, will consider how best to implement the recommendations made in the consultants' report in so far as they relate to pension benefits.

Dan Boyle (Cork South Central, Green Party)
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I thank the Minister for his reply which highlights the complexity of the issue. It involves at least one other Department, the Department of Enterprise, Trade and Employment, and as it is a financial product, probably the Department of Finance.

I agree with the Minister that the matter should be brought under the remit of one Department. However, that does not change the current situation where different Departments have had particular responsibilities for the problem as it has arisen. The situation is obvious with regard to Tara Mines, and at least 3,000 people could be affected by the misapplication of these schemes. Given that these are products that have been linked with occupational pension schemes and that it is a long-standing problem, the Minister and his Department have a direct responsibility. Will he explain how they intend to deal with the problems?

It has been indicated that the misapplication of the benefit to the employers as agents could be as high as between €300 million and €500 million, which should have gone directly to workers affected by work related accidents. Given the figure is of that scale, that thousands of people have, potentially, been defrauded, and given the linkage to occupational pension schemes, there is a pressing case for the Department to indicate how it will alleviate the problem in the short term.

I welcome the Minister's reply on better disclosure arrangements for occupational pension schemes. It would benefit all of us in the House if the Pensions Board supplied the guidelines to us as soon as possible.

Given that this was a bought-in or add-on scheme in terms of private enterprise providing work and pension support for people in specific industries, does the Minister accept that it undermines the scope of his policy direction in which he has been trying to encourage a greater take up of private pension schemes wherever and however possible?

Séamus Brennan (Dublin South, Fianna Fail)
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The Watson Wyatt report found that 238,000 people are insured under these plans, with 85% of the plans arranged through employer sponsored or voluntary groups. I am anxious that the schemes come under some form of monitoring and regulation. The report recommended that they be brought under the Insurance Ombudsman, now called the Financial Services Ombudsman. My Department and the Department of Finance are discussing how best to make this happen. I support the consultants' suggestion and am of the view that the services must be within the ambit of the Financial Services Ombudsman. We will try to ensure this happens as soon as possible so that the schemes may be overseen.

It is worth pointing out that these are not so much pension plans as insurance plans. They insure against a person not being able to continue work in certain circumstances.

Dan Boyle (Cork South Central, Green Party)
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They were sold as add ons to pensions.

Séamus Brennan (Dublin South, Fianna Fail)
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That is often the case. They are often a bolt-on product and part of it. However, for the moment we are treating them as insurance products and that is the reason we are considering sending the issue not to the Pensions Ombudsman but to the Financial Services Ombudsman. That is the route we will take and I trust it will make a difference. More than 200,000 people are involved and their interests must be protected. The Financial Services Ombudsman should be in a position to do that.

Dan Boyle (Cork South Central, Green Party)
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The central point of my original question did not so much concern who takes ultimate responsibility. The Financial Services Ombudsman will deal with the schemes in the future. The 200,000 people on the schemes largely get the service they paid for and those who are not linked to their employer as the agent do not suffer a detriment in the payout likely to accrue to them. However, a cohort of people have been damaged in the past. Regardless of who takes responsibility for the issue in the future, I am concerned that someone should take responsibility for the way these schemes have been misapplied in the past. I want an answer and guidance from the Minister as to what role he can and should play in that.

Séamus Brennan (Dublin South, Fianna Fail)
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These insurance policies are essentially private arrangements entered into between employer and employee. I will examine whether the ombudsman can play a role with regard to the existing stock, but I doubt we can make much progress in that area because retrospection is difficult when establishing new responsibilities. That said, it may be open to me to ask the ombudsman, when he takes responsibility for the area, to examine what occurred and suggest how we can assist.

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Minister has already explained that he does not have a formal reply for Question No. 48.

Séamus Brennan (Dublin South, Fianna Fail)
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I do not have a formal reply, but I am happy to deal with the question, if the Deputy wishes.

David Stanton (Cork East, Fine Gael)
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Question 48: To ask the Minister for Social and Family Affairs if he has given further consideration to his Department's policy of reassessing savings derived from means-tested non-contributory pension payments when reviewing estate cases; the percentage of these cases set up for overpayments where next of kin have stated that the overpayments arose from savings accumulated from non-contributory pensions for each year since 2000; if he is satisfied that his Department has made sufficient efforts to ensure non-contributory pensioners are aware of the clawback policy operated by his Department; and if he will make a statement on the matter. [23226/06]

Séamus Brennan (Dublin South, Fianna Fail)
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The issue of reassessing savings derived from means-tested non-contributory pension payments when reviewing estate cases has been discussed many times and the Department continues to study and examine the situation. Deputies have put the case that, where people with savings from their non-contributory pensions die and their estate is examined, we should find some way to disregard the block of savings which emerges when the estate goes to probate and we discover it.

