Thursday, 23 March 2006
Social Welfare Law Reform and Pensions Bill 2006: Committee and Remaining Stages.
I move amendment No. 1:
In page 5, before section 1, to insert the following new section:
"1.—The Minister shall within 6 months from after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the effect and operation of means tests overall in the social welfare system and in particular in relation to the carer's allowance.".
There has been much debate in recent times as regards the system operated by the Department of Social and Family Affairs. It is worthwhile at this stage to look at how various schemes are being administered. The Minister made an important announcement this week that has to be welcomed. Nonetheless, we need to look at the procedures and methods in place that deal with issues which may not necessarily have arisen when the methods now being used by the Department were first introduced.
A particular case has come to my attention recently concerning someone with a low-level literacy standard who cannot work or seek employment on grounds of ill-health. This a person who is unable to speak up for himself, and except for the benevolence of a neighbour, would be left behind by a system not designed to deal with such a specific case. This is a case involving someone running a very small unprofitable farm who has applied for a payment but whose debts incurred are increasing rapidly year by year. A credit system is operated by the local creamery. The individual reached a point where he was physically no longer able to work and applied for a payment or award of €28 per week.
The nine cows on the 50-acre farm were got rid of while the majority of the acreage is mountainy and of no benefit to the owner. This has been calculated against the individual in question to whom a reduced payment of €28 per week has been issued.
The person in question qualifies for a medical card and has a cancerous lump on his neck. He is driven to Cork University Hospital three times per week by his brother who qualifies for a social welfare payment. This person does not have enough money to buy food or pay bills. The quality of life, or lack thereof, that this person must endure is a throwback to a bygone era. The failure of the system in this case highlights that it is not designed to cater for individuals who find themselves in circumstances of this kind. Any Christian who examined the case would accept its merits given the dire conditions, poverty and deteriorating health with which the person in question must live. It is not good enough that the system does not provide for specific needs such as those outlined. It must be overhauled.
This is only one of many cases I have encountered in recent times. On previous occasions, I brought to the attention of the Minister another case involving a person whose application for a social welfare payment was refused. This is an important case because it is not isolated. I am certain it is replicated across the country because the circumstances I will describe extend beyond geographical boundaries. The person in question suffered from severe depression and was advised, when the depression eventually began to lift, to apply for a social welfare payment. The person had previously worked and paid PRSI contributions and always made a significant contribution to the State. Unfortunately, due to the nature of the illness, the person was not in a position to make an application for a social welfare payment.
The applicant was initially informed that the level of contributions made was insufficient to qualify for a social welfare payment. The person then applied for invalidity benefit and allowance but was refused a second time. The person was called to attend a doctor and should have been treated with humanity. The doctor was not personable, however, and did not assist the applicant who was in the throes of trying to defeat depression. Following this rigmarole, a payment was refused and the applicant did not appeal the decision. This is not a unique case but to be fair to the Minister, he took a personal interest in it and I appreciate the correspondence I received on the matter from his private office.
It is unacceptable that a person who experiences an illness such as depression will fail under our archaic system to qualify for a payment to which he or she is at least morally entitled. The application in this case did not survive the various checks and balances because of the nature of the system. Surely the system must be reviewed and the procedures and methods deployed to process applications engineered in such a manner as to cater for the particular needs of individuals such as those I described.
The doctor in this case showed no interest. The Department should consider introducing other approaches which take into account all relevant information and under which the outcome of individual cases are determined on merit. Sufficient medical evidence is available to support what I have said. I ask the Minister to examine the ideology driving our archaic system which leaves many people behind.
I welcome the Minister to the House. Senator McCarthy has outlined a number of individual cases in which people were caught up in the means test arrangements. These reflect a large number of similar cases. I ask the Minister to keep the system under review and take into account a range of issues, including those raised by Senator McCarthy, when carrying out any such review.
I will focus on the means test applied to carers. I take on board the Minister's comments on Second Stage on Tuesday in reply to my request that he consider abolishing this means test. He informed Senators that the cost of such a measure would be approximately €140 million and indicated that he needed to consider whether it was preferable to widen the net or increase payments to carers.
While it is difficult to argue with the Minister in this regard, as Senators are aware, many carers do not qualify for carer's allowance because of the means test. We must recognise the work done by carers and the sacrifices they make. While I recognise it will not be possible to do this immediately, I hope the Minister will consider abolishing the means test before the next budget in order that more carers will be brought into the net and have their work recognised and, more important, to ensure more people will take on the task of caring for elderly relatives.
The Department should not work in isolation but hand in hand with the Department of Health and Children to facilitate older people returning home from hospital. We are all aware of the problems associated with the large number of older people occupying hospital beds. If we managed to encourage and financially reward more people to care for older people at home, we would do a service for many people by freeing up beds and allowing older people to be cared for at home. This would also recognise the work done by carers who are not currently financially rewarded. At the same time, the abolition of the means test would bring other carers into the net. I ask the Minister to consider introducing such a measure in the year ahead or, failing this, to take action to improve the position for more carers.
As I noted on Second Stage, figures provided by the Carers Association indicate that only 24,000 of 150,000 carers receive either carer's benefit or carer's allowance. Clearly, therefore, a large number of carers are not being financially rewarded for their work.
The amendment calls on me to lay before the House a report on means testing in the area of carer's allowance. While I cannot accept the amendment on technical grounds, this formula is often used to ensure a debate takes place on an issue. I am always pleased to lay reports before the Seanad whenever requested and to come before the House to discuss issues. While I have no difficulty with the spirit of the amendment, it is not possible to accept it on technical grounds.
I was pleased to meet Senator McCarthy recently in Boston. When a person by the name of Senator McCarthy shows up at a function in the United States a shiver goes down spines but people were greatly relieved to learn that the Senator in question was a brand new, bright politician from Ireland as opposed to the subject of a current movie.
As Senators will be aware, the carer's disregards were significantly increased in the recent budget to €290 per week for a single person and €580 per week for a couple. As a result of this change, a couple with two children may earn up to €32,925 per annum and continue to receive the maximum rate of carer's allowance, while a couple earning up to €54,400 would receive the minimum allowance. In effect, when allowances are made for PRSI and other expenses, most family sizes on average industrial earnings will qualify for the maximum rate of carer's allowance, which is indicative of the good progress made.
The respite care grant, a popular relief for many people, has increased to €1,200. Senators requested that I do more to promote this grant and I undertake to do so. The family income supplement, FIS, campaign is going well and I will give some thought to introducing a carer's campaign thereafter with the aim of attracting more people to avail of the respite care grant. I am always prepared to contemplate changes and the Department has made many changes in the previous two budgets. This legislation is surrounded by reforms. I am open to change and progress because, with regard to the welfare system, I fundamentally believe that while finance and income are critical, the social policy behind them is also important. In that context, I have an open mind on abolishing the means test, which, as I previously stated, would cost €140 million. I am not convinced that represents the best use of €140 million, in so far as improving the disregards and raising income limits is probably more targeted than completely abolishing the means test. However, if a stage is reached where the efforts involved in administering the means test are greater than the cost would warrant, it may then be better to introduce a universal scheme. I will keep the matter under review as the year progresses. As the disregards are increased and more people are brought within the scheme, the cost of removing the means test theoretically decreases. However, provision must be made according to the resources available.
