Irish state pensions now incur a banking fee in the USA and Canada

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State Contributory Pension payments in Canada and US now incur a banking fee.
From what I can see DSP changed its bank provider from Bank of Ireland to Danske.
Instead of a direct deposit (no charge) It is now sent as Wire Transfer ($14 charge).
Here is an (blame the banks not us) answer in Dáil Éireann.
Anyone else affected by this?


Catherine Connolly​

Question:
661. Deputy Catherine Connolly asked the Minister for Social Protection if she will address the fact that persons in receipt of an Irish State pension living abroad are now being subjected to substantial banking fees as a result of the decision to change the payments to wire transfers rather than the direct deposit arrangement which is in place for these payments by countries internationally; and if she will make a statement on the matter.

Heather Humphreys​

Answer:

The Department of Social Protection is in the process of changing its banker to Danske Bank. This is on foot of the Government’s decision in 2017 to tender for a single banking service for all Government Departments and Offices, a contract which was awarded to Danske Bank in 2018.

My Department uses the bank for both cheque and electronic fund transfer (EFT) payments, i.e. funds transferred directly into a person’s account in a financial institution. Payments to people resident outside the state are generally made by EFT as this is the most efficient and cost effective method of delivering a payment.

Earlier this month, the Department moved its foreign EFT payments to beneficiaries outside of the SEPA zone to Danske Bank. As a result of this change, US and Canadian banks levied cross border payment charges on their own customers' Irish pension payments. There are approximately 6,400 pension recipients in the US or Canada receiving a pension payment from this Department. It is not known how many of these pension recipients are impacted by the charges. However, the Department wrote to all such customers in January, informing them of the potential of charges being levied on their payments by their own bank.

Payments to markets outside Ireland where the sending bank is not a member of the domestic clearing system, such as the US or Canada, are processed as international cross border payments, also known as ‘international wire transfers’. Processing such payments as international wire transfers ensures that the sending bank complies with its national and international Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) obligations. In order to effect these international wire transfers in markets such as the US and Canada, the services of correspondent banks are necessary, and their use is the industry standard approach.

Correspondent banks will deduct charges from the payment amount to compensate for the cost of processing the payment and discharging their AML and CTF obligations.

Danske Bank is currently in contact with its correspondent banks in relation to the matter.
 
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NoRegretsCoyote said:
$14 out of a weekly payment is huge. Likely that many of these recipients won't be in receipt of the full state pension either.
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We get pensions paid monthly in Canada and the United States.
Yes the average irish pension of people i know would be around 200 eur per month.
You need to have worked a minimum of 5 years in Ireland to get a pro-rata pension.
Before they changed banks from Bank of Ireland to Danske Bank there was no charge direct deposit.
I got a letter from DSP saying I should shop around for a bank that does not charge a fee.
But all banks charge a standard fee for wire transfers.
 
Some stories from the Irish Times (April 20) on this issue:
Cannot seem to insert link. Here are the headlines:

Cantillon
"Pensioners pay price for Government’s banking move"

"US and Canada residents claiming Irish State pension hit with extra charges"
 
Below is a copy of a letter I recieved from DSP on April 20:
I have redacted all individual names:
Before this all payments where processed by Bank of Ireland direct deposit no charge
__________________________________________________________________________________________________________________
Further to my e-mail of 1 April, I have an update for you on electronic Social Welfare payments made to people living in Canada.
The Department has confirmed that there is no other option for Danske Bank but to process the payments to Canada as cross-border payments (also known as international wire transfers) via a correspondent bank. This is to ensure that Danske Bank, as the Department’s banker, fully complies with its national and international Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) obligations.
In light of that, the Department is implementing a change to its payment file generation process to try and eliminate the possibility of more than one correspondent, or intermediary, bank in Canada processing the payments. In March and April Danske Bank sent all Canadian payments via Bank of Montreal. While Bank of Montreal can process payments to most Canadian banks, there are some financial institutions for which it needs the assistance of another intermediary bank to complete the payment. In cases like this the payee can be charged wire transfer fees twice, once by Bank of Montreal and then again by the second intermediary bank.
As Danske Bank also have correspondent banking arrangements with three other Canadian banks, the Department hope to be able to target the May run of payments so that only one intermediary bank is used between Danske Bank and each Social Welfare recipient’s bank in Canada.
The Department is continuing to liaise with Danske Bank on this issue and to see if there is scope to reduce these wire transfer charges. I am sorry that I am unable to give you better news in relation to changing the payment method from wire transfer. However, I hope to have information soon on the wire transfer fees that each of the four Canadian correspondent banks charge.
I will forward on that information to you as soon as I have it. In the meantime I can confirm that the wire transfer fee charged by Bank of Montreal is CAD$8.
 
Why not open an account in Ireland, let it accumulate if you can afford to, then transfer abroad less frequently to reduce charges.
 
Pmc365 said:
Why not open an account in Ireland, let it accumulate if you can afford to, then transfer abroad less frequently to reduce charges.
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Yes, That's a possibility. But why should I? DSP should have kept the status quo of having direct deposit (no charge). Now the letter sent indicates that Danske Bank does not have the ability to do this. They suggest (in a letter from Jan. 8) we go shopping for the lowest fee for wire transfers from Canadian Banks. But all banks charge the same fees for wire transfers give or take a dollar ($14 to $17). I know people here from various other European countries whose pensions are all direct deposit (no fee).
 
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Pmc365 said:
Why not open an account in Ireland, let it accumulate if you can afford to, then transfer abroad less frequently to reduce charges.
Click to expand...
If you use a service like Transferwise (now Wise), the savings in charges aren't huge with bulk. For EUR to USD 0.5% for €1,000 and 0.4 for €10,000 and miniscule savings on that for €100,000.

I wonder if the DSP would pay into a Wise multi-currency account with its own IBAN. https://wise.com/gb/multi-currency-account/#features
 
I would use accounts in N26, Wise or even Revolut.
These give you a decent exchange rate and more flexibility if you spend the money in different currencies.
 
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