Payments of Social Security Benefits to Overseas Customers

NATIONAL AUDIT OFFICE

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

Payments of Social Security Benefits to Overseas Customers

ORDERED BY THE HOUSE OF COMMONS TO BE PRINTED 17 MAY 1994

LONDON: HMSO 407

f7.40 NET

PAYMENTS OF SOCIAL SECURITY BENEFITS TO OVERSEAS CUSTOMERS

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act.

John Bourn Comptroller and Auditor General

National Audit Office 4 May 1994

The Comptroller and Auditor General is the head of the National Audit Office employing some 800 staff. He, and the NAO, are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies: and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.


Contents

Summary and conclusions

Part 1: Introduction

Part 2: Services to the customer

Part 3: Administration of benefits

Part 4: Controls over entitlement and payment

Appendices

I. Conditions governing the payment of social security benefits to people living abroad, and organisation of the Overseas Benefits Directorate

2: Local social security offices contacted by tbe National Audit Office

3: Survey of overseas beneficiaries

4: Organisations contacted by the National Audit Office

Pages

1

4

7

11

17

22

25

27

29


Summary and conclusions

Service to Customers

1 In 1992-93 the Benefits Agency, an executive agency of the Department of Social Security, paid more than E800 million in social security benefits to people living outside the United Kingdom. Over 95 per cent of these beneficiaries were Retirement Pensioners or Widows’ Benefit recipients, more than half of whom lived in either Australia, Canada, the United States or the Republic of Ireland.

2 This report examines the extent to which the Agency provide an efficient service to their overseas customers, and the Agency’s controls over benefit entitlement and payments to overseas beneficiaries. The National Audit Office reviewed the services provided by the Agency’s local offices to people intending to live abroad, and examined the work of the Agency’s Overseas Benefits Directorate. In addition they contacted more than 30 other organisations, including the social security authorities of 15 countries, and surveyed a representative sample of some 4,400 benefit recipients living overseas.

3 The Agency’s local offices play a relatively minor role in dealing with overseas work, which includes the provision of leaflets and advice to customers intending to live overseas. Overseas beneficiaries who had had contact with local offices expressed a high level of satisfaction with the advice they had been given, but some staff felt they would benefit from further training in dealing with enquiries about the payment of benefit overseas. The Agency have responded to this, and are aiming to provide suitable material by the Spring of 1994 (paragraphs 2.2 to 2.8).

4 The Agency’s Overseas Benefits Directorate specialise in dealing with customers living abroad, and are the focal point for overseas enquiries. Beneficiaries surveyed by the National Audit Office expressed very high levels of satisfaction with the advice services provided: 90 per cent of respondents said that the Directorate’s response to a request for information had fully answered their enquiry. Some recipients wished for clearer explanations of how their benefit awards had been calculated, and for the Directorate to write to them in their own language. The great majority of overseas beneficiaries read English, but, for those who do not, the Directorate provide a translation service. However, some respondents said they had not received translated material, even though they had requested it (paragraphs 2.9 to 2.12 and 2.16 to 2.17).

5 In recent years the Directorate have implemented several initiatives to monitor and further improve services to customers. Customers surveyed by the National Audit Office were highly satisfied with the existing standard of service: on a scale of 1 (very good) to 7 (very poor), 84 per cent of respondents ticked boxes 1 or 2, while only 1 per cent ticked boxes 6 or 7. Some respondents, however, made suggestions for further improvements, and the Directorate have undertaken to examine these and take them forward as appropriate (paragraphs 2.18 to 2.24).

1

PAYMENTS OF SOCIAL SECURlTY BENEFITS TO OVERSEAS CUSTOMERS

Determination of entitlement, and payment of benefits

6 Although local offices administer some benefits for people living warseas temporarily, the bulk of such work is undertaken by the Overseas Benefits Directorate. Determining overseas customers’ entitlement can be complex and time-consuming work since it involves, in addition to the application of United Kingdom social security legislation, application of the terms of bilateral conventions and treaty obligations with foreign Governments, and, frequently, liaison with overseas social security authorities. The Directorate currently set targets for clearing individual actions taken on cases, but from April 1995 will work to targets covering the period from the initiation of a claim to the date of a decision being made. The National Audit Office found that Retirement Pension and Widows’ Benefit claims take, an average, about six months to clear. On average, some 50 per cent of the time spent dealing with cases was within the Directorate’s control (paragraphs 3.2 to 3.14).

7 Overseas beneficiaries are paid by one of three methods. Direct credit transfer is the most efficient, and the Directorate encourage customers living in countries where the facility is available to be paid in this way. Some 94 per cent of respondents to the National Audit Office survey said they were content with the current method by which they were paid, and 76 per cent of those living in countries where direct credit transfer was available had opted to use the facility to receive their benefit payments (paragraphs 3.15 to 3.20).

Computerisation 8 To improve the speed and accuracy of processing Overseas Retirement Pension and Widows’ Benefit cases, in 1990 the Department approved a project to computerise the Directorate’s administration of these benefits. At 1992-93 prices, estimated costs of E14.6 million were expected to be more than offset by staff savings worth E33.9 million over the ten year period to 1998-99. The project proved to be far more technically challenging than had been expected, and by July 1992 the estimated costs had risen to g22.7 million. Expected savings had also risen, to E42.4 million at 1992-93 prices (paragraphs 3.21 to 3.26).

Control5 over continuing entitlement

9 Implementation of the project was completed in May 1993, but in February 1994 the number of staff employed was still significantly greater than had been estimated would be necessary in the financial case for the project. The Department plan to undertake a post-implementation review of the project in 1994-95, and this will show how far the original financial case for the project has been achieved (paragraphs 3.28 to 3.33).

10 Benefit recipients are required to inform the Benefits Agency of changes in their circumstances which affect their benefit entitlement. The risk of recipients not reporting such changes is greater when they live abroad. To counter this risk, many foreign social security authorities and other organisations which pay Overseas pensioners make extensive use of “life certificates” and take other special measures to confirm the continuing eligibility of recipients (paragraphs 4.1 to 4.3 and 4.9 to 4.10).

11 The Directorate discontinued the use of life certificates in 1985, but undertook targeted life certificate exercises in 1990 and 1993. They have also seconded an officer trained in social security matters to the British High Commission in Dhaka, Bangladesh for a trial period of one year, whose duties include the provision of assistance to existing beneficiaries and people wishing to claim benefit. In


addition, the Directorate are actively seeking to extend arrangements with other countries’ social security authorities for the provision of mutual assistance (paragraphs 4.5 to 4.8 and 4.11 to 4.14).

General conclusion, and recommendations

12 Overall, the National Audit Office concluded that the Agency’s local offices and the Overseas Benefits Directorate were providing services to overseas customers which were of a very high standard. There was, however, scope for further improvements in some areas. While recognising the primary importance of the cost effectiveness of further improvements, the National Audit Office recommend that the Overseas Benefits Directorate should consider, in particular:

. what action, and if necessary further investment, is required to gain maximum benefit from their computer system. A review to determine this is likely to be undertaken following the completion of the post-implementation review of the project, planned for 1994-95;

. formally, and on a country-by-country basis, the risk associated with overseas customers failing to notify changes in circumstances, with aview to taking further special measures to confirm the eligibility and identity of beneficiaries in high risk countries.

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Part 1: Introduction

1.1

1.2

Introduction

The primacy function of the Department of Social Security (the Department) is to administer social security benefits for people living in Great Britain. Under certain conditions, however, some social security benefits may be paid to people living abroad (see Appendix 1). In 1992-93, the Benefits Agency (the Agency), an executive agency of the Department, paid more than E800 million to beneficiaries living outside the United Kingdom.

As Table 1 shows, in 1993 some 95 per cent of overseas social security beneficiaries were either Retirement Pensioners or Widows’ Benefit recipients. Just over half of them lived either in Australia, Canada, the United States or the Republic of Ireland (see Figure I), but there were beneficiaries living in more than 180 counl&s.

