Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697804492361.pdf (Ireland)
MEMORANDUM ON FINANCIAL PROVISIONS.

Section 8 of the Bill.

1.

A clear distinction must be drawn between the invested moneys of the National Health Insurance Fund and the investments of the Society's Pension Fund which are transferred to the Minister for Finance under section 8(2) of the Bill.

The latter investments constitute the assets of the Society’s pension Fund and are required to meet the Society’s liability to provide pensions for its staff on retirement.
As the Minister for Finance will take over the liability for existing arel future pensions on the dissolution of the Society the assets of the Pension Fund are transferred to him to be held or disposed of by him for the benefit of the Exchequer which will have to meet the cost of the pensions after the transfer day.

Sections 9 - 14 of the Bill.


The general effect of sections 9, 12, 13 and 14 of the Bill is to 2. simplify the investment provisions governing National Health Insurance finance by merging all invested moneys of the scheme in one investment account under the control of the Minister for Finance.

The moneys in this account will be held in trust on behalf of the National Health Insurance Fund and will be available as and when required to meet expenditure out of that Fund on benefits and administrat ion.
Sections 9 - H of the Bill.

Iferagraph (b) of sub-section (1) of section 56 of the National Insurance 3.
Act, 19H> as amended by sub-section (4) of section 3 of the National Health Insurance Act, 1920, provides for the payment to the National Health Insurance Society for investment, or for the investment by the Minister for Social Welfare on behalf of the Society, of one-half of the sum ascertained from time to time to be available for investment out of the sum standing to the credit of the Society in the National Health Insurance Fund.
Since the inception of the scheme of National Health Insurance in 1912 4. up to date various sums have, under the foregoing provisions, been made available for investment, first to the various approved societies and since 1933 to the National Health Insurance Society.

These 3ums now amount to a total of £2,359>457 and are invested in securities having a nominal value of £2,349>461 which, at the request of the Society, are held by the Minister for Social Welfare on behalf of the Society.
When the Society is dissolved its assets and liabilities become, under 5. sections 9> 10 and 11 of the Bill, assets and liabilities of the National Health Insurance Fund.
The Minister for Finance already holds investments to a nominal value of £3,748,487 on behalf of the National Health Insurance Fund and as the investments at present held by the Minister for Social Welfare on behalf of the Society will, on the dissolution of the Society, become investments held by him on behalf of the National Health Insurance Fund it is proposed to merge these investments with those at present held by the Minister for Finance.
This is provided for by section 9(1) of the Bill, the effect of which is to put all invested moneys of the National Health Insurance Fund under the control of the Minister for Finance to be held by him on behalf of the Fund.

It is considered that the Minister for Finance is the proper authority to invest such moneys after the dissolution of the Society.

Section 12 of the Bill.


There are also invested moneys under the National Health Insurance Aote 6. held by the Minister for Finance on behalf of the National Health Insurance -— 1* IL * .... 2.

Reserve Fund set up under Section 6 of the National Health Insurance Act, 1942.
This fund was the successor to the National Health Insurance Central Fund set up by the National Health Insurance Act, 1918, for the purpose of making good deficiencies arising in individual societies on the quinquennial valuation of their assets and liabilities.
On the dissolution of the National Health Insurance Society no purpose would be achieved by maintaining the National Health Insurance Reserve Funi as a separate entity and, accordingly, section 12 of the Bill provides for the merging of its investments with those of the National Health Insurance Fund under the control of the Minister for Finance.

Section 13 of the Bill.


(1) The expression "the Guarantee Fund" is defined in Section 2(1) 7. as "the Guarantee Fund set up for the purposes of Section 26 of th^ National Insurance Act, 1911", which provided for the giving of security by approved societies against defalcation by their officers in respect of National Health Insurance moneys coming into the hands of the societies.
(2) It was not laid down in Section 26 of the Act of 1911 that the Guarantee Fund should be set up; the method of implementing the provisions of the Section were not defined.
In fact, however, the Guarantee Fund was specifically set up by the Irish Insurance Commissioners to implement the provisions of the Section, and the accounts of the Guarantee Fund, audited by the Comptroller and Auditor-General as part of the accounts of the National Health Insurance Fund, are presented each year to both Houses of the Oireachtas.
All societies were compelled to contribute to the Guarantee Fund in proportion to their membership and losses arisipg from defalcations were made good to societies if it ms considered from the circumstances of each particular case justified a grant from the Fund.