According to the CSO, 40,000 people provide care for more than six hours per day, 8,000 between four and six hours and 15,000 for between two and four hours. Some 85,000 people — a significant figure — provide care for fewer than two hours per day. These figures were revealed in replies to a question in the 2002 census on the number of people providing unpaid personal care for a friend or family member with a long-term illness, health problem or disability. The latter 85,000 fall into a different category of care and, while I do not say we should ignore them, they should be borne in mind when the headline figure of 150,000 is quoted. These figures probably need to be re-checked because they date from 2002.
The total cost of the budget package for carers this year is €54 million and overall support for carers has increased from €223 million in 2005 to approximately €270 million for the current year. Some 34,000 respite care grants were paid last year at a cost of €34 million and 2,268 claims were made for carer's benefit. I agree that carers should be recognised, valued and supported. An important issue also arises in terms of looking after the needs of carers so that they can see to the needs of others. Policy should now be focused on that.
I move amendment No. 2:
In page 5, before section 1, to insert the following new section:
"1.—The Minister shall within 6 months from after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on introducing an earnings disregard for the purposes of social welfare benefits for relatives who assist in childminding similar to that for childminders.".
The Minister is correct in that these amendments are being brought to ensure the issue remains on the agenda. We cannot propose more forthright amendments because these would have fiscal implications and would therefore be deemed out of order. Nonetheless, it is opportune to discuss these issues because child care is a political hot potato.
The family members who provide invaluable services to the parents of young children could end up losing out as a result of their work. People have been pushed into commuter belts, where they are cut off from their families and the communities in which they grew up. House prices and other economic factors are significant factors in the lives of such people. We must have regard to the circumstances in which people on the lower end of the income scale are disadvantaged for providing a valuable service to family members. I urge the Minister to explore whether there is room for developing this issue. This amendment has already been debated on Committee Stage in the Dáil, where useful exchanges occurred between Opposition Deputies and the Minister. However, it is important that the issue be also raised in this House, to ensure that those who provide this service are dealt with sympathetically.
I support the amendment tabled by Senator McCarthy and congratulate the Minister on bringing childminders who mind up to three children within the home into the PRSI net. That worthwhile provision will ensure these people, the majority of whom are women, are entitled to contributory pensions and maternity benefits.
I concur with Senator McCarthy that people who are in receipt of social benefits while minding children should be able to earn some form of compensation for their work without affecting their allowances, although I am not sure of the measures currently in place. Usually this money is paid under the counter and is not declared but people are entitled to payment in return for minding children.
I have misgivings about this line of argument. The introduction of the disregard for earnings of up to €10,000 was a good incentive for people to undertake child minding activities. Disregarding these earnings for social welfare benefits will create an anomaly in that the earnings of other people on low salaries are taken into account when their social welfare benefits are determined and they may also seek similar provisions. It is already possible to receive benefit while earning less than the disregard. A case might be made for excluding the €10,000 from the payment, so that it represents net earnings. The tax benefit will not then be factored into calculations for social welfare purposes. However, disregarding the entire amount is not a sustainable argument.
I appreciate Senator Terry's remarks on PRSI. Extensive discussion was held on this issue, which some felt was informal income and, as such, should not involve either tax or PRSI. I took the opposite view. To ask women in particular not to have a PRSI contribution for a period, however small the income, would store up trouble for the future. Some other Minister may be standing here in 20 years time and be asked to backdate it, for example. I am glad the Senator spotted the issue and had been calling for it. I appreciate the comments.
Senator Jim Walsh is correct in his comments on the €10,000 limit. It is income and it would be going too far to disregard it for welfare purposes on top of normal income. Welfare payments exist to support people and must usually take income into account. In some cases, such as child benefit, it clearly does not. In many cases across the board, however, income must be taken into account and treated accordingly. This income would be exempt from taxation, which is particularly useful, and the disregard would be up to €200 per week. If an extra disregard is put in, it would be difficult to integrate this into the social welfare system without introducing many other anomalies.
I will give an example. A lone parent minding children in the home could earn up to €200 per week before the payment would be affected. A lone parent minding children in a crèche or on a community employment scheme could have his or her payment reduced once the weekly earnings reached €146, which is the limit for lone parents. A specific disregard for child minding, as is sought in the amendment, could lead to poverty traps. Taking the combined income of welfare payments and allowable earnings, the incentive to increase earnings beyond the threshold, and thus move out of the welfare system, is likely to be removed.
Another example would be if a spouse of a person with two children was on unemployment assistance or the recipient of disability benefit. Up to €192 per week could be earned without affecting the payment, which would include qualified adult allowance and child dependent allowance additions for a spouse and children. In that case, the total household income would exceed €500 per week. That would clearly bring about a poverty trap that would not be sustainable. It would be increasingly difficult to get people back into the workforce if that type of income was permitted to be built up through use of the welfare system. This is a good scheme which has been generally welcomed across the Houses.
With regard to the €1,000 per annum allowance for children under six years, the first payment is in August, the second is in September and I hope the third payment will be in December. Thereafter, payment will occur in the week following the end of the quarter. As Senators know, it is a quarterly payment. The tax exemption on €10,000 of earnings should also help. I have no doubt that over the years these figures will only move in one direction.
I move amendment No. 3:
In page 5, before section 1, to insert the following new section:
"1.—The Minister shall within 6 months from after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on continued anomalies affecting persons who were recipients of deserted wife's benefit.".
This issue was again raised on Committee Stage in the Dáil by Deputies Seán Ryan and Penrose. The Minister is clearly aware of it. Deputy Seán Ryan has been very insistent with regard to this amendment. He has indicated that only a small number of people are affected, and the case has been articulated quite well in the other House on the nature of the exact anomaly. The amendment proposes to deal with this, and I ask the Minister to deal with the anomalies where people could find themselves worse off as a result of changes made. Although the number of people affected is declining, I ask the Minister to keep the issue under constant review.
Deputy Seán Ryan has expressed strong views on this issue in the other House and on Committee Stage. I promised him I would keep it under consideration. It is difficult as the issue goes back to 1992, when an earnings limit was introduced for deserted wife's benefit. Following from this, the one-parent family payment, or the lone parent allowance as it is now called, was introduced in 1997. The deserted wife's scheme was discontinued with effect from 2 January 1997. The scheme was retained to the extent of existing entitlements already acquired in August 1992, when the earnings limit was introduced for new claimants, and in 1997 when the one-parent family payment was introduced. It has been preserved for existing entitlements.
In the 2006 budget, the upper earnings limit to receive benefit for one-parent families was increased to €19,500 of gross earnings per year, an increase of €83 per week. A recipient of deserted wife's benefit with dependent children can transfer, which is an important point. If a person is on the old deserted wife's allowance, that person can transfer to the one-parent family payment if it is beneficial to do so. Such a facility is important.
There are currently approximately 100 recipients of deserted wife's benefit on reduced rates due to earnings, of which 48 would be eligible to transfer to a one-parent family payment. It is an important issue for those people, as stressed by Deputy Seán Ryan. The paper my Department published a few days ago on supports for lone parents gives us a chance to debate these issues. I hope we avail of the opportunity in the Bill to debate these issues. I will keep the matter under review.
Essentially what has occurred is that an old scheme was closed down, a new scheme was initiated, and some people stayed on the old scheme despite having the option to move to the new scheme. They found that their income may have increased and were caught by limits. In most cases, the issue has been that these people got additional earnings above the limit and were therefore not entitled to it. We will keep the matter under review, as we do with all schemes.
I move amendment No. 4:
In page 6, before section 4, to insert the following new section:
"4.—The Minister shall, within 3 months of the commencement of this Act, lay a report on the effectiveness of Child Benefit and Child Income Support as a tool for tackling child poverty, before the Houses of the Oireachtas.".