Table 1: Numbers of recipients living and being paid benefit whilst abroad

Benefit

Retirement Pensions

Widows’ Benefit

War Pensions

Invalidity Benefit Other incapacity benefits (note 1)

Child Benefit (note 2)

Number of recipients

624,617

19,315

15,500

7,561 7,148

5,500

679,641

%

91.9

2.8

2.3

1.1

1.1

0.8

100.0

Source: Benefits Agency

Notes: 1. Other incapacity benefits includes Sickness Benefit and Industrial Injuries Disablement Benefft.

2. Figures for all benefits exe,2 Child Benefit relate to June 1993. In the absence of more up to date information. the ffgure for the number of Child Benefit recipients living OVI?K%%?S is an esfimate, based on 1991 data.

Table 1 shows the number of people in 1993 who were living abroad and being paid social securitv benefits.

Many overseas beneficiaries spent their working lives in the United Kingdom, and moved abroad for their retirement. But a wide range of circumstances can give rise to people living abroad becoming eligible to receive a United Kingdom social security benefit. Some recipients [for example, merchant mariners) may not have lived in this country for many years, but retain rights to benefit because they have regularly paid National Insurance contributions. And some recipients (for example, widows of men who lived and worked in the United Kingdom) are entitled to Widows’ Benefit on the basis of their late husbands’ National Insurance contributions. They may themselves have never lived or worked in this country.

The Agency have published the following objectives, which they aim to meet for all their customers, whether they live in Great Britain or abroad:

to develop an efficient customer orientated benefit delivery service, which is accessible, accurate, prompt, helpful and cost effective and which does not discriminate on the grounds of race, sex, religion or disability;

to provide comprehensive information to the public on social security benefits, in accordance with guidance from the Secretary of State, so that they are informed about their entitlements and

enabled to claim and receive benefits: and

to ensure the correct amounts of benefit are paid on time, with proper safeguards against fraud and abuse.

Most of the work of administering benefits for people living overseas is undertaken by staff of the Agency’s Overseas Benefits Directorate (the Directorate] who are based in Newcastle upon Tyne. However, the Directorate do not deal with Child Benefit or War Pensions for people living abroad: these are handled by the Agency’s Child Benefit Directorate and by the War Pensions Agency respectively. And within Great Britain, the Agency’s local offices

4


Fioure 1: Distribution of Retirement Pensioners and Widows’ Benefit reciuients, 1993

Key

more than 100,000

m 10,000 to 100,000

100 to 9,999

1 to99

I

0

Countries with more than 10,000 recipients

Australia

Canada

USA

Republic of Ireland

South Africa

New Zealand

Spain

Germany

Jamaica

Italy

France

‘000 recipients

153

109

77

70

32

32

26

19

18

17

IO

Source: Benefits Agency, Overseas Benefits Directorate

Figure 1 shows that in 1993 there were Retirement Pensioners and Widows’ Benefit recipients living in most countries of the World. The majority of recipients lived in Australia. Canada, the USA or the Republic al Ireland.

5


provide advice to customers who intend going overseas, and make payments within Great Britain to some benefit recipients who are living abroad temporarily.

Scope of the National Audit Office examination

1.6 Against this background, the National Audit Off& examined:

Ii) the extent to which the Agency provide an efficient service to customers who are either going, or living, overseas: and

(ii) the Agency’s administrative controls over benefit entitlement and payments to overseas beneficiaries.

The Agency’s services to overseas customers, and their views on the service received, are covered in Part 2 of this report. Pact 3 addresses the administration of benefits for those living overseas, while Part 4 covers the Agency’s controls over benefit entitlement and payments to overseas beneficiaries.

1.7 The examination concentrated on the work of the Agency’s local offices and the Overseas Benefits Directorate. To review local offices’

1.8 overseas work, the National Audit Office sent questionnaires to a representative sample of 20 Agency districts, covering 54 offices. Subsequently, they visited six of these offices and a further four offices identified by the Directorate as having relatively heavy overseas workloads. Appendix 2 provides details of the survey questionnaires, and the offices contacted. In addition, the National Audit Office reviewed the work of the Directorate and examined a statistically representative sample of more than 700 cases.

1.9 To obtain information on customers’ experience of the service provided, the National Audit Office undertook a postal survey of a representative sample of some 4,400 beneficiaries living overseas. Appendix 3 explains the sampling methodology employed. The National Audit Office also contacted a range of Government departments and private sector organisations in the United Kingdom, and the social security authorities of 15 other countries, to find out how they controlled payments to overseas pensioners and to identify examples of good practice. Appendix 4 lists the bodies consulted.

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Part 2: Services to the customer

Introduction

2.1 In examining the services provided to customers intending to live, or already living, overseas, the National Audit Office reviewed:

(a) the information and advice services provided by local offices and the Directorate;

(b) other contacts customers had with the Directorate;

[cl measures taken by the Directorate to monitor and improve service; and

(d) customers’ experience of the services provided.

Information and advice services

2.2 The Agency mainly use leaflets to publicise the availability of benefits for people living abroad. Two leaflets, entitled “Social Security Abroad” and “Pensioners or Widows Going Abroad”, provide general advice and are available from local offices. Both leaflets advise readers needing more detailed information to contact the Overseas Benefits Directorate.

2.3 In response to the National Audit Office questionnaire, staff at 37 of the 54 offices surveyed said they provided leaflets to customers enquiring about the payment of Retirement Pension or Widows’ Benefit overseas, and 32 provided leaflets about the availability of incapacity benefits. Five offices supplemented the information provided in leaflets by giving talks to local interest groups.

2.4 In addition to the two general leaflets, the Agency also produce a wide range of other material, including a series of 22 leaflets on the availability of United Kingdom social security benefits in specific countries. At the time of the National Audit Office examination these leaflets could only be obtained from the Directorate. The Agency were, however, reviewing the text, format and distribution arrangements for these leaflets with the aim of

providing better quality leaflets which would be made available to the public when and where they were needed.

2.8 In addition to providing leaflets, local office staff are sometimes asked by callers to give advice about the payment of benefits overseas. Although staff have access to full instruction manuals setting out the rules governing eligibility, they tend not to be familiar with them as such enquiries are made relatively rarely. Among the staff who responded to the National Audit Office questionnaire, 30 out of 54 said they had received no specific training to deal with such enquiries, while the remainder had received on the job training. At the time of the National Audit Office examination, the Agency were preparing a “quick reference guide” to the manuals to enable local office staff more readily to provide advice.

2.8 Staff at 45 of the 84 offices surveyed said they felt they would benefit from further training. In the light of this, the Directorate explored with these and other offices the areas of difficulty to be addressed, with the aim of developing suitable training material by the Spring of 1994.

2.7 Some local office staff believed that, in order for them to be able to provide a better service to customers enquiring about the payment of benefits abroad, they needed to know more about the work of the Overseas Benefits Directorate. In April 1993 the Directorate distributed to local offices a brochure entitled “Abroad Outlook”. This described the Directorate’s role in administering incapacity benefits for those living abroad. A companion brochure covering the Directorate’s work on Retirement Pensions and Widows’ Benefit was being prepared, and was expected to be issued to local offices by March 1994.

2.8 Despite the reservations expressed by some staff about their ability to provide adequate information and advice to customers, respondents to the National Audit Office survey of overseas beneficiaries expressed a high level of satisfaction with the advice they had received. Of the 4,419 respondents to the

PAYMENTS OF SOCIAL SEC”RITY BENEFITS TO OVERSEAS CUSTOMERS

-

2.9

2.10

2.11

2.12

survey, 498 had made enquiries of a local office before their departure from the United Kingdom. Of these, only 37 (7 per cent) said they had been unable to find out from the office what they felt they needed to know.

The Directorate act as the focal point for enquiries about benefits from people already living overseas. Among the 4,419 respondents to the National Audit Office survey of overseas beneficiaries, 2,196 had written to the Directorate to ask for information and advice. 1,974 (90 per cent] of these respondents said that the Directorate’s reply had fully answered their enquiry, and 1,895 (86 per cent) said that the reply had been received in a reasonable time.

