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Investigation Report on the non-payment of arrears of contributory pensions.

Extra-Statutory Payment of Arrears

Extra-Statutory Payment of Arrears

33. In the course of these investigations I discovered that the Department has a long-standing arrangement with the Department of Finance to enable the payment of arrears of contributory pensions on an extra-statutory basis. The arrangement enables the payment, on an extra-statutory basis, of the equivalent of pension arrears where those arrears are not payable within the terms of the regulations. This arrangement came to light in the case of a widow who had failed to claim contributory widow's pension within the prescribed time and had lost very substantial arrears. She argued her case with the Department who then paid her part of the arrears on an extra-statutory basis. She then complained to my Office in relation to the balance of unpaid arrears. I found it somewhat disquieting to discover the existence of such an arrangement in this manner given that my Office has been dealing with this kind of issue since at least 1985. It is probable that at least some of the "late claims" complaints dealt with over the intervening years might have benefited from this arrangement had this Office been aware of its existence. In its formal written responses to the investigation cases, the subject of this report, the Department did refer to the existence of such an extra-statutory arrangement. The Department commented:

"These (extra-statutory payments) arise very infrequently and only under the most restricted circumstances which arise directly from a case of proven error or proven misinformation on the part of the Department or where the person was simply incapable by reason of illness of making a claim. The (present) cases have been examined in the light of these requirements and it is not considered that they meet them".

34. When I subsequently enquired into the details of this arrangement, I discovered that, in relation to the contributory old age pension, it has been in effect since April 1961. The Department had an existing sanction in operation in relation to contributory widow's pension and contributory orphan's allowance and this was extended to contributory old age pension when that pension was introduced in 1961. However, the scope of the sanction as conveyed to the Department by the Department of Finance was somewhat broader than might be understood from the Department's reference to it as set out above. In its response to the draft of this report, the Department pointed out that it had never been its intention to mislead my Office in relation to the existence of the extra- statutory arrangement.

35. The Department of Finance sanction letter provides for the making of extra-statutory payments:

"(i) where payment is claimed but not obtained within the prescribed time due to official causes;

(ii) where the paying officer, under a misapprehension or through error, fails or refuses to cash Orders presented within the prescribed time;

(iii) where, following official enquiry or change of circumstances, the beneficiary is under the mistaken belief that the title to pension has ceased or that an appeal would be influenced by accepting a lower rate of pension;

(iv) where Orders are not cashed within the prescribed time due to the mental or other incapacity of the beneficiary or his approved agent, and

(v) in any other circumstances in which the Minister for Social Welfare is satisfied that payment should be made in equity or to avoid undue hardship (provided no doubt exists as to entitlement to pension at the material time)."

36. In the present context, item (v) above is of most interest. Undue hardship and equity are presented as separate grounds on which extra-statutory payments might be made. In our interviews with senior officials of the Department, and in follow-up contacts, the thinking and practice of the Department in relation to "hardship" payments and "equity" payments were explored. (See Paragraphs 54-58.)

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