Vol. 508 No. 4
42 Mr. J. O'Keeffe asked the Minister for Social, Community and Family Affairs if he will change the unjust system of assessment of means for non-contributory pensioners and others which involves assessing notional income at up to 15 per cent of their bank moneys and other capital. [19176/99]
I have already indicated to the Deputy that my Department is reviewing the current method of assessing capital, which was introduced by my predecessor. As part of this review, a recent sample survey was carried out to identify the amounts of capital held by old age pensioners. This survey indicates that of the 35,000 pensioners who have capital, approximately 24,600, or 70 per cent, have less than £5,000, while some 31,000, or 88 per cent, have less than £10,000. Only about 4 per cent of pensioners surveyed had capital in excess of £20,000.
In the light of the survey findings, my Department is currently examining options for improving the method of assessing capital. However, in addition to benefiting those already in receipt of old age – non-contributory – pensions, any reduction of the current assessment rates would also be of benefit to pensioners with substantial amounts of capital who are not currently entitled to payment. I would be anxious, therefore, to ensure that any possible changes to the current rules would benefit those with modest amounts of capital, while the system should continue to ensure that the small proportion of people with large amounts of capital should avail of it to contribute, at least partially, towards meeting their needs. As any relaxation of the current rules would have financial implications, such a change could only be considered in a budgetary context.
Does the Minister accept that deposit interest rates are at an historic low and that the position has changed totally since this system was put in place and last revised about five years ago? Does he accept that because of historically low interest rates we now have a system which is unfair and unjust and needs to be changed? Does he accept this view has also been adopted by the all party Oireachtas committee? Will the Minister give a commitment that this system will be changed soon?
We have had this discussion before and I will not go into the detail of it again. I have accepted that, on the face of it, the figures of 7.5 per cent and 15 per cent look excessive. However, I said before – I have looked at this thoroughly, including the files and the reason the figures were introduced at that level – they do not take into account the substantial initial disregard of £2,000. That was devised by my Depart ment and accepted by then Minister, Deputy De Rossa, because it would assist people with modest capital. However, in the light of changing circumstances, I previously indicated – obviously I accept the view of the all-party committee – that perhaps this should be examined. That is one of the reasons we instigated this review and why the Department carried out this survey. We are examining that. There are a number of suggestions before me which I will consider in the context of the forthcoming budget. I cannot pre-empt what may happen at that stage. It is probably better that the assessment is as transparent as possible so people fully understand it. I do not think people understand the current system, which looks excessive. However, the net effective rate is in the region of only about 3 per cent for those couples with capital under £20,000.
Does the Minister accept that as a policy objective we should encourage people to save in a secure manner? An unfair system encourages people to keep their savings under the bed, which is essentially what they do down the country. That is not sensible in this era of crime.
I accept that. It has always been the view of successive Governments and Ministers that we should endeavour to assist people. For example, the £2,000 disregard was introduced to allow people to have capital in the event of death or whatever. Obviously, this may need to be considered in changing times. It is important, having looked at the practice in other European countries, that the system of assessment here is much more favourable, particularly compared with our nearest neighbour. In Sweden, Norway, Finland, Austria, Switzerland, Spain and Portugal, claimants must use all their assets and capital before they receive social assistance. In other countries, entitlement to social assistance ceases once one's assets exceed a very small disregard. We have a favourable assessment procedure which should be continued. However, we are trying to make it more transparent and understandable to the public.
