Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 30 Jun 1999

Vol. 507 No. 3

Written Answers. - Social Welfare Benefits.

Jack Wall


166 Mr. Wall asked the Minister for Social, Community and Family Affairs the plans, if any, he has to change the regulations of carer's allowance payments to ensure that they are not means tested. [16862/99]

The carer's allowance is a social assistance payment to carers on low incomes who live with and look after certain people who need full-time care and attention. At the end of March 1999 there were 11,659 carers in receipt of the carer's allowance. The estimated expenditure on carer's allowance in 1999 is over £59.5 million.

Following a detailed examination of the review of the carer's allowance, which was launched in October 1998, and its proposals on the improvement and development of the carer's allowance, arange of measures were introduced in the 1999 budget at an additional annual cost of over £18 million, to improve and develop the position of carers, that is, over 40 per cent increase in funding in one year.

The changes introduced in the 1999 budget included some improvements in the means test for carer's allowance. From August 1999, a disregard of £75 per week will be applied to the income of a single carer and the current disregard of £150 per week will be applied to the joint means of a married couple.

The submissions and proposals of all organisations representing carers were considered as part of the review process and are comprehensively addressed in the report. One of the major issues raised by these groups was the removal or easing of the carer's allowance means test.

The review examined the means test and considered that it should be maintained as a way of targeting scarce public resources towards those who are most in need. The means test which applies to the carer's allowance is one of the more generous tests associated with social welfare schemes. The position will be kept under review.

Eamon Gilmore


167 Mr. Gilmore asked the Minister for Social, Community and Family Affairs the notional rate of interest applied to savings by his Department when assessing the means of an applicant for old age contributory pension; when this rate was fixed by his Department; his views on whether this rate is fair in view of the collapse in the value of savings which elderly people have due to the very low interest which can be earned on these small scale savings; and if he will make a statement on the matter. [16863/99]

Entitlement to the old age contributory pension (OACP) is determined by reference to the level of PRSI contributions that claimants have throughout their working lives and is not affected by the claimant's means. However, where a person has not paid PRSI contributions or has insufficient PRSI contributions to qualify for OACP, they may apply for the means-tested old age non-contributory pension.

The purpose of the means test is to ensure that the limited resources available are directed at those most in need. Accordingly, in assessing means, account is taken of any cash income the person may have, for example, earnings from employment or self-employment, together with the value of any capital or property owned.

As there are substantial numbers of people in receipt of weekly social assistance payments, it would not be feasible to assess means from capital on the basis of actual returns from investments. This would necessitate 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. For this reason a notional value is ascribed to the capital owned.

Under the current arrangements for assessing capital and property the first £2,000 is disregarded, the next £20,000 is assessed at 7.5 per cent and the balance is assessed at 15 per cent. These arrangements, which were provided for by my predecessor, applied to old age non-contributory pensions with effect from October 1997.

While the formula for the notional assessment of capital includes rates of 7.5 per cent and 15 per cent, the actual effective assessment rates are much lower. For example, a single pensioner can have capital of up to £6,160 and a couple can have capital of up to £12,320 and still qualify for the maximum rate of old age non-contributory pension. In addition, a couple with capital of £20,000 would only be assessed with means of £600, giving an effective assessment rate of just 3 per cent. As only 2 to 4 per cent of pensioners have capital in excess of £20,000, this means that the effective assessment rates for the vast majority of pensioners are very much lower than the 7.5 per cent and 15 per cent rates which are used in the notional assessment formula.

The current formula which is used to determine the value of capital or property disregards a certain amount of capital from the assessment in recognition of sudden and unforeseen needs which may arise; attributes a value to the potential investment income which the capital or property is capable of generating; and recognises that, in addition to the value of the income which the capital or property is capable of generating, there is a further benefit to the claimant through the possession of that capital or property.

Accordingly, the current system is designed to ensure that those with modest amounts of capital receive the greater share of available support, while the small proportion of people with large amounts of capital or property should avail of it to contribute, at least partially, towards meeting their needs.
Nevertheless, the Department is reviewing the system in the light of the interest rates currently available on investments. However, it should be noted that simply reducing the assessment rates of 7.5 per cent and 15 per cent down to the current levels of interest available on bank deposit accounts would disproportionately benefit those who are well off and this consideration was among those informing the decision of the previous Government to set the assessment rates at their present levels.

