Dáil Éireann debate -
Thursday, 17 Oct 1996

Vol. 470 No. 3

Written Answers. - Non-Contributory Old Age Pension Applicants.

Joe Walsh

Question:

127 Mr. J. Walsh asked the Minister for Social Welfare if he will have arrangements made to change an anomaly in the way his Department treats the rate of interest on investments paid to applicants for non-contributory old age pensions in means tests in view of the fact that the proven rate of interest is currently 3 per cent or 4 per cent and his Department's base it at the 10 per cent rate. [18868/96]

Minister for Social Welfare (Proinsias De Rossa)

The means tests used to determine entitlement to all social assistance payments 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.

During the debate on the Social Welfare Bill, 1996, I made it known that I was taking the opportunity of the introduction of the new one-parent family payment and the new disability allowance to commence the process of standardising the provisions for the assessment of capital across all the various social assistance payments. Under the new provisions, the first £2,000 of capital will be disregarded, the next £20,000 will be assessed at 7.5 per cent and capital in excess of £22,000, if any, will be assessed at 15 per cent.

The extension of these provisions to other social assistance payments will be done progressively over a period of time in view of the significant administrative implications involved. There are about 430,000 people in receipt of a social assistance payment at present and the means of all those with capital will have to be reviewed on the introduction of any changes in this area.

The substantial £2,000 initial disregard under the new arrangements will significantly reduce the effective interest rate for most recipients and will mean that claimants are not effectively assessed at 7.5 per cent until their level of capital approaches £25,000. The cost of extending these arrangements to other social assistance payments is in the region of £9.5 million in a full year.