As outlined in previous correspondence and explained at the CWU Seminar, the Union availed of the services of Fóla Partners to conduct an in-depth review of finances. Furthermore, Dermot O’Malley & Co, arising from the audit of the 2022 accounts identified a number of key issues to be addressed by the NEC. One significant area identified relates to the Social Benefit Fund which has been operating outside of rule for several years and with payments rising to €1m in the last year.
The Social Benefit Fund has returned a cumulative deficit of €1,137,837 in the past five years, reaching its highest level recorded at year end 2022 of €303,191. There is no question that urgent action is required to address the significant financial strain on the Social Benefit Fund in circumstances where expenditure continues to increase as a result of rising numbers of claims, higher salaries (affecting the Sickness Benefit Scheme), compounded by high inflation, at a time when membership contributions are decreasing.
Calculation of Benefit Payments
The Union conducted an extensive analysis of options available to address the issue of overspend on the Sickness Benefit Scheme, while continuing to provide financial assistance to eligible members. The Finance Committee reviewed all of this information before coming to a decision on the most appropriate course of action.
Bearing in mind the evaluation from the Fóla review that “there is no real scope to curtail expenditure without significant changes to the benefits”, the Finance Committee has recommended a decision to change the method of calculating payments from, a percentage of basic pay, to a flat weekly rate, to commence on the Friday 2nd June 2023. A summary comparison of the change is outlined in the table below:
The reasons for proposing implementation of the changes outlined above are:
- It provides an equitable and predictable level of benefit to members.
- It will allow the Union to prepare forecasts and budget for expenditure on the Social Benefit Fund, which is good fiscal practice.
- It can assist in ensuring that the Social Benefit Fund remains a viable benefit for members into the future.
- It addresses the continued and ongoing deficits, which are a breach of the CWU Rules and the NECs requirement as the governing body to uphold these.
- It reduces the administrative costs associated with payment.
- It makes arrears/overpayments simple to calculate.
This recommendation was accepted by the National Executive Council (NEC).
There is provision in the CWU Rules and Constitution for the NEC to make changes to the payment of benefits from the Social Benefit Fund:
In the event of severe financial strain on the Social Benefit Fund due to civil disorders, an unforeseen level of claims or unforeseen disasters, the Finance Committee, subject to the sanction of the National Executive Council, has the power to limit or defer any or all of the benefits specified under the rule”
In deciding on the above approach, the NEC is acutely aware of the effect that the current global economic downturn is having on our members; however, it is nonetheless crucial that the Union acts now to ensure the long-term viability of the Social Benefit Fund, and in particular the Sickness Benefit Scheme, by addressing this deficit issue without any further delay.
Any members with an active, continuing claim for Sickness Benefit will not be affected by this change; it will apply to all new claims received from 2nd June 2023.
Publication Type: Circular