Other contacts with customers

All customers wishing to claim benefits, whether living overseas or not, must complete a claim form. Customers who intend to live abroad, but who are living in Great Britain when they claim, may submit the form to their local office. Customers who are already living overseas when they claim are asked to send the form to the Directorate.

Once the Directorate have calculated the amount of benefit due, they write to recipients to notify them of their awards. 2,838 (64 per cent) of the 4,419 respondents to the survey of overseas beneficiaries said they had had no difficulty in understanding the letter they had received, while just under 12 per cent (522 respondents) said they could not remember whether they had understood it or not.

Among the remainder, 432 (10 per cent of all respondents] said they had not been provided

with an explanation of their award, and a further 10 per cent (450 respondents) said they had had problems in understanding how their award had been calculated. Many of these respondents had complex employment histories and had worked in more than one country. Some thought that, in calculating their benefit awards, the Directorate may not have taken full account of their National Insurance contributions. But they said they could not check whether this was so, since the Directorate had not explained clearly in their letter how the award had been calculated.

2.13

2.14

2.15

2.18

2.17

The most frequent type of contact which beneficiaries have with the Directorate occurs simply when they receive their benefit payments. The organisations representing overseas pensioners which were contacted by the National Audit Office reported that their members were generally well satisfied with the Agency’s payment service. One area of concern, however, was the non-receipt of payments by a small minority of their members, and the delays which sometimes occurred in investigating complaints.

Few of the respondents to the National Audit Office survey of overseas beneficiaries had experienced such delays. Some 93 per cent said their payments always, or usually, arrived on time. Nevertheless, 83 respondents (2.5 per cent] said that their bank sometimes delayed crediting their accounts with benefit payments, and 45 [l per cent) reported that the receipt of payable orders was sometimes delayed.

The National Audit Office found that the Directorate generally took prompt action when they were informed of such problems. But the timelag before the Directorate were told about non-receipt was on average six weeks. At the time of the National Audit Office examination the Agency were developing instructions for overseas customers on the action they should take if they failed to receive their payments.

A high proportion of the Directorate’s customers read English: among the 4,419 respondents to the National Audit Office survey of customers living overseas, 3,899 (88 per cent) said they could do so. For those who cannot, however, the Directorate provide a translation service using 58 h-eelance translators who between them cover 45 foreign languages. Where a language is not covered by

a freelance translator, the Directorate employ a commercial tianslation service. In 1993, the Directorate translated some 24,000 documents into English, but received only 360 requests for translations into foreign languages.

Among the respondents to the survey were 188 who said they had received material from the Directorate in a language other than English. 191, however, said that no such material had been received, even though they had requested it. This group included 18 of the total of 88 respondents living in the Indian sub-continent, and 74 of the total of 456 respondents living in Germany, Italy and Spain.

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PAYMENTS OF SOCIAL SECURITY BEiVEFlTS TO OVERSEAS CUSTOMERS

2.18

2.19

2.20

2.21

Monitoring and improvement Table 2: Results from the OTIS system in the period measures July-September 1992

In recent years the Directorate have implemented several initiatives to monitor and further improve their services. These have included the establishment of customer satisfaction surveys: the introduction of a system to monitor customers’ comments about service; and in December 1992 the publication of a Customer Charter Statement.

Type of comment Number of commenfs

%

Positive comments

Thanks to the staff 01 section Thanks for sewice delivery Thanks for advice, or benefit

Negative comments

115 17 115 17 97 14

The Directorate conducted their first customer opinion survey in 1991. This focused on the quality of correspondence and on telephone services, and found that customers generally were well satisfied. The sample of customers consisted of 2,000 people who had written to the Directorate during a specific three day period, and a further 2,000 who had telephoned over a specific two week period. A further survey was undertaken in 1993. This was based on a similar sample size, and used similar questions to the 1991 survey, to allow comparisons of the service to be made over time. The results were similar to those achieved in 1991, with more than 90 per cent of respondents expressing satisfaction with the current level of service.

Complaints about late payments Complaints about telephone/

correspondence service

97 14 57 a

Delays in replying to correspondence 31 5 Difficulty in understanding leaflets 24 4 Dissatisfaction with decision on 24 4

award of benefit Length of timetaken to reach a

decision 20 3

Miscellaneous complaints 91 14

071 la0

Source: Overseas Benefits Directorate

Table 2 shows that just under half of the letters received by the Overseas Benefits Directorate between July and September 1992 praised the selvice provided. The main cause of complaints was late receipt of payments.

The Directorate have operated a system known as “Opportunity to Improve Service” (OTIS) since June 1992. The staff record comments made by customers about the standard of service they have received, and a Customer Service Unit within the Directorate produce monthly reports for operational managers, based on the information collected. Follow-up action regarding complaints is the responsibility of individual operational managers, but the Customer Service Unit check with customers the action taken in a sample of cases.

2.22 The Directorate published their Customer Charter Statement in December 1992. This set out qualitative and quantitative service standards and was distributed to all local offices, selected welfare organisations, and British consulates, High Commissions and embassies. The Directorate decided against distributing copies of the Statement to all existing beneficiaries on the grounds of cost. Distribution to customers was limited to those enquiring about benefits, and new claimants.

Customers’ experience of the service Table 2 summarises the output from the OTIS system for the period July - September 1992. The collection of information was suspended in those parts of the Directorate responsible for dealing with Retirement Pensions and Widows’ Benefit in October 1992, and not resumed until October 1993. Thus later information for the Directorate as a whole was not available at the time of the National Audit Office examination.

2.23 As part of their survey of overseas beneficiaries, the National Audit Office asked respondents to rate the service they had received from the Directorate on a scale of 1 (very good] to 7 (very poor]. As Figure 2 overleaf shows, the overwhelming majority of respondents rated the service highly: 84 per cent of respondents ticked boxes 1 or 2, while only 1 per cent ticked boxes 8 or 7. There was, however, some variation between residents living in different countries. For example, 94 ‘per cent of the respondents living in Canada

9


2.24

Figure 2: Respondents’ overall rating of the service

Overall, on a scale of 1 to 7, how would you rate the service received from OSS, Newcastle (Overseas Benefits Directorate)?

Very Good very Poor

1 2 3 4 5 6 7

Number of respondents 2,933 606 211 156 17 16 35

Percentage of respondents 66 16 5 4 1

Source: National Audit Offfce

Notes: (I) 245 respondents (5 per cent) expressed no opinion. (2) Percentages do not sum to 100 per cent because of roundlllo.

Figure 2 shows how respondents to the National Audit Office post.9 survey rated the service they had received from the Overseas Benefits Directorate.

rated the service as above average (ie in boxes 1 to 31, while 83 per cent of the respondents living in Italy did so.

(Cl

Although, in general, respondents rated the service highly, 586 of the total of 4,419 respondents suggested improvements which might be made to the service. Thus:

Cdl 112 respondents made various suggestions concerning the extent of information made available to overseas beneficiaries about their own benefit, or about other benefits to which they might be entitled. For example, 32 wished to receive regular information on developments in the United Kingdom benefits system:

283 respondents suggested improvements concerned with benefit payment. These included 92 who were concerned about the effect of exchange rate fluctuations and bank charges on the amount of benefit they received. These are issues which are largely outside the Directorate’s control.

52 respondents suggested that the Directorate should provide an annual statement of the amount of benefit which had been paid. Many of these respondents explained that this would help them both to check that they had received amounts due to them, and to complete forms such as income tax returns in their country of residence.

156 respondents suggested improvements to the way the Directorate handled correspondence or administered benefits. For example, 52 respondents asked for material and correspondence to be sent in foreign languages, and 38 suggested that the Directorate should respond to correspondence more quickly;

The Directorate have undertaken to examine these suggestions and to take them forward as appropriate.

