Curbing Benefit Fraud: A quarter of applications rejected

There’s hardly a household that, in one way or another, is not embraced within the country’s social welfare network.Published social protection figures for 2020 indicate that nearly half of the population during the year drew a record amount of just under €1.1 billion in contributory and non-contributory social benefits. The highest cohort of beneficiaries were the retirement pensioners, widows and invalidity pensioners. Other beneficiaries ranged from individuals with a disability to families with young children; from persons on sickness benefit or social assistance to carers of elderly persons living in the community.

The social benefit programmes are crucial to an administration which has at heart societal well-being, particularly the provision of a safety net for those who need it. Disbursement on these programmes has been growing yearly and now stands at more than 30% of the total recurrent expenditure incurred by Government.

However well-meaning in adequately supporting and financing these programmes, the government remains on the alert to curb abuse and ensure that benefits are delivered to persons who are truly eligible to them. Abuse would not only be detrimental to the taxpayer, but ultimately would be socially unjust and negatively impact deserving recipients.

As the promoter and administrator of the social benefit programmes, the Ministry for Social Justice and Solidarity, the Family and Children’s Rights (MSFC) has in place mechanisms to prevent and detect fraud and avoid administrative errors. They are run by the Business Intelligence and Compliance Unit within the Income Support and Compliance Division.

The evaluation activities of the unit came into focus through information tabled recently in Parliament, which revealed that in 2019 and 2020 over €5 million were saved through the detection of benefit fraud by 1,500 persons.  Abuse was detected through on-site inspections, following reports of potential or suspected infringements and desk-based exercises which entail review and analysis of data to establish cases of abuse.

In 2019 and 2020, over €5 million were saved through the detection of benefit fraud by 1,500 persons. 

In recent years up to €12 million were estimated to have been further saved through preventive controls at claimant registration phase. This risk-based approach was developed in 2016 to minimise fraud risks at entry point.

Figures made available to TheJournal.mt show that around a quarter of the 18,000 scrutinised applications were rejected. Access and use of fiscal data enabled the unit to effectively target and nip at the bud applications for means-tested benefits. The aim of the unit is not to punish but to deter individuals from committing fraud. Alongside such approach, through regular media interventions, unit officials seek to foster a better understanding of benefit eligibility parameters.

Benefit fraud cases are finally adjudicated by a management committee formed of officials from the Department of Social Security and the Income Support and Compliance Division. The setting up of the review mechanism has smoothed out inter-departmental divergencies and put paid to the strains in adjudicating cases highlighted by the Auditor General in a report on “Addressing Social Benefit Fraud” in January 2014. Cases are now dealt with expeditiously and consensually.  

Figures made available to TheJournal.mt show that around a quarter of the 18,000 scrutinised applications were rejected.

Besides immediate savings, detection of fraud generates sums of unduly paid benefits which have to be recouped from receivable benefits. Legislative provisions limit the rate of collection to a minimum of 10% if overpayment was the fault of the beneficiary; and 5% in those cases where overpayments resulted through an administrative error.  In those cases where a defaulter is no longer entitled to any benefits the department enters into a repayment agreement.

Unavoidably, such capping slows down the collection of overpayments, leading to an accumulation of arrears. Latest published figures show that by the end of 2019, arrears stood at €26.8m, with one third incurred before 2010.

A senior official at the Ministry for Social Justice & Solidarity told TheJournal.mt that up to 2015, the arrears were accruing at the rate of about €2.5m annually, but administrative measures put in place over the past few years have succeeded in appreciably arresting the upsurge. He explained that while between 2011 and 2016 arrears shot up by over €11m to €25m; in the four-year period up to 2020 they only increased by €1.5m.  At the same time, through concerted efforts to accelerate the collection of overdues by end of 2020 the amounts of recovered overpayments have doubled and for the first time surpassed €5m last year.

The recouped amounts are ploughed back into the social benefit programmes through annual enhancement of benefits or introduction of new social measures for people who are truly in need.

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