Jim O'Keeffe


168 Mr. J. O'Keeffe asked the Minister for Social, Community and Family Affairs the cost of the free telephone allowance scheme; and the estimated additional cost of extending the scheme to all old aged pensioners. [16922/99]

The free telephone rental allowance is available to people, usually aged 66 or over, who are in receipt of a welfare type payment and who are either living alone or with certain categories of people, e.g. dependent children or a person with a disability. This condition is not, however, applied in the case of persons over age 75 who are in receipt of a qualifying payment.

The cost of the free telephone rental allowance in 1998 was £28,940,000. The estimated additional cost of extending the scheme to all old age contributory and non-contributory and retirement pensioners is £25 million.

Noel Ahern


169 Mr. N. Ahern asked the Minister for Social, Community and Family Affairs the cost of giving all women back credits for the years they stayed at home minding children, for example under 12 years; the examination, if any, carried out into this area; the number of women on a social welfare payment; and the number not on a social welfare payment who would qualify for a payment or larger payment if this was implemented; and if he will make a statement on the matter. [16951/99]

The Government recognises that women who leave the workforce to undertake family responsibilities in the home face difficulties in maintaining their social insurance record and has given a commitment under An Action Programme for the Millennium "to provide the mechanism to allow women, who take time out for family reasons, to continue contributions for pension purposes".

However as the Deputy will be aware, certain measures have already been introduced to address this problem. Special arrangements are already in place to help people who work in the home to qualify for an old age contributory pension. From 6 April 1994, years spent out of the workforce caring either for children up to the age of six increased to age 12 from 6 April 1995, or incapacitated people may be disregarded in calculating the person's yearly average number of contributions for old age (contributory) pension purposes. A maximum of 20 years may be disregarded in this way.
Provision is also made for the award of credited contributions in the year in which a person commences or ceases to be a homemaker. In addition, earnings of up to £30 per week where a person is engaged in part-time employment outside the home are also permitted. It is estimated that up to 250,000 people could ultimately benefit under the above arrangements.
I would also point out that in November 1997 I introduced new pro-rata pensions so that people who pay social insurance for a reasonable period of time will qualify for an old age (contributory) pension. A yearly average of between 15 and 19 contributions gives a pension of 75 per cent of the maximum rate, while an average of between ten and 14 gives a pension of 50 per cent. To qualify a person also needs to have a minimum of 260 paid contributions. This measure is of benefit to many women who have gaps in their PRSI records due to working in the home looking after a child, or caring full time for an elderly or incapacitated person.
However, in line with its stated commitment, the Government accepts that more work needs to be done in this area. My Department is now considering the issue on a three-fold basis.
Firstly, the issue is being examined in the context of the general review of the qualifying conditions for the old age (contributory) and retirement pensions which, it is hoped, will be completed shortly. Secondly, an in-depth examination of the provisions of the homemakers scheme and the estimated costs will also be undertaken by the Department, later this year. This examination will consider the present disregard arrangements and alternatives such as the award of credited contributions, the question of retrospection, and the cost of any change to the present arrangements.
Finally, the question of pension provision, both social welfare and occupational, is being considered by the Department in the context of the pensions board report on the national pensions policy initiative. In its report, Securing Retirement Income, the pensions board recommended that occupational pension coverage targets also include specific targets for increased coverage of women in both employed and self-employed areas.
The board considered that the proposed introduction of personal retirement savings accounts (PRSAs) would greatly facilitate the position of women with broken employment records due to childcare and other responsibilities. The working group, chaired by my Department, which was set up to examine issues relating to the introduction of PRSAs, is making good progress. The outcome of the group's deliberations will be reflected in the comprehensive pensions Bill which I hope to publish early in 2000.
There are, at present, just under 350,000 women in receipt of a social welfare payment, including pensions, unemployment payments, sickness and maternity benefits and supplementary welfare allowance. Child benefit, which of course is payable irrespective of employment status is also being paid to a further 483,000 people, of whom it is estimated that 95 per cent are women.