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Part 3: Administration of benefits

3.1

3.2

Introduction

In examining the administration of benefits for customers intending to live, or already living overseas, the National Audit Office reviewed:

(4

(bl

(cl

Cd)

the administration of benefits by the Agency’s local offices;

the Directorate’s arrangements for determining overseas customers’ entitlement to benefit;

systems for making payments abroad;

implementation of a project to computerise the administration of Retirement Pension and Widows’ Benefit awards to overseas customers.

Administration of benefits by local offices

Where existing beneficiaries wish to receive benefit payments while they are abroad, their cases are referred to the Directorate. If, however, they are content to have their benefit paid to a bank account, or to an agent, in Britain while they are overseas the responsibility for administering their benefit remains with the local office iE

(a) in Retirement Pension and Widows’ Benefit cases, the absence is for six months or less;

(b) in Sickness and Invalidity Benefit cases, the beneficiary has, at the date of departure, been incapable of work for at least six months, and the absence is not expected to exceed three months; or in Invalidity Benefit cases, the customer has been incapable of work for at least 12 months and the absence is not expected to exceed six months;

(c) in Industrial Injuries cases, the absence is expected to last less than three months.

The responsibility for administering benefits for people who expect to live abroad for longer periods rests with the Directorate.

3.3 During their visits to local offices, the National Audit Office examined 81 cases involving applications from existing beneficiaries to receive Sickness Benefit or Invalidity Benefit while abroad. None of the offices visited had specific targets for dealing with such applications, as they formed a small part of the offices’ overall workload. Generally, such applications were dealt with quite quickly: 50 per cent of the cases examined by the National Audit Office were cleared within six working days, and 90 per cent within 21 working days.

The Directorate’s arrangements for determining entitlement

3.4 The adjudication and calculation of benefit awards for people living overseas can be complex work, since it involves not only the application of the Social Security Acts and regulations, but also the terms of bilateral conventions and treaty obligations which the United Kingdom has with other countries (see Appendix 1). The work also frequently requires staff to liaise with foreign social security authorities before decisions on claims can be made.

3.5 Within the Directorate, administrative responsibilities are shared between three groups of staff dealing with awards of Retirement Pension and Widows’ Benefits, and a fourth group dealing with the payment of these benefits. A separate group handles all work associated with incapacity benefits. An organisation chart of the Directorate is shown at Appendix 1.

3.6 In dealing with claims the Directorate have not set clearance targets which extend from the date when a claim is initiated to the date of a decision being made. This is because of the delays often experienced in obtaining information from claimants living overseas and

11


3.7

3.8

3.9

3.10

3.11

from foreign authorities. Instead, clearance targets have been set only for those actions

cases, the Directorate were awaiting further

within the Directorate’s control. information from the individual concerned, or from a foreign social security authority.

In 1991-92, the Directorate achieved their targets for clearing 90 per cent of actions on Retirement Pension and Widows’ Benefit claims within five working days and 95 per cent of actions on claims for incapacity benefits within four working days. In 1992-93 the Directorate again achieved their target on incapacity benefits, but their performance on Retirement Pensions and Widows’ Benefit deteriorated slightly: they achieved 83.4 per cent of actions within five working days, compared with a target of 90 per cent.

The Agency told the National Audit Office that, from April 1995, the Directorate would adopt clearance targets which would cover the period from when a claim was initiated to when a decision was made. Targets expressed in this way were more meaningful to customers than targets for individual actions on cases.

3.12

3.13

For each of the three Awards Groups, the National Audit Office analysed the time taken to clear the sampled Retirement Pension and Widows’ Benefit cases in terms of the proportions of time spent within the Directorate, and the time spent waiting for responses from customers and foreign authorities. Figure 3 illustrates the results and shows that, on average, the time taken by each Group to deal with cases was 126 working days (about six months]. The average time cases spent being actioned by the Directorate varied from 49 working days (Awards Group 3) to 73 working days (Awards Group 1).

Incapacity benefits

In examining the Directorate’s work in this area, the National Audit Office examined 297 claims for Retirement Pension or Widows’ Benefit, and 116 incapacity benefits cases. Decisions on all the cases examined had been made between January 1990 and March 1993.

Retirement Pension and Widows’ Benefit

Of the 297 Retirement Pensions and Widows’ Benefit claims examined by the National Audit Office, the benefit entitlement on 218 had been decided, while action on the remaining 79 was still in progress. There was sufficient information on file to enable a clearance time to be calculated in almost all of the completed cases [ZOO out of the 218). Among the 200 cases, 10 per cent had been cleared within 28 working days, 50 per cent within 97 working days and 90 per cent within 230 working days, In general, those cases which took longer to clear had involved the Directorate in obtaining additional information to that provided on the claim form, either from the individual concerned or from the social security authorities in the country where they lived.

Of the sample of 103 completed cases involving Sickness Benefit or Invalidity Benefit examined by the National Audit Office, 60 involved a wide range of actions concerning changes in customers’ circumstances and reviews of their medical condition. 10 per cent of these cases were cleared within four working days, 50 per cent within 19 working days and 90 per cent within 59 working days. The remaining 43 completed cases involved new claims from overseas customers, or notifications from customers that they were moving abroad. Of these, 10 per cent were cleared within 12 working days, 50 per cent within 50 working days and 90 per cent within 257 working days. In 17 of these 43 cases, the Directorate had had to contact a foreign social security authority before the case could be decided. Again, these cases were generally the ones which took longest to clear, with 50 per cent being cleared within 198 working days.

A further source of delay was the need to translate information provided in medical reports into English. In the 17 cases in the National Audit Office sample where this had been necessary, it added, on average, one month to the time taken to deal with the case.

In 44 per cent of the 79 cases in the National Audit Office sample where action was still in progress, the claim had been initiated more than six months before the date of the National Audit Office examination. In many of these

3.14

3.15

Making payments to overseas customers

Beneficiaries living overseas are paid by one of three methods:

12


Figure 3: Average lime taken to clear Retirement Pension and Widows’ Benefit caeee in the National Audit Office sample

All Groups

Awards Group 1

Awards Group 2

Awards Group 3

0 20

Time spent within the Directorate

40 60 80 Working Days

0 Time spent awaiting customers’ replies to enquiries

0 100 120

[_~:I Time spent awaiting foreign authorities’ replies to enquiries

Source: National Audit Office anatysis

Note: The average time taken to clear cases in a// three Awards Groups was 126 working days.

Figure 3 shows, for each Awards Group and overall, the proportion of the time taken to clear Retirement Pension and Widows’ Benefit cases which was within. and outside. the Directorate’s control.

[a] Payable Order, sent to the beneficiary’s address, to their bank 01 building society, or to a named agent:

(b) Direct Credit Transfer, paid to the beneficiary’s bank or building society account in the United Kingdom through the BACS system, or abroad through its international equivalent, which is known as TAPS (Tram-continental Automated Payments System);

(c) Schedule Payments, using agents or banks to pay customers living in New Zealand or countries in the Indian sub-continent.

3.16 The TAP system was introduced in 1987, and is operated for the Benefits Agency by the Bank of Scotland. It is available only for people living overseas and receiving Retirement Pension or Widows’ Benefit. It is also the quickest and most secure method of payment for overseas beneficiaries, and the cheapest for the Agency to administer.

3.17 As Table 3 overleaf shows, the Directorate have been successful in encouraging overseas beneficiaries to use direct credit transfer systems in countries where this method of payment is available. The number of countries

where TAPS is available has grown gradually since 1987, and the facility was extended to Cyprus, Austria, Malta, Norway and Monaco from October 1993.

3.18 In countries where the schedule payments method is used, it takes longer for beneficiaries to receive payments than with TAPS: usually the effect of the delay is that beneficiaries receive payments regularly, some four weeks afteffhe due date, compared with seven days if TAPS is used.

3.19 For Retirement Pension and Widows’ Benefit recipients in New Zealand, the Agency employ the New Zealand Department of Social Welfare as their payment agent. For those living in India, Pakistan and Bangladesh the Agency employ three foreign banks as their payment agents, under agreements dating from the 1970s. At the time of the National Audit Office examination, the Agency were negotiating with the three banks to bring the agreements up to date, to gain reassurance from the banks that they took steps to confirm beneficiaries’ identities before making payments, and to provide better safeguards to beneficiaries on exchange rates and charges.