When probate is taken out and the accounts of the deceased are closely examined, substantial so-called savings are often found. The last time I answered this question, I explained the policy and that there is a clawback because the amount of money in the account now shows the person was not entitled to the pension at the time. I cannot change that. An initial examination of the issue showed it was impossible to tell the difference between whether the money in the account was saved from the non-contributory pension or whether it came from some other source. The real issue is whether the money comes from another source such as a small inheritance, a gift or payments from a relative.

Ring-fencing this became a major issue. It was decided that we would not depart from the present policy until we had one about which we were very sure-footed. We continue to consider it as asked in Question No. 48.

David Stanton (Cork East, Fine Gael)
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I thank the Minister for his reply. Perhaps he should come to the House more often without notes. Is the Minister aware of the particular case of Anthony Hennigan that was brought to our attention at committee? Is he aware that a social welfare appeals officer found against the Department in this issue? Is he aware that almost 50% of these cases arose from savings from means-tested pension payments according to an internal memorandum in the Department of Social and Family Affairs? Will the Minister not agree that 50% represents a major issue even though Department officials told me in committee that they did not consider it to be so? Will the Minister confirm that it is the practice to deduct funeral and legal expenses applicable to the estate before an over-payment is calculated? Is he aware that the appeals officer in his report stated that he found no evidence before him of such consideration being given in that case? Will he give an assurance that the correct procedure is being followed in every case?

Will the Minister make himself aware of what the appeals officer said about the circumstances of the case with reference to the Social Welfare (Consolidation) Act 1993, in particular the appeals officer's report that he did not find any significant reference by the deciding officer to the appellant's submissions which relate to the special circumstances of this case? However, he was assured that all the circumstances were fully considered. Will the Minister agree that it is wrong to penalise older people and perhaps their elderly relatives by double assessing their means? In other words after having been assessed for a non-contributory pension, an older person will save up for a rainy day. When such a person passes away a further assessment is made. Does the Minister agree that this is continuing and that the saving threshold from 1977 to 1979 was £200 and from 1979 to 2001 it was £2,000 and that those thresholds are still being applied? I ask the Minister to consider the issue as a matter of urgency and make the necessary changes.

Séamus Brennan (Dublin South, Fianna Fail)
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I am not particularly aware of the specific case, but given that the Deputy has raised it, I will make a point of studying it. The Deputy might be aware that I am examining the area of non-contributory policy in any case. As I said to the committee last week, the number of people on non-contributory pensions is reducing each year and obviously those on contributory pensions is increasing correspondingly or even faster. Up to half those on non-contributory pensions are on partial pensions. Enormous effort is going into means testing these and making changes as to the proportion of pension received at every stage. This area needs to be examined and in that context we can review this issue.

There is an essential principle in the question asked by the Deputy. As the law stands the existing limits must be applied. If we subsequently discover that the accounts of a deceased person reveal something different from what we had been led to believe five or ten years earlier, it cannot be ignored under the present law. As I have said many times, I am very keen to examine the operation of non-contributory pensions as those on such pensions end up worse off than contributory pensioners. While contributory pensioners must contribute to the fund, there is no means test and they can earn what they wish. They are entitled to have other pensions. Whereas the dwindling brigade of non-contributory pensioners find that we means test very severely and although in the budget I increased the amount they can earn, they do not have the facility to earn additional funds. I have commenced the process of examining that area in recent weeks. Regarding this claw-back, we would be happy to examine any proposals on how to ring-fence such savings and confirm and verify them. It would be extremely difficult and I have no such proposals at present.

David Stanton (Cork East, Fine Gael)
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Does the Minister not agree that his officials have stated that 50% of the cases relate to means-tested payments? Under the Social Welfare (Consolidation) Act 1993, the circumstances of each case must be taken into account. Is the Minister not concerned that the deciding officer found that did not happen in this case?

Séamus Brennan (Dublin South, Fianna Fail)
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I will study the case in question and find what lesson can be learnt. If all the payments come from means-tested payments, that should not lead to a claw-back in most cases.

David Stanton (Cork East, Fine Gael)
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It does.

Séamus Brennan (Dublin South, Fianna Fail)
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I will look at how it operates in practice. In principle if savings come from means-tested payments, they should not be of such a scale as to necessitate a claw-back, unless the person is extremely frugal, and it is hard to be frugal on means-tested payments.

David Stanton (Cork East, Fine Gael)
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They can be.

Séamus Brennan (Dublin South, Fianna Fail)
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I will consider the matter. The principle is solid. Every case is considered on its merits under the present law. However, the broader area of non-contributory pensions needs examination.