Dáil Éireann debate -
Wednesday, 27 Nov 1996

Vol. 472 No. 2

Written Answers. - Means Assessment.

Mary O'Rourke

Question:

54 Mrs. O'Rourke asked the Minister for Social Welfare the plans, if any, he has to take account of actual interest rates, rather than a notional rate when calculating income from deposit rates in relation to means test for social welfare payments; and if he will make a statement on the matter. [22291/96]

Brendan Smith

Question:

80 Mr. B. Smith asked the Minister for Social Welfare the proposals, if any, he has to improve the savings/means limits in relation to calculation of entitlement in respect of non-contributory old age pensions; and if he will make a statement on the matter. [22261/96]

Minister for Social Welfare (Proinsias De Rossa)

I propose to take Questions Nos. 54 and 80 together.

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. 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 significant number of recipients as rates fluctuate.

During the debate on the Social Welfare Bill, 1996, I made 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. The means of all social assistance recipients 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.