Official Report: Minutes of Evidence

The Chairperson (Mr Maskey): I welcome Gerry McCann, Seamus Cassidy and Doreen Roy. As you know, we have sought an extension to the time available to us, but, hopefully, we can still do this well within a reasonably short period. That will depend on the evidence we have heard and on a few of the members. To reflect, we have had a number of submissions, some oral and some written. Very helpfully, the officials were here to respond at the same time as we were hearing the evidence to help the clarity of our thoughts on the matter. We have a paper in your tabled items that outlines issues raised on the Pensions Bill and the Department's response. Hopefully, members will have had a chance to review that. Officials committed to coming back to give us clarity on some matters. Gerry, are you happy enough to take us through some of that? Do you think that there is anything that was not covered?

Mr Gerry McCann (Department for Social Development): I think that we covered most of the issues over our meetings. One issue was raised last week, so I will clarify it for the Committee's benefit before we start. Chair, you raised with me a situation where a man and woman had been married and then split and each got a further partner. It was asked whether they could get benefit under the existing system. I should make this clear: if the spouse is now living with someone else as husband and wife, they are not entitled to any benefit under the existing system. I just wanted to clarify that point for you.

The Chairperson (Mr Maskey): Thank you, Gerry, for that.

Mr Allister: That is different from what we were told last week.

Mr G McCann: No, sorry; I have not seen Hansard, so I am not exactly sure, but when I was thinking over what had been discussed, I thought that I should clarify the point for the Committee. We got slightly off the main topic and were talking about various scenarios. I just wanted to make the situation clear for the Committee's benefit so that we fully understood each other.

Mr Allister: So, if the surviving spouse is living with someone else, they are not a beneficiary.

Mr G McCann: Yes, if they are living with someone as husband and wife, for example, they are not able to get the benefit.

Mr Allister: If the deceased spouse had been living with somebody —

Mr G McCann: That does not really enter into it.

Mr Allister: The surviving spouse gets it.

The Chairperson (Mr Maskey): Thank you for that. As you know, most of the stakeholders did not comment on specific clauses. Comments on clauses and members' issues relating to clauses are highlighted in your paper. Otherwise, some of the key issues raised have been highlighted under comments on each Part of the Bill, which we will go through in a few minutes. Mickey Brady, you are looking to come in.

Mr Brady: Sorry, I was not here last week. I want to ask about the bereavement support payment, which you cannot get when you are pension age. It goes to the fact that a person can claim only on their own contributions. Previously, a wife could claim at the pensionable age if she saved those stamps and she could claim her husband's stamps. What happens in a case where they have reached pension age and there is a bereavement? It gets paid for a year. However, you will presumably not benefit from some of the new rules, meaning that you will not benefit from your late spouse's stamps. You would have to have stamps to get pension in your own right.

Mr G McCann: Yes, I think you are explaining the old category B system of pensions. Under the new system, category Bs will not exist. We will have a special category, which we will carry on. If the spouse dies before the new system comes in and the surviving spouse hits pension age after that date, they will still be able to get paid at a rate that is equal to the old rate for category BL.

Mr Brady: That is OK, because it is likely that more people will lose their spouse at the pensionable age than before it.

Mr G McCann: As we spoke about before, because of the way that over the years people have been entitled to more category A pension under the existing system, the numbers are falling. It will be more the older cohort that is affected by this.

Mr Brady: Presumably, those people will be protected from the —

Mr G McCann: As I said, that will be the case if the spouse who died had hit the pensionable age before 2016. If the person hits pension age after that, they can be paid a rate that is equal to category B.

Mr Brady: They will be protected.

The Chairperson (Mr Maskey): Members' tabled items pack gives a breakdown of all the issues in the Bill, Part by Part. The purpose of today's discussion is to allow the officials to deal with any queries that we might still have. We are thankful that they are here. Obviously, officials will not be taking part in the substantive discussion, but it is helpful that they are here. Members, you have the paper in which the officials have tried to address the issues that have been raised with us. We need to satisfy ourselves today with the responses that we have and that we do not have any further queries. On that basis, I propose that we go through the clause-by-clause scrutiny of the Bill at next week's meeting.