I compliment the Minister on his thinking since he came into the Department of Social and Family Affairs, and the efforts he has made to bring about reforms in the short time he has been there. I agree with the Minister's argument that we can no longer solely accept that giving money to people in certain circumstances will improve a family's lot. The same could be said in the case of children.
I agree that we must find better ways of tackling child poverty. It is a disgrace that we still have so many children in this country living in poverty. Money is obviously essential to unemployed people or those on low income and we must give financial assistance. Over the years, however, we have seen that merely giving money is not the only option for lifting people out of poverty. The Minister is taking an approach that takes this into account. I have not yet gone through the document launched by the Minister some days ago regarding support for lone parents, but I know there are many factors in it which will help lone parents. It clearly follows that it will also help children.
I recognise that child benefit has increased significantly over the past number of years, but do we have any way of measuring if the increase has taken children out of poverty? Have we been able to measure the benefit of the increases parents have received? Many children still, unfortunately, go to school without a breakfast or warm clothes to wear and do not have a hot meal during the day. We use these indicators to distinguish children who experience poverty. Their attendance at school suffers, affecting their literacy and overall education.
We are creating another cycle of poverty. If some people were trained to manage their income, meagre though it may be, they would have sufficient to feed their family properly. The key is managing the money they have. It is very difficult to live on social welfare benefits but there is a lack of training for certain families to manage their money and break the cycle of poverty that has affected them for generations. The Department of Social and Family Affairs, along with others, must adopt a multidisciplinary approach to tackle the curse of poverty affecting many families.
I acknowledge the approach the Minister is taking. I do not say we should cut back on financial support but other things must be done to support families, such as providing training and other support mechanisms. Has the Minister any indicators that the improvements in child benefit have had a positive effect in taking children out of poverty?
I support this amendment. Other methods must be employed to alleviate and eventually eliminate child poverty because, without being flippant, throwing money at the problem will not succeed. Senator Terry has eloquently outlined cases where children attend school without clean, warm clothing, fail to have a warm meal one in every two or three days and lack a sufficient red meat diet. These are worrying facts brought to us by the Combat Poverty Agency and other anti-poverty agencies.
It is very important to bear in mind that many aspects of the Celtic tiger and the economic prosperity we have enjoyed in recent years have masked these problems. They have not ceased but exist under the surface. Many of those affected do not have a voice and cannot articulate their circumstances. The organisations studying these issues tell us that other measures must be put in place to alleviate child poverty. Has the Minister considered any measures, other than child income support and child benefit, to eliminate child poverty?
I was impressed by Senator Terry's comments. The manner in which she put forward the amendment struck a chord and made a lot of sense. Child poverty involves much more than the monetary amount coming into a household. There is a range of other issues, not least where a child comes from a family where education is not a priority and is often viewed with derision, putting him or her at a huge disadvantage. Although there are mechanisms that address this, there must be enhanced efforts to break the cycle so that people who come from such a background have a better chance. The number attending third level education has increased considerably in the past decade and is a significant factor but some people are, despite our economic success, left behind. Attitude is an important factor and any mechanisms that address that should be put in place.
There is great reluctance, which I understand and, to an extent, support, to introduce means testing for child benefit. However, there are people on six figure incomes who are in receipt of it. Given the reluctance to introduce a limit over which it would not be paid, perhaps there could be a voluntary scheme encouraging people on incomes exceeding, for example, €100,000 or €150,000, not to avail of the benefit. I do not know to what extent it would be taken up but I suspect some people, having had opportunities in modern Ireland which their parents or grandparents did not have, might see it as a chance to forgo money that can be better utilised for needy children or other causes. Maybe that is too optimistic and puts undue faith in people's altruism but I believe some people would act in that way and it might achieve the objective without imposing limits, which I feel would be resisted by the Minister.
If I had one wish for my time in this Department it would be for child poverty to disappear. There are many other priorities but that would be the one I would pick. In 21st century Ireland it is totally unacceptable that any child should live in poverty and a decent country like ours should not tolerate it a day longer. I feel strongly about it because the brashness of these days gives one to believe there are no children living in poverty, whereas the sad reality is there are. The 2004 official figure for child poverty, meaning children aged under 16, was 9%. We have made substantial moves in 2005 and 2006 so I suspect the figure has significantly reduced. The figure for people technically living in poverty in the population as a whole is 6%. I say "technically" because the figures derive from formulas and can be crude.
I will put forward some examples of the measures we have introduced. The family income supplement, which we have advertised recently, provides a major support for low income families. Child poverty exists above all in lone parent families, followed by households where both parents are unemployed. Significantly, child poverty also exists in low income families, where a parent has earnings. The family income supplement applies to these cases. One, possibly extreme, example involves a family with four children, two aged under six, on an income of €20,000. Although that is above the minimum wage it constitutes a low income when mortgage and bills are taken into account. That family can claim €2,000 for child care, because of the two children aged under six, child benefit of €8,000 and family income supplement of a further €7,977. It can also claim a back-to-school allowance of €480. The figures are not always spelled out so I wish to put on record that such a family can get €18,000 in welfare on top of income of €20,000, bringing its total income up to €38,000.
Most of these provisions were made in the past two budgets and constitute a direct assault on child poverty. If it was not for the fact that such houeholds include four children the sums would not add up and those in question would not receive such funds. I will give one final example before concluding.
Yes. A four-child family on €20,000 gross income could receive €2,000 in child care, €8,000 in child benefit, €8,000 in family income supplement and €480 in back to school allowance, comprising a total social welfare package of approximately €18,000 and giving a total income of €38,000. Very little taxation would be involved due to the low income.
Taking the example of an unemployed family with two children, both of whom are under six years of age, it will receive unemployment assistance of €16,000. Using approximate figures, the family will also receive €2,000 in child care, €3,600 in child benefit and €240 in back to school allowance and will probably qualify for the fuel allowance of approximately €400, bringing the family's total income to €22,000, an additional €6,000 on the basic unemployment assistance figure.
As Senators can see, all of the extra income is child-focused. If the family does not have any children, it will not receive the extra income. Keeping these numbers moving is the best way to get money into those families and tackle child poverty. There are dozens of other examples that I would like to publish at some stage, as they show what is possible.
For this reason, tapering and phasing are required. The transition from being able to get these types of unemployment funds to enter the world of work must be smooth. Like an accelerator and a clutch, a person must rely on one while easing off the other. This is critically important in welfare, as people would stay in a poverty trap instead of moving in the direction they should, that is, to work, which is the best response to child poverty.
The Minister's statement warrants comment. The manner in which he spelled out the situation was informative but it could be circulated with other examples. As Senator Terry said, the Minister should be commended. There have been significant and focused improvements in social welfare, particularly in recent years. The Minister has taken a keen interest in the matter and impressed everyone by the manner with which he has approached this portfolio.
I welcome the encouragement given to people to escape the poverty trap. It is significant that in the example given, an additional social welfare payment of €18,000 will be made to someone who works and earns €20,000 as opposed to someone who is unemployed. I welcome this measure. The manner in which the Minister recently dealt with the lone parents issue shows the same philosophy of encouraging people to avail of opportunities in the workplace without penalising them. People have often tried to get jobs in the black economy and did not avail of better job opportunities because they might have lost their social welfare benefits pound for pound. It was a difficult and stark choice. While the Minister will agree that it is not a panacea, this encouragement will be a significant step in the right direction for people who are on modest social welfare or other incomes if progress continues.
