Vol. 460 No. 3
20 Mr. J. Walsh asked the Minister for Social Welfare the plans, if any, he has to take account of actual interest rates, rather than a notional 10 per cent rate when calculating income from deposit accounts in relation to the means test for social welfare recipients. [1445/96]
The means tests used to determine entitlement to all social assistance schemes include an assessment of the value of any capital or investments which the applicant may have. Different methods of assessment are applied in the various social assistance schemes. For example, in the case of unemployment assistance and supplementary welfare allowance, the first £400 is assessed at 5 per cent and capital in excess of this amount is assessed at 10 per cent. For old age pension purposes, an initial disregard of £200 is allowed, the next £375 is assessed at 5 per cent and the balance is assessed at 10 per cent.
There are about 430,000 people in receipt of a social assistance payment at present. In view of the large number of recipients involved, it would not be feasible from an administrative point of view to assess means from capital on the basis of actual returns from investments as this would necessitate frequent reviews of the entitlements of a very significant number of recipients as rates fluctuate.
I have plans, however, to standardise the method of assessing capital across the various social assistance schemes so as to improve the equity of the system. This will have to be done progressively over a period, in view of the administrative implications involved and I intend to commence this process in the current year.
The reply is a load of nonsense. The Minister should check with the Minister for Health as, in the case of health, interest is taken into account in means testing. A print out is readily available from financial institutions. It is unsatisfactory that elderly people particularly are charged an excessive and unreal amount of 10 per cent. The dogs in the street know one cannot get 10 per cent interest on a deposit account. Why is the system not changed? Why not have the actual interest charged rather than a notional amount?
The points raised by the Deputy about rates are valid but I am sure he is aware income is not assumed on the basis of all savings of the person concerned. As I already pointed out, there are disregards. I intend to review the system with a view to standardising the process of assessment of savings for all schemes. It should be borne in mind that there are 430,000 people in receipt of assistance schemes. It is not a matter of reading the rates available on any one day from the Stock Exchange and Government securities; all applications have to be examined to see whether the rate should apply and that is not an easy task. Some system must be put in place to ensure stability of income for the people concerned. Obviously returns from investments may fall as well as increase.
It is mind boggling that the Minister is making an excuse for this unsatisfactory position. Anybody who seeks from a financial institution the interest accruing on their account for a month, six months or a year is given it readily. This matter has serious consequences because many elderly people, rather than being over-charged for their accounts, keep money under the mattress, and that leads to problems. I am not blaming the Minister for difficulties in rural Ireland but as a result of the present system people are reluctant to put the few pounds they put aside for their burial expenses into the credit union or post office because they will be charged at a rate of 10 per cent. People who put their money in a financial institution are lucky to get a few pounds interest after handling charges are deducted — the actual rate is nearer to 1 per cent than 10 per cent.
The Deputy said it is relatively easy to get an annual figure from a financial institution. I will read out the representative yields on Government securities, the most important aspect in terms of investment, from January 1995 so that he will appreciate the position is not as simple as he believes. On five year gilts the end of month returns in percentage terms are: January, 8.6; February, 8.68; March, 8.69; April, 8.66; May, 8.07; June, 8.45; July, 8.07; August, 7.72; September, 7.61; October, 7.33; November, 6.76; December, 6.60 and January 1996, 6.38. On ten year gilts the figure ranges throughout the year from 8.66 to a present figure of 7.16. On 20 year gilts the figure ranges from 8.37 to 7.36 in January of this year. It is not a simple matter to establish what would be a fair rate. It must also be borne in mind that elements of savings are disregarded.
I am not arguing that the current system is a fair one but it is a complex matter to resolve and I intend this year to seek to resolve it. It will take some years to deal with the matter because a range of schemes are involved and assessments of this kind apply differently to each scheme. If the Deputy was really concerned about this matter he might have taken action before now bearing in mind that his party was in Government for most of the last ten to 15 years.
I wondered when the Minister would fall back on the old reliable of blaming the former Government. The Minister said he would change the system but I find it incredible that he talks about five and ten year gilts and Government securities. Elderly people do not have the money to invest in Government gilts. They deposit their money in the local post office, credit union or bank where they are charged 10 per cent on it. Rather than pay that rate many elderly people keep money in their homes and as a result are attacked and beaten up. I would ask the Minister to change the present system.