What we really want to do is use today to clear up any difficulties that we might have so that we can make sure that we understand the Bill. It does not matter whether we agree with any aspect of it. Today is just about making sure that we are clear what the Bill represents and what each clause stands for. That will expedite next week's discussions. We have the officials here today to clear up anything that we are not sure about. Is there anything in the paper or any of the six Parts of the Bill that people want to get further clarity on or any particular issues that they want to raise with the officials this morning? Are members content that they understand the provisions in the Bill?

Mr Allister: That is a big ask.

The Chairperson (Mr Maskey): Nobody wants to declare their hand on that one. It may well be that you will have a bit more of a discussion as we go through clause-by-clause scrutiny. If that is the case, so be it; it might focus people's minds.

You have a breakdown of the issues.

Mr Brady: On prisoners, the paper states:

It goes on to say that the:

However, if the benefit is contributory, it is not means tested. If the person had stamps and the conviction is quashed, presumably they would be entitled to backdated pension. Why would compensation —

Mr G McCann: It will all depend on the nature of the compensation. If the court, at the time of making the award of compensation, has taken into account that they were not paid the state pension and included an amount for that as part of the compensation, it would not be paid twice.

Mr Brady: So, the court will preempt in a sense —

Mr G McCann: It could. It will be for the court to decide how it calculates what the compensation should be.

Mr Brady: The reason why I am raising that is because a person might feel a bit miffed if they have already paid their contributions and are getting that as a right, whereas if they were not in that situation and qualified for pension and got compensation for an accident, for instance, that would not be affected.

Mr G McCann: To take the accident example, we take compensation into account and seek the money back.

Mr Brady: That used to be it, but, if you are in an accident, the insurance company is involved. Compensation recovery does not apply directly to the person any more.

Mr G McCann: No, but we get the money back from —

Mr Brady: I understand, but it is from a different source. It does not affect the actual —

Mr G McCann: As I say, what we are aiming to do here is to catch where the court has already paid an amount because of the state pension having been payable and to ensure that the state is not paying the person twice.

Mr Brady: I am not thinking of that aspect. If they did not receive their pension during that period, presumably they would also get compensation for wrongful imprisonment, which is a different issue.

Mr G McCann: That would be outside our remit. When the compensation is calculated, there is normally a substantive breakdown of how they ended up with the total figure.

Mr Brady: So, if it is directly related to not being paid state pension, you are compensated for that. That is a different thing, because you would be getting it twice, in a sense. However, if it is for wrongful imprisonment or something, it would be a totally different situation.

Mr G McCann: That is certainly our understanding of how the provision is to work.

Mr Allister: Take, for example, the prisoner who has been wrongly convicted and spends two or three years in prison. Quite apart from compensation, if they are under pension age, do they then get credits?

Mr G McCann: I think that they do —

Mr Seamus Cassidy (Department for Social Development): Yes, provided the conviction is quashed.

Mr Allister: So, there are two issues: whether there is an entitlement to credits on foot of the quashing and whether, if they had been a pensioner, they would have been getting a pension.

Mr Campbell: How long has that been the case? My understanding is that it has been the situation for quite a long time.

Mr G McCann: I think it has been the case for quite a long time.

Mr Campbell: I mean decades. It is not —

Mr G McCann: I would have to do some research to answer your question totally, but as far as I know, it has been around for some time.

Mr Wilson: On the previous point on the entitlement to full pension, we had some discussion about people who are on zero-hours contracts or in low-paid jobs. We looked at two or three low-paid jobs that did not reach the threshold. The Department's response was that some of those people may get picked up because they are getting child tax credit, for example, and that it was really for HMRC to see whether there are other ways of picking them up. Do we have any idea of the number of those people? It struck me as very unfair that you could have people who, because they could not get a full-time job were in a lot of part-time jobs, were not reaching the threshold and found themselves disadvantaged. Can we quantify that problem?