As Senator Terry stated, it is important to holistically tackle the range of other issues. Often, the problem is not monetary poverty, rather poverty of thinking and ambition. I am not speaking on a partisan basis because I speak my mind and, if I believed the Minister was wrong, I would say so. In this instance the Minister deserves every credit for what he has done.
I thank the Minister for his illustrative examples of the social welfare packages that families could receive. I welcome these measures, as directing such child-centred payments towards the families in question is impressive. While I do not wish to detract from the importance of the figures, is there a concern in the Department of Social and Family Affairs that some of the money might not reach its targets? Unfortunately, some parents might not think like the rest of us or believe the money should be spent on their children, which highlights Senator Terry's amendment. If there is a concern, are there realistic ways of avoiding that situation? It may be impossible but is there a school of thought on how to ensure that children receive the benefit of the payments, which are not intended to improve the social lives of parents or provide luxuries? It would be good if we could ensure that the benefit of the money reaches its targets.
Senator Jim Walsh is correct in that investment in education is a large weapon with which to beat poverty. As he stated, we are not only speaking about monetary poverty, but poverty of ambition, which affects other aspects of the lives of the people involved. Does the Department have concerns about parents drinking away the money or spending it in a flaithiúlach manner instead of spending it to alleviate child poverty?
I thank the Minister for his response and for outlining the benefits. Payments have rightly improved significantly in recent years. Senator McCarthy made an important point in that, while none of us wants to say that unemployed people or those on low incomes should not have social lives, there should be some training and management of funds, which was my initial point.
The Minister cited the back to school allowance, which is the only figure that must be vouched for. We are sure that it will be spent on children but other payments could be spent on anything. I am not saying that we should look for vouchers or receipts from people for their child care supplement spending, but there is a danger that the money handed out will not be spent on the children. The intention is to help parents with their child care costs but it is a universal supplement given to everyone with a child under the age of six years. While the supplement is welcome, we know that it does not go far in terms of the weekly costs of child care and can be spent in other ways.
The back to school allowance is positive and ensures that children will get proper clothing. As has been raised here and in the other House, figures every September show us that the supplement is a small amount. I do not want to delay the House further on this amendment because we are all as one. We want to ensure that money is well spent and that children benefit from it.
The Senators are correct, child benefit is paid to the mother. The new child care allowance is not a vouched payment so, in theory, a family could choose to spend the child benefit and the new child care allowance of €1,000 on something other than the child. There is no legal mechanism to address this but research indicates child benefit is used for family purposes in the broadest sense. In rare cases the Department may decide to pay the benefit to the father rather than the mother if family circumstances are brought to our attention. The officials in the Department are very sensitive and in cases where clear evidence shows the money is not being used to the benefit of the child it may be paid to the father or the guardian. Paying substantial funds to the child's mother involves a major element of trust. If we stop trusting the mothers of Ireland we are in serious trouble.
The back-to-school payment is means tested and was greatly improved this year. We increased the allowance by €40 per child, amounting to €120 for children between two and 11 years of age and €180 for those between 12 and 22, effective from June 2006. These targeted payments are very welcome and are not vouched. We pay them under the back to school scheme but if the mother decides it is time for a trip to Brown Thomas I cannot do anything.
I move amendment No. 5:
In page 7, before section 8, to insert the following new section:
"8.—The Minister shall, within 3 months of the commencement of this Act, lay before the Houses of the Oireachtas, a report on the review of social welfare payments for carers.".
We have had an interesting debate on carers but the means test is something we must review throughout the year. The take-up of the respite care grant is a matter I wish to keep under review to ensure people are aware of it. I meet people who would have been entitled to this grant but they were not aware of it or they did not have the wherewithal to fill out the forms. It would be worthwhile to keep this matter under review. The area needs to be expanded to bring more people into the net because it is the way forward for caring for older people or those with disabilities. It is a sign of the times that few people are in a position to care or undertake voluntary work. Many women and people who were unemployed have returned to the workplace and they are missed in the community. We must ensure we have a sufficient number of carers to look after people in their homes so the elderly do not have to end their days in institutions.
This has been dealt with in an earlier amendment. It is better to care for people in their homes and this is the preferred option and the policy of the Minister for Health and Children with regard to home care and the income supports for carers from my Department. We seek to make it financially attractive to care for people at home.
In the recent budget the carer's allowance was increased to €200. As I stated in the Dáil yesterday, this is the highest single welfare payment in the State, higher than unemployment assistance benefit and pensions. This was done deliberately to show recognition for carers. The Departments of Health and Children and Social and Family Affairs need joined-up policy to ensure it is possible to care for people at home. I share the Senator's objective.
Could the application forms for these benefits be made as simple as possible? Some forms are most complicated and this poses a problem for many people. As the forms comprise many pages and the questions are not clear some people do not bother applying for the benefit. I am aware booklets are provided with these forms but it has been brought to my attention that the forms are difficult to complete.
I will review the carer's allowance form, if the Senator is referring to that. We continually review forms to improve them but basic information is necessary. The Department makes more than 1 million payments per week and there is hardly a household in the country that does not receive a payment from it.
The section refers to pre-retirement allowances. This was the only section to which Senator Terry's colleagues in the Dáil seriously objected but in the end we reached a meeting of minds. The pre-retirement allowance was introduced in 1990 for older long-term recipients of unemployment assistance, those who had effectively retired from seeking employment and, by extension, the labour force. It was initially aimed at those aged 60 and over but this was reduced to 58 in 1991 and reduced to 55 in 1992. The allowance scheme for single women was integrated with the pre-retirement allowance in November 1992. The requirement to be available and genuinely seeking work dose not apply to those on the allowance so monthly signing is not required. It is paid weekly and is equal to the rate of unemployment assistance. It is unemployment assistance that does not have to be signed for, for which there is no requirement to seek work and which is paid from the age of 55. Participation is voluntary. Some recipients of long-term unemployment assistance over the age of 55 do not opt to take this payment but instead stay on unemployment assistance, which means they must seek work. PRETA numbers have decreased from a high of 15,300 in 1994 to 11,000 at the end of last year. Almost four fifths of these recipients are male. Some 68% of new recipients are under 60 years of age although significant numbers over the age of 60 continue to apply for the payment.
In the legislation I propose that no new person will join this scheme from a date to be specified in September. As a result the scheme will be phased out over a period of approximately ten years as the current recipients, people over 55 years, reach pensionable age. Those currently on the live register and aged between 55 and 66 who might have transferred to this scheme will no longer be able to do so. The proposed change will not affect existing recipients of the scheme. Although this reform will lead to an increase in the live register of approximately 2,000, based on current inflows, this increase will happen gradually over a year and will be offset to some extent by the impact of the employment action plan, which is being extended to all age groups. Under the employment action plan FÁS assists unemployed people to get jobs. It formerly did not apply to people aged 55 and over.
The PRETA scheme came in when unemployment was high. To get people off the register the Government took the view that unemployed people over the age of 55 would never work again and there was no point in retraining, educating or talking to them. They were put on the shelf and paid the unemployment rate until they reached the age of 66 after which they received the pension. This is no longer appropriate. We should intervene with people over 55 years up to their pension age and beyond, help and encourage them to find new opportunities, training and education. I cannot touch the 11,000 people already on this because they have made lifestyle decisions and it would be unfair to interfere with them. It is not right to allow new people aged 55 to go onto a permanent pension with no arm of the State giving them any help, support or encouragement to find employment. That is not fair to them or to their dependants and that is why I have made this move.