13


Table 3: Usage 01 Direct Credit Transfer systems by Retirement Pensioners and Widows’ Benefit recipients living overseas

COlIntry Number of Number using direct Percentage using direct credit beneffciarfes credit transfer systems transfer systems

PO) WO) %

Australia 152.6 140.3 92 Canada 109.0 96.0 aa USA 77.2 54.7 71 Republic of Ireland 69.7 44.0 a3 South Africa 32.0 23.1 72 Spain 25.6 11.1 43 Germany la.9 15.4 81 Jamaica 17.6 7.4 42 Italy 16.9 5.7 34 France 10.3 6.5 63 Belgium 4.4 2.8 64 Netherlands 4.1 2.8 66 Switzerland 2.5 1.4 56

Sweden 0.3 0.1 2 Sub total 541.1 411.3 76 Rest of the World (note 2) -iQu 0.0 -.-!2

Total a?3 m 2

Source: Overseas Benefits Directorat

Notes: 1. Fi9ures relate to Iway 1993. 2. Direct Credit Transfer systems fk BAGS or TAPS) are not available in countries in the Indian sub-continent, and in certain other

countries of the World.

Table 3 shows that mare than 60 per cent of Retirement Pension and Widows’ Benefit recipients worldwide utilise Direct Credit Transfersystems to receive their benefits. These systems are both quicker and cheaper for the Agency and beneficiaries.

3.20 Among respondents to the National Audit Office survey of overseas beneficiaries, some 94 per cent said they were content with the current method by which they received their benefit payments. Some 76 per cent (3,378 respondents) received their payments by direct credit transfer.

Computerisation

3.21 The complexity and high cost of the work involved in many overseas Retirement Pension and Widows’ Benefit cases prompted the Directorate in 1988 to consider the development of a computerised system to process awards for people living overseas. A 1989 study defined the Directorate’s requirements, and the objectives of the computerisation project.

3.22 Essentially, the project to develop an Overseas Awarding System was intended to allow Retirement Pension and Widows’ Benefit awards to be processed more speedily and with greater accuracy than was possible using

3.23

the existing clerical system. This was a particularly complex project which, in order to be successful, required the use of the latest technology and specially designed software. The system was to be fully integrated with tbe Pensions Strategy Computer System, a computerised system then being developed for the administration of Retirement Pensions for people living in Great Britain. To allow greater flexibility in staffing, the project was also

intended to facilitate the merger of the five Awards Groups which at that time dealt with Retirement Pensions and Widows’ Benefit.

Departmental approval for the project was given in July 1990, and in October 1990 the Department submitted a business case to the Treasury. This estimated that costs of f12.2 million (~14.6million at 1992-93 prices) would be mare than offset by savings of f28.4 million (g33.9 million at 1992-93 prices) over the ten year period to 1998-99. These savings were to accrue mainly from reductions in staff numbers and improved productivity. Overall,

14


the business case estimated that the project would yield a net present value of HO.5 million (f12.5 million at 1992-93 prices).

3.24 The Treasury formally approved the project in December 1990. By April 1991, however, it was clear that linking the Overseas Awarding System to the Pensions Strategy Computer System was proving to be even more technically challenging than had been expected, and that action would have to be taken if the budget was not to be exceeded. A revised specification for the system was drawn up which omitted smne features of the original design and deferred the implementation of others. Development work continued, but in February 1992 the Directorate decided that the full merger of the five Awards Groups should be postponed. Instead, the number of Awards Groups was reduced to three from May 1993, in order to reduce the costs of training staff in all aspects of the system, while allowing the projected slippage in implementation to be minimised.

3.25 Pilot running of the new system began in March 1992, and in July 1992 the Department submitted to the Treasury a revised business case, based on the less ambitious project specification. Omitting costs of El.5 million (El.8 million at 1992-93 prices) which had been incurred before 1990, the revised business case estimated costs at Z20.2 million (E20.9 million at 1992-93 prices) and savings of E41 million (f42.4 million at 1992-93 prices) over the period 1990-91 to 2000-01. On this basis, the project was estimated to yield a net present value of E12.8 million (E13.3 million at 1992-93 prices].

3.26 The Agency explained that smne E3.2 million of the increase in costs between the initial and second business cases was accounted for by changes in the type and amount of hardware thought to be necessary. For example, the initial case envisaged the need for 260 computer terminals, while the second allowed for 320 terminals. In addition, the Information Technology Services Agency, which was responsible for the design and implementation of the system, had had to employ a greater number of consultants on the project than had been originally envisaged. This accounted for a further E2.2 million of the increase.

3.27 The estimates of costs and savings in the business cases submitted to the Treasury were dependent upon a number of assumptions,

including forecasts of future workload and expected improvements in staff productivity. Based on an analysis of trends over an eight yea period, workload was expected to increase by between 4 and 7 per cent a year, reaching 1.56 million items of work by 1992-93. In the event, however, the workload of the three awards groups fell from 1.39 million items in 1989-90 to 1.28 million in 1992-93. The forecast growth in workload was critical to the financial viability of the project, since it was used to calculate the level of staff savings which would result from implementation.

3.28 Awards work is mainly undertaken by staff in the Administrative Officer grade. The July 1992 business case also assumed that implementation of the project would increase staff productivity such that, for 1993-94, the three Awards Groups would require 188 Administrative Officers, despite the forecast increases in workload. In February 1993, however, the Directorate expressed concern that the expected improvements in productivity were not being achieved quickly enough, and for 1993-94 the Administrative Officer allocation was set at 276.5. In April 1993 there were 285 Administrative Officers in post.

3.29 The Agency told the National Audit Office that the Directorate were committed to reducing the number of staff employed in the three Awards Groups in order to bring the total closer to that forecast in the July 1992 business case. Thus, by February 1994 the number of Administrative Officers in the three Awards Groups had fallen to 228.

3.30 During 1992-93, the demands of implementing the system and of training staff in the new methods of working contributed to the Directorate not meeting their clearance targets for Retirement Pension and Widows’ Benefit work in that year (paragraph 3.7). In addition, a special exercise had to be undertaken during the year to identify smne 13,500 overseas Retirement Pensioners who had retired, and Widows’ Benefit recipients who had been widowed, while living in countries where annual increases in benefit were not payable. The exercise, which took sane 15 staff years of effort, was prompted by legal advice which showed that benefit had been awarded at too high a rate in such cases. In July 1993, however, the Government announced that

15


these beneficiaries’ payments would not be reduced, and that regulations would be introduced to regularise the position.

3.31 These factors led to an increase in the number of uncleared items of normal work, from 14,600 items in April 1992 to nearly 32,000 in May 1993, when implementation of the system was completed. To stem the rising accumulation of work, during 1993 the Directorate asked staff to use the Overseas Awarding System only where it led to cases being processed more quickly than by using the Pensions Strategy Computer System alone. Operational managers in Awards Groups 1 and 2 told the National Audit Office that this had resulted in the Overseas Awarding System being used only for sane 1.5 per cent, and 30 to 35 per cent of cases respectively. Awards Group 3 made greater use of the system, since it was capable of processing awards for people living in European Community countries quickly. In February 1994, the number of uncleared items of work had been reduced to SOme 19,400.

3.32 The managers added that the main problem areas with the system were its inability:

(al to transfer data electronically to the Pensions Strategy Computer System, Awards staff had to calculate awards using

(b) the Overseas Awarding System; print out the results: and then reenter the data to the main computer system;

[cl automatically to produce and issue standard forms to be sent to customers and oversew social security authorities; and

(d) to produce management information statistics. These had to be collected manually, leading to a loss of productive time.

At the time of the National Audit Office examination, the Information Technology Services Agency were developing software to remedy some of these problems. But funds were not currently available to develop programs to transfer data electronically from the Overseas Awarding System to the Pensions Strategy Computer System.