Mr G McCann: I think that I have seen a figure, although I cannot remember it off the top of my head. I would have to look for it, but I am sure that we can find out what it is.

The point that I was making to you previously is that this issue is really about whether a person has to pay National Insurance contributions. It is a National Insurance contribution issue, which is totally outside our control. We as a Department and, indeed, the Assembly do not have any control over this issue. It is really about whether the person is at the point of having to pay National Insurance contributions. That is the issue, and it is not something that we can resolve here. I will see whether I can get a figure for the numbers involved back to you before Tuesday, or whenever we meet again.

Mr Wilson: You said that HMRC and the Department for Work and Pensions (DWP) were working on this.

Mr G McCann: They have been looking at a longer-term solution. The issue is that a fairly large number of these people are not caught by the real-time system that works at the moment. The only people who are caught by it are people who are on PAYE. Your earnings might be under £111, but you are on PAYE. So, there is no automatic system that allows these people to be caught. That is part of the issue. The Older People's Commissioner had asked whether we could use that system to do it. The answer is that it cannot be used in that way at this point in time. HMRC and DWP have been looking at that, although I do not think that I could put it any stronger than that.

The Chairperson (Mr Maskey): Mickey, did you want back in on that?

Mr Brady: Following on from Sammy's point, you could have somebody who has two or three jobs, but all those jobs are paying below the LEL, which is about £102 or something. There is no aggregation. You are saying that, because they are not on record, it is up to HMRC to trace them. Would it not be a fairer system if there was some record from the employer that could give HMRC the opportunity to aggregate the wages?

Mr G McCann: Again, this is an issue for HMRC because it is about National Insurance contributions.

Mr Brady: I understand.

Mr G McCann: I am just making the point that we as a Department have very little influence over this issue.

Mr Wilson: Mickey, even if they were aggregated, if none of the jobs brought them up to the level where they were paying National Insurance contributions, on which job would they pay the National Insurance contributions?

Mr Brady: I know, but if you are aggregated, presumably, if you had two jobs and got £100 for each, you would be over the lower earnings limit. It just seems that you have somebody who is earning more than the lower earnings limit but is not paying any contributions. There is a reverse of that.

The other thing is the zero-hours —

Mr G McCann: Sorry to interrupt, but one of the other problems is that it is not so much that who pays concerns the person in work; it is who they are working for and falls liable for the employer's National Insurance contribution. That is why I said that I cannot put it any stronger than saying that the issue is being looked at. I think that there are big issues in trying to work out how we could get this to fly in practice.

The other point is that, from some stuff that I have read, for people caught by this, you often find that they are getting credits anyway because they will have a child. They will get child benefit and child tax credits etc. So, we think that there are a fairly large number of people in this cohort who are being caught by the system anyway.

Mr Brady: You are saying that people who are on zero-hours contracts, which are unfortunately becoming much more prevalent, and who are then out of work can pay class 3 contributions. However, the likelihood is that, if you are on a zero-hours contract, you will not be able to afford class 3 contributions.

Mr G McCann: It could be that your zero-hours contract could mean that you have already paid enough for the year anyway. It could also be that you are not employed for x number of weeks, but you are employed for x number of months. As long as that brings you over the LEL for the year —

Mr Brady: That could bring you over the lower end.

Mr G McCann: Yes. So, if you are a zero-hours contract, that does not mean that you will not have a full qualifying year.

Mr Brady: But there will still be gaps in your contribution record.

Mr G McCann: All you need is a qualifying year, which is 52 times the LEL. If you have worked for six months, for example, you probably will have that.

Mr Brady: Presumably, if they are signing on for jobseeker's allowance, they will be credited with that.

Mr G McCann: If they have claimed jobseeker's allowance, they would be getting a credit.

Mr Brady: That would form part of their contribution record.

Mr G McCann: Yes. That is why we are saying that, for this cohort, it might not be quite the problem that we may think it is when you look at it cold.