I thank the Minister. I did not intend to oppose this section because I agree with the Minister's proposal. I can understand why this payment was there in past years and I thank the Minister for allowing those on that scheme to remain on it. In light of our changing economic climate and our healthier, fitter and longer-living population it is right that this scheme be abolished and that only those who are unemployed for very good reasons should receive unemployment assistance. The same is true in the private sector where one of the biggest mistakes has been retiring people at the age of 55. This had an impact on occupational pension funds. It was wrong to retire young people, and I consider 55 to be young. The same has to be said about people in this category, particularly the people now coming up to that age. Hopefully they will have been in employment, will be able to take on training and many will want to continue working when they reach the age of 65. We are making provisions to allow that to happen, which I welcome.
I move amendment No. 6:
In page 18, before section 28, to insert the following new section:
"28.—The Minister shall, within 3 months of the commencement of this Act, lay before the Houses of the Oireachtas, a report on the position of one parent families.".
I proposed this because I am interested in the document launched last week and I have asked that we examine and debate it in this House, which would be worthwhile. Many of its provisions are worthwhile and I like the Minister's thinking on how to support people in their efforts to improve their situation. We give them financial support but also make demands of them and give them the necessary supports to return to the workplace or to education. That is the way forward to help people out of poverty. I am concerned that not everybody is able to return to work. I am talking about lone parents, particularly some mothers who may find it difficult to cope with young children alone. Children might suffer more if their parents went back to work. In encouraging, helping and supporting people to return to work or education we must be careful not to put children in a worse situation.
The cohabitation rule is outdated and needs reform, as proposed in the document. As we have a growing number of lone parents, we therefore have a growing number of young children who in many instances do not know who the other parent, usually the father, is. We should do all we can to ensure that, as far as possible, a child has two parents, regardless of whether the second parent is the natural parent. Although that will not be the case for many, we should encourage two-parent or two-adult families to care for children. The Minister's proposal is worthwhile, as are many other proposals that we will not discuss today. I call for a debate on that document as soon as possible.
I am glad that document is published and I thank the lone parents' associations and organisations whose representatives I met recently. I also pay tribute to the officials and working groups who put so much work into that document. Yesterday the Seanad Office asked me when I might be in a position to debate that matter in the House. I understand the debate is provisionally set for immediately after the Easter break, so we will be able to have a good discussion at that time. It is appropriate for me to leave the matter at that.
At present total State spending on supporting lone parents is €1.3 billion per year. One in three children born last year was born to an unmarried mother. The rate of poverty is approximately 6% in the population generally but it is three and a half times that among lone parents — the official figures put it at close to 30%. There is significant concentration of child poverty as a result of lone parenthood, which is why our earlier discussion on child poverty is so important. A quarter of all lone parents did not go beyond primary education.
I would like to deal with one myth. Only 2% of lone parents are teenagers. While 2% is too many, there has been a misinterpretation of the profile of lone parenthood. Most lone parents are substantially older than their teenage years. Approximately 60% of lone parents do some work but it is very low paid work, chosen deliberately to keep them under the threshold of €146, so their allowance is not interfered with.
I am excited about the reforms I believe we can put together. My Department has its inspectors knocking on doors, a job they do not like to do and which, in the 21st century, I am not sure it makes sense to do. The inspectors want to know whether the child's father is living in the house and, if so, the allowance is taken away.
The report which has been published recommends solutions, although they are not easy solutions. I look forward to a good discussion on the report. I hope we can have early legislation. If I can achieve some form of consensus in both Houses, we should move quickly on this.
I thank the Minister for making the telling and important point that only 2% of lone parents are teenagers. There has been an orchestrated campaign in this regard led by senior academics and journalists who know better — it is not that they should know better, they do know better. It has been led in many respects by an engineer. Engineers know a lot about a certain subject but a professor emeritus of engineering in one of our universities is not an authority on lone parents. Nor should one of the broadsheets, The Irish Times, be allowed to get away with publishing last year the vile article by a columnist attacking lone parents. It used derogatory terms to stigmatise a group of people and was full of inaccuracies. The author of the article knew and knows better.
I am glad the Minister has reiterated this important statistic. We must be mindful in regard to the debate on lone parents that only 2% are in the teenage category. The other factors which result in lone parenthood are death, desertion, imprisonment of spouses and so on. It is not just one issue. I commend the Minister on raising this important statistic.
One of the most important statistics provided by the Minister was that 25% of lone parents did not progress beyond primary education. This brings into focus the need to keep students at school until they have completed the process, an issue which is related to the poverty traps to which we referred. Initiatives are being taken in this regard but we need to keep an emphasis on the issue.
Many girls who have had children have dedicated themselves to rearing their children and sacrificed careers and job opportunities to do so. It is not good enough that the fathers of those children in many instances get away without fulfilling their responsibilities. The Department attempts to recoup some of the costs from the fathers but every father of every child has a responsibility and should be held to that in law. It is not good enough that the taxpayers at large would rear a family for somebody who may well father children with a number of girls, as happens. I call for a greater clampdown in this area. Any legislation brought forward should reflect this perspective.
I move amendment No. 7:
In page 18, before section 28, to insert the following new section:
"28.—The Minister shall, within 6 months of the commencement of this Act, prepare and lay before the Houses of the Oireachtas, a report on the work of the Maintenance Recovery Unit of his Department.".
This is the amendment which Senator Jim Walsh will support.
That fathers should and would support their children is an important point. The Minister might provide figures outlining how many fathers support their children. There is a sense of irresponsibility among some men who father children and simply turn their backs on the mothers. It is a serious problem for many mothers and impacts on their children. The financial aspect is not the only important aspect. It is also a factor that the father is not involved in the life of the child and that the positive influence a father could have is lost.
The amendment considers the issue of maintenance recovery. I raised this issue in the House last December and I again ask the Minister what efforts his Department will take to try to ensure that fathers make these payments. What success is the Department having in recovering some of the money owed? What percentage of mothers name the fathers of their children? It must create a difficulty if no father is listed on the birth certificate.
This is an issue we need to take more seriously. We need to let men know that if they father a child, that child is for life and they have a financial and social responsibility towards him or her. It is a matter of concern — this is more prevalent in built-up areas, particularly disadvantaged areas — that men father children with a number of different women. This creates a problem, which is probably a matter for the Department of Health and Children rather than the Department of Social and Family Affairs, whereby children will grow up not knowing they are half brother or half sister to a child living in the same block or on the same street. It is an issue which needs to be addressed. I am interested to hear the Minister's response.
I support the amendment. No mercy should be shown to those who are found to be in dereliction of their duty to their children. Unfortunately, one could not call such people fathers because that is not how a father would behave. However, there are cases where people do not accept the responsibility that goes with parenthood, do not want to assume their duties and take no responsibility for the rearing of their children.
There is an increased burden on the State in terms of resources and the higher dependence on the Department given that both parents are not operating as a unit or that co-operation is not being provided by the former partner. It is essential that the full resources of the maintenance recovery unit are in place to ensure that such fathers are hauled over the coals and that they contribute any expense that has accrued to the Department due to their inability to fulfil their obligations, duties and responsibilities to their children. That money should be recouped. In the same way that no mercy should be shown to tax evasion, none should be shown in this area. The full resources of the Department should be deployed to the maintenance recovery unit to recoup costs from people who, because of their inability, lack of understanding and lack of contribution towards the rearing of their children, have placed an increased financial burden on the State.