3.33 The Department plan to undertake a post-implement*tion review of the Overseas Awarding System project during 1994-95. This will show the variation in the actual costs and savings incurred and achieved compared with the forecasts made in the business cases, and will recalculate the project’s net present value.

16

-

4.1

4.2

4.3

PAYMErnS OF SOCIAL SECURITY BENEFITS TO OVERSEAS CUSTOMERS

Part 4: Controls over entitlement and payment

Introduction

Whenever the Agency make a benefit award, they inform the recipient that certain future changes in circumstances may affect benefit entitlement. For example, the Agency should be told if the benefit recipient dies; recipients of incapacity benefits should notify the Agency of changes in their medical condition; and Retirement Pensioners and Widows’ Benefit recipients should tell the Agency about changes in their marital status. Recipients, or their representatives, are asked to tell the Agency of relevant changes as soon as they occur.

The risk of changes in circumstances not being notified to the Agency is greater if recipients are living abroad. For example, all deaths within the United Kingdom are automatically notified to the Department by the Registrar of Births, Deaths and Marriages. Where beneficiaries are paid using the TAP system, foreign banks may become aware of the death of a beneficiary, and notify the Department. But there is no requirement upon foreign authorities to notify the Department of the death of United Kingdom social security recipients, and in any event the registration systems of many counties am less well developed than that of the United Kingdom. In addition, where changes in circumstances do come to light and overpayments of benefit have occurred, there is less scope for the Agency to enforce recovery action.

By its nature, the full extent of the problem of beneficiaries or their representatives not notifying changes in circumstances is unknown. However, in 1992-93 the Directorate wrote off overpayments of benefit amounting to some E471,OOO. This figure represented less than 0.06 per cent of the total amount paid to overseas beneficiaries, and included losses resulting from official error in the calculation of benefits, as well as those arising from beneficiaries’ failing to notify changes in their circumstances. Overpayments of ~26 and under are normally written off as being

4.4

4.5

4.6

uneconomic to pursue. For larger amounts there is no standard legal mechanism whereby the Directorate can pursue debts effectively in overseas countries, and at the time of the examination, they were taking further legal advice.

The National Audit Office reviewed the steps taken by the Directorate to minimise overpayments, and compared the controls exercised with those operated by other Government Departments and private sector bodies which pay pensions to people living overseas. The National Audit Office also obtained information from other countries on the controls operated by their social security authorities making payments to recipients living abroad.

The Directorate’s controls

The National Audit Office examined 300 cases processed by the Directorate’s Payments Group in the period March 1990 to March 1993 and found that recipients, or their representatives. were often slow to report changes in circumstances which would be likely to reduce the amount of benefit paid. For the sampled cases, the average time taken for notification of Retirement Pensioners’ deaths to be received by the Directorate was 16 working days, but in 10 per cent of the cases where a death had occurred, the Directorate were not informed for more than 54 working days. The Directorate generally took prompt action once they had been informed of the death: on average further payments were stopped within three working days of the notification being received.

From 1952 until the early 1970s the Department required all recipients of Retirement Pension and Widows’ Ben&t annually to sign certificates attesting to the fact that they were still alive. From the 1970s to 1965, a sample of beneficiaries was required each year to furnish such “life certificates”, but

17


4.7

the practice was then discontinued in the wake of a period of industrial action by staff, which had left large amounts of work in arrears.

Following a report which recommended that life certificates should again be issued, in 1990 the Directorate sent certificates to a sample of some 10,700 Retirement Pensioners living overseas. The sample was selected to include beneficiaries living in the Indian sub-continent and New Zealand with whom the Directorate had had no recent contact and who were over 60 years of age, and other beneficiaries who received their benefit payments through personal agents or banks in the United Kingdom and Channel Islands. As a result of this exercise, payments of benefit to 167 customers (1.6 per cent of the sample) WRI‘B suspended.

4.8 In 1992 the Directorate prepared a further report on the controls over payment of benefits overseas. This report led them to design a new life certificate form which asked for much 4.9 more information from customers, and emphasised the importance of reporting changes in circumstances. The report also led

the Directorate to implement targeted exercises to confirm that beneficiaries were still alive. These exercises were to be based on the findings of the Directorate’s report rather than on formal assessments of risk analysed on a country-by-country basis. Thus, in August 1993 the Directorate sent life certificates to all 6,400 Retirement Pensioners over 70 years of age who were living in the Indian sub-continent and to all 1,300 Widows’ Benefit recipients living in Bangladesh. By January 1994, this exercise had resulted in the suspension of further payments to 1,566 beneficiaries (20 per cent of those to whom certificates had been sent). However. the Directorate believed that this number would reduce over time, as beneficiaries who were still alive reacted to the suspension of their benefit by contacting the Directorate.

Controls exercised by other bodies

Foreign social security authorities (Table 41, and other Government Departments and private sector institutions in the United

Table 4: Overseas authorities’ checks on their oversees residents’ continoioo elioiblitv for benefit

Country Number paid separate overseas use own staff or Life Certificates Frequency of Life Require Life overseas Department overseas authorities Certificates Certificates

UK 680.000 Yes for verification

overseas Yes (Note 1) (Note 1) Witnessed

Yes

France 441,000 United States 353,000 Netherlands 120,000 Belgium 110,000 Canada 78.000 Germany 75,000 Sweden 30,000

Australia 25,000 Austria Less than 25,000 Spain Less than 25,000 Barbados Less than 25,000 Bermuda Less than 25,000 Switzerland Less than 25,000

mrus Less than 25,000 Denmark Less than 25,000

Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes NO NO NO NO NO

Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes

AIlWJl By Risk (Note 2)

ArllW Annual (Note4) Annual (Note 5)

AIlIWl Targeted

By Risk (Note 2) ArWJal AllIW

Monthly (Note 6) Biennial AIlrW AWlUal AllrVXif

Yes No (Note 3)

Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes

Source: National Audit Office survev of overseas so&?/ securitv authorities

Notes: 1. Life certiffcate exercises were undertaken in 1990 and 1993 4. Except to those paid by certain types of direct credit transfer. on a selective basis. 5. Depends upon age. Annual for surviving spouses receiving

2. Risk assessed by age group, and country of residence. pensions. 3. Witness required if the beneficiary is unable to sign certiffcate. 6. With payment confirmation.

Table 4 shows that, despite differences in eligibility criteria, all countries except the United Kingdom make extensive use of life certificates to confirm continuing eligibility Australia. Spain and the United States employ staff in countries where large numbers of overseas beneficiaries live to confirm the status and continuing eligibility of such beneficiaries.

18


Kingdom (Table 51, regularly check the continuing eligibility of pensioners living abroad. Almost all of those contacted by the National Audit Office made extensive use of life certificates, and a number of foreign social security authorities took further steps to confirm beneficiaries’ continuing eligibility for benefit, or to remind them of their responsibility to notify changes in circumstances which might affect their benefit entitlement. Thus:

(a)

(b)

(Cl

Cd)

All the foreign authorities sent one reminder to the beneficiary if the life certificate was not returned, and suspended further payments if no reply to the reminder was received. An exercise conducted by the United States’ authorities in 1989 had resulted in payments to 1.5 per cent of all beneficiaries being suspended, while the circumstances of a further 15 per cent were found to have changed. A similar exercise by the Canadian authorities in 1990 had resulted in payments to 2.5 per cent of all beneficiaries being suspended.

The United States’ authorities assessed the risk of overpayment associated with beneficiaries living in each foreign country. They required life certificates from beneficiaries at intervals ranging from once every three months to once every three years, depending on this assessment of risk.

The Netherlands authorities sent information to all beneficiaries at least once a year which outlined changes in Dutch social security law, and reminded beneficiaries of the need to notify the authorities of changes in circumstances. In up to ten per cent of cases, the information was either returned to the authorities as beneficiaries had moved, or beneficiaries themselves wrote to the authorities to notify changes in their circumstances.