Mr Brady: Just on the zero-hours contract, obviously, if somebody can pay class 2 contributions, there would need to be some sort of a campaign that would make people aware of that, because they are becoming more and more prevalent.

Mr G McCann: Yes, for the class 3s.

Mr Brady: Yes.

The Chairperson (Mr Maskey): That might form a recommendation, monitoring or guidance or something like that. We will come back to that in a second. Is anybody of the mind that they want amendments to any of the clauses? I am not getting those indications. I am still of a view that it is possible that, when we go through the Bill clause by clause, it might spark a more substantive discussion because people will see the direct implications. What we had wanted to do today was make sure that we are clear on what the Bill provides for. We would ideally want the Committee officials to go away and start drafting a report, and next week we would formally go through the Bill clause by clause. The following week, the Clerk would bring back the full report to the Committee to be signed off. Do we want to give ourselves a Tuesday morning for the clause-by-clause scrutiny? I suggest a Tuesday morning as a dry run on the clause-by-clause scrutiny if we think that it might spark more focus in our minds. I am not proposing it; I am just asking whether we want to take the opportunity or whether we are content to leave it to Thursday and go through the Bill clause by clause then anyway.

Mr Allister: What is the new timeline?

The Committee Clerk: Next Thursday is the formal clause-by-clause scrutiny, so, on the assumption that all the issues are cleared and members are content with the clauses, we will do that next week. The following week we would have a draft report on the Bill.

Mr Allister: Sorry, I did not make myself clear. What is our end date? Do we have a further extension?

The Committee Clerk: It is 26 March, I believe. There is plenty of time.

Mr Allister: We could maybe work with the Thursdays.

Mr Campbell: Is there any disadvantage? Say we did not go ahead with the Tuesday and came to the formal clause-by-clause scrutiny on Thursday and it then became clear that it was more protracted than people might have thought, is there an issue if that is delayed? It is not a big issue time-wise, is it? It does not seem to me as though it is.

The Committee Clerk: It may not be, unless we require further clarification from the Department or if members want to make recommendations. Those can be made in the clause-by-clause scrutiny.

The Chairperson (Mr Maskey): I will bring you in, Gerry, in a second. I do not think that there would be any immediate need. Gerry may give us a contrary view on that. We obviously want to go through the Bill clause by clause, which is when we often make recommendations. The Department may want to monitor something to see how it rolls out or to discuss what happens in guidance, for example. You talked about someone having two low-paid jobs and who determines which employer picks up responsibility for National Insurance. That could be interesting. Gerry, you wanted to make a remark.

Mr G McCann: It is just on the timing of the Bill. As it stands, were we to finish next week, which is what we were aiming for, the Bill would probably not get Royal Assent until the end of May or early June. Our problem is that people in Northern Ireland are then left with less than a year before the new system kicks in. We had been keen to ensure that each and every person out there knew that this was going to bite. The longer we eat into that period, the less time people have to plan ahead for changes. I am just pointing out from the Department's point of view that that would be our concern.

The Chairperson (Mr Maskey): Gregory's direct question asked whether it would be a major problem if we were not to do clause by clause next week and had to do it the following week, for example.

Mr G McCann: It would just mean that the date for Royal Assent would get kicked back further into June, which would leave people with an even briefer window to plan for the effects of the change.

The Chairperson (Mr Maskey): OK. We do not want to manufacture problems, so can we work on the basis that we are content to come back on Thursday to do the clause-by-clause scrutiny? That obviously presupposes that we may have queries that require clarification, but I hope not. You and your colleagues, Gerry, appreciate that these are complex matters and that members are just trying to do the right thing.

Are members content that we will deal with this next week so that, on the basis of the discussions that we have had so far and with stakeholders and so on, the Committee Clerk and other officials can start putting together a draft report?

The Chairperson (Mr Maskey): Thank you very much, members. I thank you, Gerry, Seamus and Doreen, for your time here again this morning. It has been really helpful.