I will not repeat what I said but I fully support everything that has been said by Senators Terry and McCarthy. I wish to make an additional point, raised by Senator Terry, relating to the health issues arising from people being unable to trace their parentage. We should be stronger in ensuring that all birth certificates must contain the registration of the father's name as well as the mother's name. That should be given legislative backing. In cases where there is doubt — of which there are not too many — DNA and other testing can identify the true father. In the interests of society and of ensuring that a father fulfils all his responsibilities to a child and to the mother of the child, we should be stronger in our approach to this aspect.
This is an area that needs considerable attention and reform. The document on lone parenthood which we recently published deals with this issue because I wanted to make sure that the maintenance issue was included. The applicants for a one-parent family payment are required to make ongoing efforts to seek adequate maintenance from their former spouses or, in the case of unmarried applicants, the other parent of the child. They have to satisfy the Department that they have made reasonable attempts to obtain such maintenance.
This issue of maintenance payments is first and foremost a private matter and the manner of many such payments are resolved through the courts. However, the purpose of the Department's maintenance recovery operation — we have a unit in this area — is to recover some or all of the moneys being expended on social welfare payments for lone parents. In every case where a one-parent family payment is awarded the maintenance recovery unit seeks to trace the other parent, referred to as the "liable relative" in order to ascertain whether he or she is in a financial position to contribute towards the cost of one-parent family payment. The follow-up activity takes place within two or three weeks. All liable relatives are then assessed with maintenance liabilities. They are notified by the Department and then issued with determination orders. The amount assessed can be reviewed when new information comes to light.
The number of one-parent family payment recipients being paid by the Department at the end of last year was 83,000. Included in that figure is approximately 900 payments to widowed persons where maintenance is not an issue. In the period January 2003 to December 2005, the maintenance recovery unit examined 56,000 cases and issued determination orders to 8,017 liable relatives. At the end of January 2006, the latest date for which figures are available, 2,193 liable relatives were contributing directly to the Department. The Department's records indicate that approximately 9,600 one-parent family payment recipients are in receipt of maintenance from their spouse or other parent of their child and, as a result, receive a reduced rate of one-parent family payments.
There are a large number of issues involved. Senator Terry requested some figures. She wanted to know how many fathers were contributing to the maintenance of their children. The best figure I can give her is 15% and I will give a brief outline of the background. Last year we examined 16,000 cases and in 12% of them we found no trace of the father. In 17% of cases we found that the father was on social welfare. In another 17% of cases the liable relative was either unknown or there was violence in the household or other unusual circumstances. We determined that no contribution was due from 39% of those who had jobs because of their being on low income and other circumstances. That figure seems to be very high but I am sure there is a good reason for it. Determination orders were made in 15% of cases. In other words, 15% of all the samples examined — I have no reason to believe that it is not the same across the board — are required to make payments.
We must do far better than that. These moneys generally are not paid directly to the spouse but to the Department in order that we can reduce the one-parent family payment. This is an issue I have discussed with my officials. We are asking a young father to pay money to a Department of State when he should be paying it directly to the mother. I wonder if it is possible to make that link and whether the latter is the direction in which we should be moving. That would be difficult because currently the policy is that payment from the father is a way of reducing the State's liability to pay the one-parent family allowance. The money comes to the Department and that may be a reason the figure is very low. I am only speculating about that and not certain about it. However, we can do more here.
There is another side to this matter that I wish to briefly mention. It is that fathers' rights groups cannot be forgotten. These groups claim fathers have difficulty in gaining access to their children. We must also consider grandparents who often lose contact with their grandchildren. It is not good social policy to have a situation where in a large number of cases, fathers and grandparents do not have access to a child. We have to get a system here where every father who can pay something must do so.
In the UK all fathers are required to pay a minimum of £10 a week, regardless of their circumstances. I have not thought about this matter any further at this point. The Child Support Agency in the UK got into difficulty due to computer and other problems and I would not want to follow that route. I am not interested in the finances of this issue so much as the social policy aspect. If a couple are not together, we should try to make sure that maintenance is available in such a way that strengthens, rather than weakens, the link between the father and the child. Our current system is not good enough in terms of strengthening the social contact link between the child and the father. We need to do more in that area. We could discuss this perhaps when we come to deal with the report on lone parents.
I thank the Minister for his reply and the way in which he is considering this issue with reform in mind, with which I agree. The figure for fathers contributing to the maintenance of their children is very low. It is not good enough that of the number of cases examined, only 15% of fathers are contributing. I would like to see an improvement in that figure and for fathers to become more involved with their children. This issue is not only about money. While the Department of Social and Family Affairs must ensure the funds and benefits are well spent and that those who should pay are doing so, we also need to consider the wider social issues. In the context of the debate on the new report on lone parents we might be able to touch on this relevant issue.
When we talk about lone parents we only tend to think of mothers. While we know there are lone parents who are fathers and who are rearing children, we must take account of the lone parent who is not living with the child and the responsibilities placed on that individual. We must recognise these social and financial responsibilities and tackle the social aspect of all benefits because, as I argued earlier, we must get away from the hand-out mentality. We must bring about change and create a better society. I look forward to the debate on the proposal for lone parents.
I move amendment No. 8:
In page 18, before section 28, to insert the following new section:
"The Minister shall, within 6 months of the commencement of this Act, prepare and lay before the Houses of the Oireachtas, a report on the progress of his proposal to develop a second tier payment.".
As time is pressing, I will ask the Minister to comment on his proposal in respect of the second tier payment.
The NESC, with which I held a recent meeting, has examined the issue of a second tier payment for some time and its work is ongoing. It is one response to child poverty but, as was stated earlier, it is not the only response. I am determined to press ahead and complete this work with the NESC and see if the second tier payment can be introduced.
The child care package introduced this year has complicated the picture because it is another tier of child payments. I must give considerable thought to how this second tier will work because it will be another column under which money will be paid for children. I must expend more thought on the matter. I will work with the NESC in respect of this issue between now and the next budget.
I move amendment No. 10:
In page 20, before section 32, to insert the following new section:
"The Minister shall, within 3 months of the commencement of this Act, lay before the Houses of the Oireachtas, a report on the support provided by the Back to Education Allowance.".
This matter was also debated in the Dáil. In light of the recent court case, what does the Department of Social and Family Affairs intend to do to address the outcome of this case? I sympathise to some extent with the Minister's argument in the Dáil that the back to education allowance is an excellent allowance which helps more people to get back into education. I am not sure whether people should continue to receive this allowance during the summer months. Will recipients automatically receive unemployment benefit or another benefit during these months? What is the financial difference between these benefits? I tabled this amendment to find out how the Minister intends to deal with the outcome of this court case and the impact it will have on other people receiving the back to education allowance. Once a decision is made, it cannot simply affect the person to whom the case pertains. It must also be made for other people receiving the allowance.
We must support people who are returning to education and who find themselves without support for a short period of time when they are not attending college. Will these people receive the same financial benefit from unemployment benefit, particularly during the summer, that they would receive from the back to education allowance? Like all students, these people must go out to work during the summer. I recognise that we must support adults returning to education who have family and financial responsibilities. The question remains as to what is the best way to support them. We cannot ignore the decision of the courts.
We are still examining the implications of the court case and are receiving advice on it from the Office of the Attorney General. I recall that 173 people signed up for that case. A determination has been made in the case of one of these people. In that instance, the Department lost the case and is, therefore, required to make repayment to the individual in question. I understand the court found that the Department is required to make repayment for the summer of 2003 because that particular student had a particular expectation.