In France, agreements between the banks and the social security authorities were tightly drawn, and specified the responsibility of the bank to ensure that beneficiaries were still alive and living at the given address.

Table 5: Other organisations’ checks on continuing eligibility of overseas residents for benefit

Body Type of Lile Certificate

Ministry of Defence. Army Every 5 years to all pensioners

Overseas Development Annually to all pensioners Administration

Paymaster General’s Office Every 3 years and to all over 90 years Of age

Fisons lnternatiO”al Net required. All pensioners are known individually

lnchcape Group Every 3 years

Reuters Use network of local offices to verify continuing eligibility

Shell UK Every 3 years and annually to pensioners living in Iraq

Wellcome Foundation Sample 01 pensioners is selected by Internal Audit Depatiment and asked to provide celtificates

Source: National Audit OHice survey (May 1993)

Table 5 shows that the use of life certificates to confirm continuing eligibility for pensions is widespread in bolh the private sector and in Government Departments other than the Deoattment of Social Securitv.

4.10

4.11

The authorities of smne countries - particularly those of Spain, the United States and Australia - employed staff in countries where overseas beneficiaries were numerous. Such staff were employed to assist beneficiaries, but also to verify, on a sample basis, that they were still alive. Thus the United States’ authorities employed 157 social security-trained staff outside the United States, while the Australian authorities had established local offices in Italy, Greece and Manchester. The latter employed three staff to deal with sane 4,500 Australian social security benefit recipients living in the United Kingdom.

In line with a recommendation contained in the Agency’s 1992 report on the control over payments of benefit overseas, in December 1993 the Agency seconded a trained social security officer to the British High Commission in Dhaka, Bangladesh for a trial period of one year. The officer is responsible both for providing assistance to existing beneficiaries and people wishing to claim benefit, and for verifying the circumstances af a sample of existing beneficiaries.

I 19 1 i

PAYMENTSOFSOWALSECUFJTY BENEFITS TO OVERSEAS CUSTOMERS

4.12

4.13

Mutual Assistance 4.14

The fact that the payment of social security benefits to people living abroad is recognised as carrying some risk has resulted in a number of mutual assistance arrangements between Governments. Within the European Union, the extent and nature of such assistance is governed by Article 110 of European Community Regulation 574172. This requires that, where the Agency intend to take legal action against a beneficiary living in another member State, the social security authorities in the countiy where the beneficiary is living should lend their good offices to the Agency.

4.15

These arrangements were strengthened in 1992, when the United Kingdom held the Presidency of the European Community, by Recommendation 19 of the European Community Administrative Commission. The Recommendation provided a basis on which to build more specific mutual assistance agreements between member States, and to improve liaison generally by arranging for

direct cooperation to help prevent abuse. By February 1994 the Directorate had entered into discussions under the terms of the Recommendation with the social security authorities of one other member State, and had made soundings with another.

Another recommendation of the Agency’s 1992 report on the controls over payments of benefit overseas was that the arrangements for providing and securing mutual assistance with the authorities of other countries should be strengthened. As a first step, in April 1993 the Agency entered into an agreement with the United States’ authorities to allow staff of the United States’ Social Security Administiation to verify the identity, residence and continuing entitlement to benefit of a sample of 225 recipients of British Retirement Pensions or Widows’ Benefits living in the United States. Staff of the Benefits Agency perform a similar role in the United Kingdom on behalf of the United States’ authorities. If the arrangement proves successlid, it is likely to be extended by agreements with other foreign Governments.

20


Appendix 1 Conditions governing the payment of social security benefits to people living abroad, and organisation of the Overseas Benefits Directorate

Regulations

1 Section 113 of the Social Security Contributions and Benefits Act 1992 disqualifies people living outside Great Britain from receiving social security benefits. However, the Act also provides that this broad disqualification may be modified by regulations. And certain Orders in Council and European Union legislation also affect the payment of benefits to people living abroad.

2 The Social Security (Persons Abroad) Regulations (SI 1975/563) allow certain social security benefits to be paid abroad. For example, Regulation 2 allows Invalidity Benefit and Sickness Benefit to be paid outside the United Kingdom during the periods of temporary absence, provided certain conditions are satisfied; and Regulation 4 lifts the disqualification for payments of Retirement Pension and Widows’ Benefit. However, the Regulations do not permit increases in Retirement Pension and Widows’ Benefit to be paid to people living abroad: the amount remains fixed at the level it was when beneficiaries moved abroad, or. if they have not lived in the United Kingdom since becoming eligible, at the level at which the benefit was first drawn.

3 The Persons Abroad Regulations do not apply to the payment of War Pensions, Income Support, Family Credit, and certain other benefits. Separate regulations have been made for these benefits. The effect of the regulations on payment of the main social security benefits is outlined in Table 6 below.

Orders in Council 4 Orders in Council give effect to bilateral conventions which the United Kingdom Government has entered into with the Governments of other countries, and take precedence over the Social Security (Persons Abroad) Regulations. Since 1952 the Government has concluded conventions with 33 foreign Governments (see Table 7 opposite] to pay benefits to people abroad in exchange for reciprocal social security rights.

5 The conventions differ widely in the number and type of benefits covered. For example, the convention with Austria allows both Sickness Benefit and Invalidity Benefit to be paid unconditionally, while that with Iceland allows only Invalidity Benefit to be paid. Neither Sickness Benefit nor Invalidity Benefit is payable to people resident in Israel unless incapacity has resulted from an industrial accident.

6 The majority of the conventions have been updated within the past five years, or were being updated by the Department at the time of the National Audit Office examination. The conventions with the Governments of Australia, Canada and New Zealand are notable in that, unlike all other bilateral conventions, they do not provide for increases in the amounts of Retirement Pension or Widows’ Benefit paid. The amount remains fixed at the level it was when beneficiaries moved abroad, or, if they have not lived in the United Kingdom since becoming eligible, at the level it was when first drawn.

22


Table 6: Effect ot the social security regulations on payment of the main social security benelits

Benefit/Client Group Benefit payable during temporary absence? Benefit payable during permanent absence?

Elderly people and War Pensioners

Retirement Pension and Widows’ Benefits

War Pensions

People with low incomes

Unemployment Benefit

Income Support

Family Credit

Housing Benefit

Sick and Disabled people

Statutory Sick Pay

Sickness Benefit

Invalidity Benefit

Severe Disablement Allowance

Industrial Injuries benefits

Disability Working Allowance

Disability Living Allowance

Attendance Allowance

Invalid Care Allowance

Mothers

Statutory Maternity Pay

Maternity Allowance

Yes

Yes

NO

Yes, for first 4 weeks absence, but not if recipient is registered as unemployed.

Yes, for the period of the current award (ie up to 6 months).

Yes, for up to 52 weeks absence.

NO

Yes. under certain conditions.

Yes. as for Sickness Benefit.

Yes. as for Sickness Benefit

Yes

Yes, far the period of the current award (ie up to 6 months).

Yes, usually payable for absences up to 6 months.

Yes, as for Disability Living Allowance.

Yes, for up 10 4 weeks if recipient is not accompanied by person being cared for: otherwise for same period as person being cared for receives Attendance Allowance or Disability Living Allowance.

NO

Yes, under certain conditions

NO

NO

NO

NO

NO

NO

Ye5

NO

NO

NO

NO

NO

NO

Child Benefit Yes, for up to 8 weeks absence NO

Table 7: Countries with Bilateral Conventions with the United Kingdom

Australia (note 2) Austria Barbados Belgium (note 1) Bermuda Canada (note 2) CypW Denmark (note 1) Finland France (note 1) Germanv (note 1)

Gibraltar Guernsey Iceland Ireland (note 1) ISrae1 Italy (note 1) Jamaica Jersey Luxembourg (note 1) Malta Mauritius

Netherlands (note 1) New Zealand (note 2) Norway Philippines Poriugal (note 1) Spain (note 1) Sweden Swiherland Turkey United States of America Yugoslavia

Source: Benefits Agency, Overseas Benefits Directorate

Notes: 1. Member of the European Union. 2. Countries in which Retirement Pensions and Widows’ Benefit are not subject to annual uprating. Pensions

and Widows’ Benefits are also not uprated for recipients living in countries with which the United Kingdom has no convention.

