Written answers
Wednesday, 31 March 2021
Department of Employment Affairs and Social Protection
State Pensions
Catherine Connolly (Galway West, Independent)
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661. To ask the Minister for Employment Affairs and Social Protection if she will address the fact that persons in receipt of an Irish State pension living abroad are now being subjected to substantial banking fees as a result of the decision to change the payments to wire transfers rather than the direct deposit arrangement which is in place for these payments by countries internationally; and if she will make a statement on the matter. [16550/21]
Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The Department of Social Protection is in the process of changing its banker to Danske Bank. This is on foot of the Government’s decision in 2017 to tender for a single banking service for all Government Departments and Offices, a contract which was awarded to Danske Bank in 2018.
My Department uses the bank for both cheque and electronic fund transfer (EFT) payments, i.e. funds transferred directly into a person’s account in a financial institution. Payments to people resident outside the state are generally made by EFT as this is the most efficient and cost effective method of delivering a payment.
Earlier this month, the Department moved its foreign EFT payments to beneficiaries outside of the SEPA zone to Danske Bank. As a result of this change, US and Canadian banks levied cross border payment charges on their own customers' Irish pension payments. There are approximately 6,400 pension recipients in the US or Canada receiving a pension payment from this Department. It is not known how many of these pension recipients are impacted by the charges. However, the Department wrote to all such customers in January, informing them of the potential of charges being levied on their payments by their own bank.
Payments to markets outside Ireland where the sending bank is not a member of the domestic clearing system, such as the US or Canada, are processed as international cross border payments, also known as ‘international wire transfers’. Processing such payments as international wire transfers ensures that the sending bank complies with its national and international Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) obligations. In order to effect these international wire transfers in markets such as the US and Canada, the services of correspondent banks are necessary, and their use is the industry standard approach.
Correspondent banks will deduct charges from the payment amount to compensate for the cost of processing the payment and discharging their AML and CTF obligations.
Danske Bank is currently in contact with its correspondent banks in relation to the matter.
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