In assessing means for old age, non-contributory, pension purposes, account is taken of any cash income the person may have, together with the value of capital and property. For the purposes of assessing the value of capital and property a notional assessment method is used. The use of the notional method avoids the necessity of frequent reviews of the entitlements of a very significant number of recipients whenever interest rates fluctuated or whenever the capital was moved from one investment option into another.
Up until 1997, the assessment rates for savings that applied to old age, non-contributory, pensions were: first €253.95, £200.00 – nil; next €476.15, £375.00 – 5%; balance – 10%.
Gradually between 1997 and 2000 the method of assessing capital was streamlined across the various social welfare schemes. As the most recent step, my predecessor made provision in the Social Welfare Act, 2000, for the introduction of a new assessment method for capital which came into effect from October of that year. This new method applies to all social assistance schemes, other than supplementary welfare allowance.
Under the new method the first €12,697.38, £10,000, of capital is disregarded; capital between €12,697.38, £10,000, and €25,394.76, £20,000, is assessed on the basis of €1.27, £1, weekly means for each €1,269.74, £1,000, of capital; capital between €25,394.76, £20,000, and €38,092.14, £30,000, is assessed on the basis of €2.54, £2, weekly means for each €1,269.74, £1,000, of capital; and capital above €38,092.14, £30,000, is assessed on the basis of €5.08, £4, weekly means for each €1,269.74, £1,000, of capital.
The revised arrangements introduced in 2000 considerably benefited both single and married old age, non-contributory, pensioners by up €27.93 per week in the case of single pensioners and €41.90 per week in the case of married pensioners.