(3) The Guarantee Fund was not set up by Regulation.

It was set up by administrative act of the Commissioners.

Provisions regarding the Fund appear, however, in the National Health Insurance (Approved Societies) Consolidated Regulations, 1918.
(4) With the dissolution of the Society the necessity for the Guarantee Fund disappears.

(5) The Section, therefore, proposes in sub-3ection (1) to bring the Guarantee Fund to an end and in sub-section (2) to merge its assets in the general fund.

(6) At 31st December, 1949, the investments held on behalf of the Guarantee Fund had a nominal value of £14>342.

Their cost price was £12,609 and their market value £13,725* Section 14 of the Bill.
As the provisions of section 56(1)(b) of the 1911 Act dealing with 8. the investment of moneys become inoperative after the dissolution of the Society section 14 of the Bill provides that thereafter surplus moneys of the National Health Insurance Fund will be transferred to the Minister for Finance for investment on behalf of the Fund in the same way as surplus moneys of the Unemployment Fund and the Widows' and Orphans' Pensions Fund are transferred to him for investment on behalf of those Funds.
Sections 15, 16, 17?

19, 21(3) and 26.

The general aim of those provisions is to secure that the existing 9. position of the Exchequer in relation to National Health Insurance be maintained until the new scheme of social Insurance comes into operation.

The chief grants now payable to the National Health Insurance Fund out of / ■ i , .

3. voted moneys are the grants in respect of (a) benefits and (b) administration of benefits, amounting in both cases to two-ninths of the expenditure.
When the Society is dissolved no difficulty in the calculation of the grant on benefits will be created by the dissolution, so that it is not necessary to refer to that grant in the Bill.

The position with regard to the grant on the administration of benefits is different.

Hence the necessity for Section 15 (see paragraph 10).
In addition to the State Grant on the administration of benefits the administration itself has to be dealt with, as under the Bill the cost of the Society's administration will have to be met out of voted moneys, instead as heretofore out of the National Health Insurance Fund.

To maintain the present balance, therefore, an appropriation-in-aid is necessary (see paragraphs 11 - 14).

The necessity for Section 17 is explained in paragraphs 15 and 16.
The present position is also being maintained in Section 19, but, as there is a possibility of the State Grants being increased, it is provided that the amount at present expended for additional benefits cannot be increased without the consent of the Minister for Finance (see paragraphs 17 and 18).

The necessity for Sections 21(3) and 26 is explained in paragraph 19 and paragraphs 20-23 respectively.

Section 15 of the Bill.


Section 3 of the National Insurance Act, 1911> as amended by 10. section 17 of the National Health Insurance Act, 1947> provides that two-ninths of the cost of administering benefits by the approved societies (now the National Health Insurance Society) should be recouped to the National Health Insurance Fund by the Exchequer.
When, therefore, the National Health Insurance Society is dissolved and benefits are administered by the Department of Social Welfare it will no longer be possible to ascertain the cost of their administration on the old basis of taking the Society's costs only into consideration.

This section, accordingly, provides for fixing the yearly cost of administration at the total of two amounts, viz.
(a) the fixed sum of £215,000 which is the amount expended on administration by the Society in the year ending cn 31st March, 1950, and (b) the variable cost (still readily ascertainable) of providing medical certificates free to insured persons for the purpose of claiming benefit.

State Grant of two-ninths was always paid on the latter amount and there is no change in the position in relation to it.

Section 16 of the Bill.


11.9 This section provides for the repayment to the Exchequer from the National Health Insurance Fund, after the abolition of the Society, of the cost of administration formerly borne by the Society out of Fund moneys and thereafter to be borne on voted moneys.

This will mean that, as at present, the National Health 12.

Insurance Fund will bear seven-ninths of the cost of administering benefits and the Exchequer two-ninths of that cost.

13.
13.

The cost of administering benefits is being stabilised for the period between the date of the dissolution of the Society and the date of the coming into operation of the new social security scheme at the figure of £215,000 which was the Society's expenditure on administration in the year ending 3lat March, 1950, and which is the figure used in paragraph (a) of Section 15 of the Bill.
14- Sub-section (3) of this section is intended to make it clear that any liabilities of the National Health Insurance l^ind (as the successor to the Society) in respect of annual payments to the former pension fund of the Society are fully discharged by the payment of the sum of £215,000 per annum to the Exchequer under the provisions of this section.