I stated yesterday in the House that, pending advice from the Attorney General, I would not be inclined to appeal such a judgment. Obviously, I must wait for the advice of the Attorney General in the event that there are broader implications. Approximately 5,500 people were receiving the back to education allowance in 2003 and Senator Terry's colleagues in the Dáil suggested that these people were entitled to something. However, I must be very sure-footed about the legal issues at play here because schemes end and conditions change. I would be very fearful of opening up a situation whereby when a scheme is ended, everybody who did not get to the gate in time, for whatever reason, had expectations they could show were legitimate. Such a scenario would be an additional burden on the State. I wish to be circumspect about the legal issues.
Senator Terry's colleagues asked me to revisit the issue itself. The issue is whether the back to education allowance, which is approximately the same rate as unemployment assistance, should be paid for the summer months. The practice of paying the allowance during the summer ceased in 2003. I do not have any immediate intention of restoring it but, like all such matters, I like to keep an open mind and discern what is practical and necessary. It is the old question of whether once I have this money, I pay it to students in the summer or use it to improve the carer's allowance or pensions or alleviate child poverty. I suppose some students could claim that they study during the summer and, therefore, need the allowance. There are six people in my family and I never witnessed any of them study in the summer. Possibly other households have different experiences and certain people can make a case that they study during the summer. However, there is no reason they cannot obtain employment. If they cannot obtain employment, they are entitled to claim unemployment assistance. I suppose the point was that when they received the back to education allowance, which was supposed to maintain them while they were studying, they could work and receive the allowance at the same time during the summer. I do not know how they could work if they were also studying.
We must be careful because we cannot throw money around too lightly. I will keep an open mind on the matter, although I do not have an immediate intention of restoring it for the summer months because people receiving the allowance can claim unemployment assistance in the summer if they cannot obtain work. The majority of people who claim the back to education allowance are fairly successful in obtaining employment.
We should remember that virtually all of the 150,000 people who came to Ireland last year from the ten new EU member states obtained employment. The only exceptions were approximately 100 people who received unemployment assistance or satisfied the habitual residency rule. This is the kind of economy we live in. Therefore, the idea of paying the back to education allowance in August must be examined very carefully. I will keep an open mind on the matter but I do not intend at this point in time to restore the payment of the allowance during the summer.
I move amendment No. 11:
In page 20, before section 32, to insert the following new section:
"The Minister shall, within 3 months of the commencement of this Act, lay before the Houses of the Oireachtas, a report on the position of jobseekers.".
To facilitate the House, I ask the Minister to give his response on the position of jobseekers.
The term "jobseekers" is part of the new names we are applying to unemployment assistance or unemployment benefit. The names have been changed to take a more modern approach and to align them with what is happening in Northern Ireland, where the word "unemployment" is no longer in use and has been replaced by the term "jobseekers". Some people might consider it a bit gimmicky, which is not the case. It is meant to describe what the person's job is, which is to be seeking work. We made the changes following consultation with the Irish National Organisation of the Unemployed.
A number of measures have been introduced under the social welfare schemes to make them more employment-friendly. We are spending more than €1 billion a year on more than 30 schemes designed to get people back to work. There are different training schemes, education schemes, CE type schemes, all of which add up to a significant amount of money. There is the one-parent family payment, and the disregards, so that people can get back to work. The upper limit is €293, which will increase to €375. There is a 40% disregard of net earnings from part-time work for unemployment assistance. There is a tapering in the rent and mortgage interest supplement and other secondary benefits. That tapering allows people to hold on to their rental and mortgage interest supplements while they go back to work. We allowed tapering in withdrawing the adult and child dependant allowance as the spouse or partner's earnings from employment increases.
This is the clutch and accelerator effect to which I referred earlier. We have allowed this throughout the system to enable people to get back to work. There are facilitators who used to be known as jobs facilitators. They engage with people and help them to get training, employment and education. They ensure people know their entitlements. They help them to seek out job opportunities and so on. These facilitators do a first-class job.
Over the years, many thousands of people were sent to FÁS. A survey was carried out in September 2002 among 1,000 randomly-selected former back-to-work participants who had completed a certain programme between 1997 and 1999. It found that 88% of the people were no longer in receipt of social welfare payment, 79% did not return to social welfare payment at any stage, 10% were in receipt of short-term payments and just 1% were in receipt of a long-term unemployment payment.
It is clear from this that the activation programme and the activation reforms being introduced are designed to help people move from welfare to work. Helping to move people from welfare to work through myriad schemes, taperings and phasings is at the heart of welfare policy so that the slope is a gentle one rather than a cliff in trying to move from welfare to work.
I thank the Minister for his response. I agree with the changes in title because they better reflect our modern way of thinking. It is good to see so many people back in the workplace, many of them for the first time, or even for the first time in generations. The initiatives facilitate people in getting back into the workplace. It is something which should be commended and kept under review to ensure it continues to work.
I move amendment No. 12:
In page 25, before section 41, to insert the following new section:
"41.—The Principal Act is amended in section 27 by the insertion of the following new definition:
'"pension coverage" means the number of people who are covered by pension plans;'.".
As I said on Second Stage, the amendments to pensions are minor as far as I understand them. I am not sure how they will help to improve the pension payments of the thousands of people who have occupational pension schemes and I am disappointed that more is not being done in this regard.
I am also disappointed that the Pensions Board is not doing more to improve the lot of those who have pension schemes. I acknowledge the enormous report from the Pensions Board, which will be debated in this House in the near future, and I look forward to becoming involved with the Minister in discussions that may take place. I understand he will organise a forum shortly to which the members of the committee on family and social affairs will be invited, which I welcome. He recently met representatives of the pensions industry.
Much more must be done to help pensioners and those who are paying into pension schemes. The debate very unbalanced because it is about the pensions of the future. While it is essential to plan for the future pension provisions of workers, we are abdicating our responsibility to current pensioners and those who are still at work and paying into pension funds.
The Minister is trying to encourage young people like Senator McCarthy, and even younger people, to start providing for their pension. I am sure the Senator is not thinking about his pension, not to mention people younger than him. I would not encourage my sons, or anyone of that age, to start thinking about their pension. They have too many more important and pressing issues to deal with such as buying their first home or a car, and doing the things young people must do. After that, if they get married or become parents, there are other responsibilities with which they must deal.
It is wrong to focus on telling young people to prepare for their old age, and that by paying into a pension fund now they will have a decent pension when they retire. I do not know if this is true. I can only base my assumptions on the people who are at work today and who are coming up to pension age. Many people who are now retired and who paid into pension funds did what was suggested. Many were compelled to join pension schemes. One could not join many companies without being a member of their pension scheme. This was a type of mandatory pension scheme, which did not work. I would like to see a more balanced debate in favour of the pensioners of today and those who are approaching pension age. This Bill does nothing to address that issue.
The other day I mentioned providing some type of protection fund for pensioners, although it may not be working well in the UK. I understand the point the Minister made that people could become less responsible with funds because a protection scheme would be in place. If we imposed strong penalties on those who must access that protection fund, we will make people responsible. There are probably other areas in which we impose penalties on companies if they do not live up to certain standards. That issue must be considered. I agree we must provide for pensions for the future but we must be realistic and honest about it. We must, however, deal with people today which is, as the Minister knows, my problem.
There are many things we could do but I welcome the improvements made in the budget. The Minister for Finance took measures to ensure the wealthy in our country will no longer be able to put millions of euro into their pension funds and get tax relief. We heard of an individual who took €25 million tax-free from his or her pension, and he or she was not the only one to do so.