23

i


European Union legislation

7 In accordance with the Treaty of Rome, European Community Regulation 1408/71 established common provisions to enable social security beneficiaries in one member State to receive benefits in another member State. One effect of the Regulation is to allow annual increases in the amounts of benefit to be paid. Another is to allow many of the benefits listed in Table 6 above to he paid to people who are living in other member States on a permanent basis. This Regulation takes precedence over both Social Security Regulations and bilateral conventions.

Organisation of the Overseas Benefits Directorate

8 The organisation of the work of the Overseas Benefits Directorate largely reflects the conditions governing the payment of social security benefits to overseas beneficiaries, and is illustrated in Figure 4 below. Thus, in dealing with Retirement Pension and Widows’ Benefit awards, staff of Awards Group 1 deal with customers living in Australia, Canada and New Zealand and those living in countries where payments are governed by the Persons Abroad Regulations. Staff of Awards Group 2 deal with customers living in countries with bilateral conventions with the United Kingdom, excluding Australia, Canada and New Zealand and the member states of the European Union. Staff of Awards Group 3 deal with beneficiaries living in European Union countries.

Figure 4: Organisation Chart of the Overseas Benefits Directorate

Source: Overseas Benelils Directorate

Figure 4 shows how the Overseas Benefits Directorate are organised.

24

P‘4YMENTS OF SOCIAL SECuRITY BENEFITS TO OVERSEAS CUSTOMERS

Appendix 2 Local social security offices contacted by the National Audit Of&e

1 The National Audit Office sent two survey questionnaires to all 54 local social security offices within XI Agency districts. The districts were selected on a statistical basis, in order that the responses would be representative of all 159 Agency districts in Great Britain.

2 The first questionnaire sought information on how staff dealing with the public handled enquiries from customers concerning temporary or permanent residence overseas. It covered the following main areas:

. the management and statistical information kept by local offices;

. the nature of the information provided to customers making enquiries regarding payments of benefits overseas;

. the advice and guidance available to staff to enable them to deal with such enquiries:

. the extent of staff training on such work.

3 The second questionnaire sought information from staff whu dealt with applicatiuns from customers to receive benefit payments whilst overseas on a temporary or permanent basis. It covered the following main areas:

. the nature and frequency of contact by local office staff with the Overseas Benefits Directorate;

. the administrative procedures and controls employed:

. details of any local initiatives taken to improve the service provided to customers taking up residence overseas;

. the extent of guidance and training provided to staff.

4 The following 54 local social security offices were sent questionnaires by the National Audit Office. Completed questionnaires were received from all 54 offices. Six of these offices were visited by the National Audit Office, together with a further four offices thought by the Overseas Benefits Directorate to have a heavy overseas workload. All the offices visited are noted in italics in the list below.

25


Districts

Cambridgeshire

Cornwall

Essex South West

Hackney & lslington

Halifax

Harrow & Hillingdon

Hereford & Worcestershire

lrvine&Kilmarnock

Liverpool North

Lothian West

Manchester Central

Newcastle

North Kent

Ogwr Aian Nedd

Oxfordshire

Renfrew

South Humbershire

West Lincolnshire

Wolverhampton

Wigan & Leigh

Additional Oflices vivited

Birmingham (Handsworth)

Birmingham (Washwood Heath)

Bradford West

Brighton

Local Offices

Cambridge. Peterborough

Launceston, Penzance, St Austell, Truro

Basildon, Grays. Harlow

Hackney. Hoxton, Shoreditch, Stoke Newington

Halifax, Keighley, Skipton

Harrow, Uxbridge

Hereford, Redditch, Worcester

Iwine, Kilmarnock

BrecMield. Norris Green, West Derby

Balhgate, Edinburgh West

Longsight, Openshaw

Newcastle East, St James, Newcastle West

Chatham. Gravesend, Maidstone, Sittingbourne

Bridgend, Neath. Port Talbot

Abingdon, Banbury. Oxford

Johnstone. Glasgow Paisley

Grimsby, Scunthorpe

Grantham. Lincoln (Newland). Orchard St

Wolverhampton North, Wolverhampton South

Leigh, Wigan

26


Appendix 3 Survey of overseas beneficiaries

Background

Methodology

1 The National Audit Office carried out a postal survey of people living abroad and receiving a United Kingdom Retirement Pension, Widows’ Benefit or Invalidity Benefit. The purposes of the survey were to obtain information from recipients about their experiences in dealing with the Benefits Agency’s local offices and the Overseas Benefits Directorate: to find out how satisfied recipients were with the service they were receiving; and to seek their suggestions for improvements in the service.

2 Samples were drawn from records of payments made by the Overseas Benefits Directorate to Retirement Pensioners, Widows’ Benefits and Invalidity Benefit recipients in proportion to the populations receiving these benefits and living abroad. All samples were drawn on a random basis.

Statistical validity 3 Questionnaires were sent to a total of 6,918 beneficiaries, including 5,942 Retirement Pensioners, 518 Widows’ Benefit recipients and 458 recipients of Invalidity Benefit. A total of 4,419 questionnaires were returned and analysed by the National Audit Office. The survey response is detailed in Table 8 below.

Table 8: Survey response rate

NO. NO. %

Number of questionnaires sent less Recipient deceased

Questionnaire returned undelivered Questionnaire not received by addressee

Number 01 addressees in the scope of the survey less Questionnaires returned too late. or unsuitable for

analysis Questionnaires not returned

6,918 100 28 42

26 96 _1 6,622 99

183

2&m

Number 01 completed questionnaires analysed

Approximate confidence intervals, at the 95 per cent confidence level, for the results of the survey are given in Table 9 below. When interpreting results from the survey, the effects of sampling error must be taken into account. These effects are shown in Table 9 below, and arise because a sample of beneficiaries was surveyed rather than the entire population. Thus,

Table 9: Aooroximate Confidence intervals. at the 95 oer cent conlidence level

No. 01 respondents on which result is based A!mroximate Confidence Intervals applicable lo wcenfarre results at or near

10% 0, 90% 30% or 711% 50%

t% ?% P/c

500 3 4 4

300 3 5 6

200 4 6 7

100 6 9 IO

i, 27

!


for example, where a result is based on 500 responses to a question, the result quoted will be accurate within plus or minus 3% to 4%. As illustrated in the table, the effects of sampling error are greatest where half the sampled beneficiaries provide similar answers to a question. The effects of sampling error decrease where higher, or lower, proportions of respondents give similar answers to a question.


Appendix 4 Organisations contacted by the National Audit Office

The National Audit Office contacted the following Government departments and private sector companies which make payments to pensioners living outside the United Kingdom:

Government Departments

Ministry of Defence, Army Pensions Office, Worthy Down Ministry of Defence, Army Pensions Office, Glasgow Overseas Development Administration Paymaster General’s Office

Fisons plc. Inchcape plc. Reuters Limited Shell UK Limited Wellcome Foundation Limited

The National Audit Office also contacted the following bodies, each of which provide advice or other assistance to social security beneficiaries taking up residence, or already living, O”eX?aS:

Age Concern British Australian Pensioners Association British Pensioners Association, Alberta, Canada British Retirement Pensioners Society, South Africa Canadian Alliance of British Pensioners Commission for Racial Equality Disability Alliance National Association of Citizen’s Advice Bureaux Welfare Rights Association, Leicester Social Services Depa

In addition, the National Audit Office contacted the social security authorities of the following countries and sought information on their administration of payments made to beneficiaries living abroad:

Austria Australia Barbados Belgium Bermuda Canada * CyprUS Denmark

France * Germany Netherlands * Spain Sweden Switzerland United States of America *

*Countries visited by the National Audit Office.

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Documents

Payments of Social Security Benefits to Overseas Customers