Invalidity pension rules being tightened as spending soars - New legislation - 2/2/2006

Benefit fraud
Lm500,000 'saved' after investigations last year
Invalidity pension rules being tightened as spending soars

A UK poster about benefit fraud. A local freephone service is to be set up for suspected fraud to be reported.

Social Solidarity Minister Dolores Cristina yesterday moved a Bill in Parliament giving new powers to the Benefit Fraud Investigation Directorate and reforming invalidity pensions.

The minister said the purpose of this Bill was not to reduce benefits, but to ensure that such benefits were directed only to those who needed them. There would not be any crusade against those perfectly eligible for social benefits.

Speaking on invalidity pension, the minister said there was a substantial number of people who received invalidity pension and their number had increased steeply over the past few years, leading one to wonder if all such people really could not work.

She recalled that the directorate had been preceded by another unit which investigated abuse of children's allowance. As a result, spending on this benefit had been reduced by millions of liri, without anyone entitled to this allowance losing a cent.

The directorate was set up early last year and immediately its setting up was announced the ministry was flooded by anonymous reports of alleged fraud. All such reports were investigated in detail.

Mrs Cristina said the directorate included several inspectors who carried out on-site inspections, even late at night when they were least expected, and other officers who carried out investigations through shared information and technology. Information could be collected from the banks and other entities as well as by means testing. A workshop had been formed of representatives of several entities, including the directorate, the ETC, the Tax Compliance Unit, the VAT Department and the Public Registry, to channel information.

The directorate was currently focused on social benefits, but it would eventually grow to tackle other abuse, such as in the area of social housing.

Fraud investigations by the directorate last year alone had led to a "saving" of Lm500,000 in outlay on various benefits, this when the directorate was still in the process of being set up. Between May and December, 600 cases were investigated.

Mrs Cristina insisted that social benefits were never cut before an investigation conclusively showed fraud.

The staff were careful to ensure that no hardships were caused.

A freephone number would be introduced to make it easier for the public to report alleged fraud to the directorate. Reports could be anonymous, but in any case, confidentiality would be respected.

Turning to the amendments on invalidity pension, the minister explained that one would be entitled to an invalidity pension when one would have been incapable of employment or self-occupation for at least six months before the claim was made. There had previously been a waiting time of three months, but at present there was no waiting time at all. Genuine cases with no income could, however, be fast-tracked at the discretion of the director of social security.

Furthermore, to date, a person found to be incapable of work was deemed unable to work for three years. This was too long a period and was being reduced for review after a year. Certainly, one could no longer have cases, like one which she had come across, where a 28-year-old was granted a pension for life for post-natal depression! One could no longer have automatic invalidity-pension for life. Persons suffering particular conditions may not be able to continue their work but, with retraining, could do another occupation. How could a 32-year old suffering lower back pain be certified as being unable to do anything for life?

Mrs Cristina said tighter conditions were being imposed on certification of the medical condition of applicants who wished to be boarded out, and impairment tables were being introduced.

Unfortunately one sometimes came across medical certificates which raised eyebrows. For example, she had seen a medical certificate regarding an application for social housing where the doctor said his patient was suffering severe clinical depression and would benefit from a change in current accommodation. This patient was then found to be a four-month-old baby!

The Medical Board sytem would end with regard to applications for invalidity pension. The department would engage two or three doctors who would form a medical review team that would make recommendations to the director on applications for an invalidity pension. Their recommendations would be based on the new impairment tables which would be established by legal notice. These tables would be based on the Australian model, with consideration for local conditions, and would assess the applicant's capacity to work. Independent audits would also be made of medical assessments and there would be random reviews even of current beneficiaries. This, again, underlined the message that there would not be an invalidity pension for life, except where justified.

When she spoke on the application process, Mrs Cristina said the medical review team would consider the existing medical history of applicants. Where no such history existed, the applicant would be examined and tested in a public hospital on the basis of the impairment tables.

The Bill also considered rehabilitation as a means of encouraging and helping those receiving invalidity pension to return to normality. The activity rate of people in employment in Malta was low and the number of persons receiving invalidity pensions was twice that of many other countries.

The number of beneficiaries had climbed from 6,225 in the year 2000 to close to 9,000 last year! Only a tiny percentage of claims were refused.

Spending on such pensions had climbed from just under Lm10 million to Lm16 million over the same period.

Many such people, with retraining, could clearly return to some sort of work. Indeed, many people were boarded out because they were not wanted by their employers, but they actually wanted to work. Such re-skilling would be handled by the ETC, Mrs Cristina said.

The debate continues on Monday.

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