I wish to make an important point to the Minister. I said to his officials on one occasion that I could not get answers to questions. When interested parties from the pensions area appeared before the Oireachtas Joint Committee on Social and Family Affairs, a question which was not answered was concerned the most an individual took from his or her pension fund as a tax-free lump sum. Nobody from the Department of Social and Family Affairs, the Department of Finance, the Pensions Board or the pensions industry could answer that question. That is not good enough. The answer was provided in the Indecon report, namely, that at least two individuals took out a tax-free lump sums of €25 million from their pension funds. How did Indecon find the answer when officials from those Departments could not? It is not good enough that Members of the Houses of the Oireachtas cannot get that information. Perhaps there are reasons for not providing that type of information. It was shocking when that information hit the headlines. How can we enact legislation if we are not aware of all the facts and of the abuses by certain people? If we do not enact legislation to ensure these abuses do not take place, then we are not doing the work we were elected to do.
Much good work was done in the pensions area, particularly under the stewardship of Charlie McCreevy when he was Minister for Finance. He opened it up and we must continue to progress that. Apparently, almost half the working population is without an occupational pension. While the Government has had the foresight to invest in the National Pensions Reserve Fund, which will be built up over the years, effectively, it will meet only social welfare and perhaps public sector pensions. There is a need for people in employment to be able to avail of an occupational pension in addition to the social welfare one. Often, the systems are integrated.
Unfortunately during the 1990s many blue chip companies and employers moved away from the defined benefit schemes to defined contribution schemes. That was done because of black holes appearing in pension funds as a result of the downturn in the stock market. There has been a recovery and the stock market has been doing well, particularly in recent years. As they have moved away from such schemes, there is a need for the State to play a part in ensuring occupational pension funds are in place and are properly regulated. Normally, I would resist placing further impositions on employers because there are too many impositions and regulations and perhaps too much employment taxation by way of PRSI, etc., on them from which they do not derive a great deal of benefit. Competitiveness is also a huge issue.
We should be much more proactive in the area of occupational pensions. Any employer of significance should ensure staff, who may have given a lifetime of service, have a modest or a reasonable occupational pension. There should be some mechanism whereby the employer and employee contributes to such a pension. In the case of good defined benefit schemes, the employer was probably paying in anything from 10% to 14% and the employee anything from 5% to 6%. There was a ratio of 2:1. This should be considered in order to regulate the system in some way.
There is also a need to look at other aspects of this from a regulation point of view. Investments and the managers of those investments — often stockbrokers, pension funds, insurance companies, etc. — need to be regulated to ensure the benefit accrues to the investor who may not be au fait with the process. Often the fees applied are astronomical and should be curtailed.
While some relief has been given to people with private pension funds so they do not need to subsequently invest in annuities, there is a need to look at a system where anybody in any type of occupational pension scheme is not obliged to fall into the annuity scheme. Annuities provide mega profits for insurance companies. I have heard figures whereby of the amount invested, the annual payment runs at 3% to 4% which means the individual must live for at least 30 years to get back his or her capital sum even though the insurance company has this fund available to it throughout the period. This is a technical area which needs to be examined.
People starting work now will seek to qualify for pensions in 2050 and by then, the demographics will have changed. We need to plan now for those changes. There is a need for regulation given the direction in which many employers have gone in regard to occupational pensions in the past decade.
I know of Senator Terry's deep interest in the pensions area. She has made a fine contribution to the House in this area, certainly in my time here. The Pensions Board report which was published recently has been laid before the House but I do not know if we have debated it. If not, I would be in favour of doing so and I will ask the Leader if we can find time for that. I have made the same request in the other House. I hope we can go through all the issues then.
The forum on pensions which I have called comprising interested parties and stakeholders will be on 5 May and I will invite members of the Oireachtas Joint Committee on Social and Family Affairs and Members of both Houses who are interested in the subject to attend. I will ensure the Members who spoke on the subject today are invited. It is a considerable area on which I had better not start with ten seconds to go. I could go on for half an hour on pensions.
As it is now 1.30 p.m. I am obliged to put the following question in accordance with an order of the Seanad of this day: "That amendment No. 12 is negatived, that each of the sections and Schedules undisposed of is hereby agreed to, that the Title is hereby agreed, that the Bill is reported to the House without amendment, that Report Stage is hereby completed, that the Bill is hereby passed and that the motion regarding the earlier signature of the Bill by the President is hereby agreed to."
I thank the Seanad for a very fine debate. I have said many times since I took on this job that listening to public representatives on this subject is what it is all about. Members in their daily lives, between clinics and meeting so many groups constantly around the clock, know what is going on. They know how an amendment, change or allowance will affect the family. I appreciate that, which is why I have always made a point never to miss a minute in listening to the Dáil or Seanad on these issues. The contributions of Members come from real life experiences.
I can marry that with whatever good professional advice is available to me from the first-class staff in the Department. It comprises more than 5,000 people spread throughout the country who do great work day in day out. They take a positive attitude in helping people. A combination of what I get from public representatives, professional staff and good solid research allows us to keep this reform agenda going, while keeping up the day to day income of people who depend on it as a lifeline.
This Bill is one of the most complicated and lengthiest pieces of welfare legislation that has appeared before the Oireachtas in many years. Once the President signs it, gone is the title "old age pension" forever while a range of other reforms will be introduced. Senators have done a fine job in their contributions to the legislation and in trying to get it passed early for submission to the President for signature. I appreciate that as it will enable us enact the results of what has been very solid of work. It will help people who need support and make some essential reforms. I am grateful to the Cathaoirleach and the Members of the Seanad for their work on the Bill, and to all of the staff.
I also thank the Minister for giving us of his time. Anytime we have had a Social Welfare Bill before the House the Minister has given his full time to the debate. He has never left the House and I want to thank him for his interest, and for the work he has put into the Department since he came into it. He has brought a breath of fresh air to the Department and I recognise his attitude to his work in terms of wanting to bring about reform, which is very necessary. The manner he is going about it will have lasting impact.
I also recognise the work of officials in the Department who have had an enormous job to do in terms of putting the legislation together. It is no mean job to deal with all the amendments in both Houses.
I, too, want to thank the Minister for the time he has given, and the officials for the amount of work they have put into the legislation. It is very good that we are changing the name of some of the schemes. We will look back in time and wonder how long we could have gotten away with calling the "old age pension" just that, because it is ageist, to say the least. Politically correct terms such as "illness", "allowance" and "State pensions" are welcome developments.
I deeply appreciate the Minister has put on record the fact that 2% of lone parents are in the teenage category. That banishes a myth and takes the wind out of the campaign of some leading academics and journalists who have a crusade against some of the most vulnerable people to come under the auspices of the Minister's Department.
I should like to see a simplification of the language that is being used. Much of the language in the Bill is there for parliamentary purposes and a select number of people will have an interest in that type of communication. When it comes to ordinary customer service, however, there must be simplification, and not just in the explanatory memorandums and booklets attached to various schemes. It is important that people should be able to read user-friendly booklets in language that is easy to understand, to ensure optimal communication between the customer and the Department.
As someone who is not always present at these debates as frequently as the other speakers, the cross-party support for the Minister in his initiatives is a fine endorsement of the work that he is doing in the Department. He has shown a great feel and sensitivity for the whole area. It is an ideal republican philosophy towards people who are under-privileged and who need assistance. That very much reflects my life-long opinion as to what true republicanism is about. I wish the Minister well and I am sure we will have a fine debate on the pension report when it comes before the House.