/ 4« Section 17 of the Bill.

15.


Section 7 of the National Health Insurance Act, 1942, provides that when the unclaimed sum arising from the sale of stamps in any year has been ascertained it is, if it does not exceed £15,000, to be paid to the Exchequer as an appropriation-in-aid of the cost of the administration of National Health Insurance.
If the unclaimed sum exceeds £15,000 in any year the sum of £15,000 is paid to the Exchequer as set out above and the balance to the National Health Insurance Reserve Fund.
As it will not be necessary to ascertain the amount of these 16. unclaimed sums after the dissolution of the Society, and in order that the Exchequer may not be at a loss in consequence, the amount to be paid by the National Health Insurance Fund to the Exchequer under the provisions of Section 7 of the National Health Insurance Act, 1942, has been stabilised at the maximum figure of £15,000 per annum.
In every year except one since the coming into operation of the Act of 1942 the Exchequer received the full sum of £15,000 under these pro"/is ions .

Section 19 of the Bill.


The provision of additional non-cash benefits will be continued 17. after the dissolution of the Society and this section provides for fixing the amount available for them up to 31st March, 1952 (the end of the current additional benefit period) at the existing figure of £300,000 per annum, or, should it be necessary, such higher amount as the Minister for Social Welfare with the consent of the Minister for Finance may determine.
The amount (£300,000 per annum) at present being made available 18. for additional benefits is based on the actuarial review of the financial position of the National Health Insurance System as at 31st December, 1943, the report of which was received in December, 1946.

The resulting scheme came into operation in April, 1947, and will terminate in March, 1952.
Under the Acts, the next review would be made as at 31st December, 1948, and the report would normally not be available until December of 1951* In view of the dissolution of the Society it is considered unnecessary to incur the appreciable expense of any further actuarial review which could only affect the position after 31st March, 1952, before which date it is expected that the new social security scheme will be in operation.

Section 21(3) of the Bill (second paragraph).


No charge at present falls on the Exchequer in respect of Arus 19.

Brugjia where the headquarters staff of the Society is housed.

Those premises are held in fee simple by the Society, If the former headquarters staff of the Society were transferred to premises acquired under 3ub-sectiom (1), a charge against the Exchequer under sub-section (3^ would arise in relation to such staff and the present position would be altered to the detriment of the Exchequer.
The intention of the paragraph is to prevent this.

/ Section 26 of the Bill.

Under the provisions of sub-sections (10) and (11) of section 81 20. of the National Insurance Act, 1911, as amended by sub-section (2) of section 16 of the Social Welfare Act, 1948, a sum equal to two-ninths of twopence is payable by the Exchequer in respect of every contribution credited to the National Health Insurance Society in respect of it3 members.

/ 5.
/ 5.

Under paragraph (d) of section 16 of the National Health and Widows' and Orphans’ Pensions Act, 193&, a sum equal to two-ninths of fivepence- halfpenny is payable by the Exchequer in respect of every contribution paid at the army rate in respect of serving soldiers who are members of the Society.
These State Grants (amounting to £44,000 in the present year) in 21. respect of contributions credited to the Society had their origin in the difference between the British and Irish rates of contributions and the special provisions made for members of the Defence Forces.

This difference has been treated as expenditure on benefits thereby attracting the two-ninths State Grant.
After the abolition of the Society it will not be possible to 22. calculate this Grant by reference to the number of contributions paid in respect of members of the Society as all insured persons will be in the same category.

This is provided for by Section 6 of the Bill which entitles all insured persons to benefit whether or not they have applied for membership of the Society.
It is proposed, therefore, to stabilise this Grant for the period between the abolition of the Society and the coming into operation of the new Social Security Scheme at the figure in support of which there is firm data available, viz.

£44,000.

The actual amount payable on foot of this State Grant in respect 23. of any year could not be ascertained for some time after the end of the year in question.
Adjustments of the amounts of State Grant provisionally drawn had, accordingly, to be made in subsequent years.

Such adjustments were small in amount and the purpose of sub-section (3) is to avoid the necessity for them in respect of the years 1948 and 1949.

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