Dáil Éireann debate -
Tuesday, 18 Jun 2002

Vol. 553 No. 2

Written Answers. - Pension Provisions.

Noel Ahern

Question:

659 Mr. N. Ahern asked the Minister for Social, Community and Family Affairs her views on the assessment of means for non-contributory old age pension, as many pensioners do not get anything near 10% interest on their savings; the changes in the exemption disregard amount in recent years; and if she will make a statement on the matter. [13267/02]

Minister for Social, Community and Family Affairs (Ms Coughlan)

In assessing means for old age, non-contributory, pension purposes, account is taken of any cash income the person may have, together with the value of capital and property. For the purposes of assessing the value of capital and property a notional assessment method is used. The use of the notional method avoids the necessity of 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.

Up until 1997, the assessment rates for savings that applied to old age, non-contributory, pensions were: first €253.95, £200.00 – nil; next €476.15, £375.00 – 5%; balance – 10%.

Gradually between 1997 and 2000 the method of assessing capital was streamlined across the various social welfare schemes. As the most recent step, my predecessor made provision in the Social Welfare Act, 2000, for the introduction of a new assessment method for capital which came into effect from October of that year. This new method applies to all social assistance schemes, other than supplementary welfare allowance.

Under the new method the first €12,697.38, £10,000, of capital is disregarded; capital between €12,697.38, £10,000, and €25,394.76, £20,000, is assessed on the basis of €1.27, £1, weekly means for each €1,269.74, £1,000, of capital; capital between €25,394.76, £20,000, and €38,092.14, £30,000, is assessed on the basis of €2.54, £2, weekly means for each €1,269.74, £1,000, of capital; and capital above €38,092.14, £30,000, is assessed on the basis of €5.08, £4, weekly means for each €1,269.74, £1,000, of capital.

The revised arrangements introduced in 2000 considerably benefited both single and married old age, non-contributory, pensioners by up €27.93 per week in the case of single pensioners and €41.90 per week in the case of married pensioners.

Currently, assuming that persons have no other means, a single pensioner with capital of up to €20,315.80 will qualify for a full pension while single pensioners with capital of up to €63,486.89 will qualify for a minimum pension. The equiv alent figures for married pensioners are €40,631.61 and €126,973.80, respectively.

The effective rate of assessment of capital depends on the level of capital: for example, it is less than 3% for a pensioner couple with savings up to €25,000, and less than 4% for a pensioner couple with savings up to €63,000. The new system continued and enhanced the policy of ensuring 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 should avail of it to contribute, at least partially, towards meeting their needs.

The arrangements introduced in 2000 were also, from the point of view of both customers and departmental staff, relatively simple to use and to understand. However, while the introduction of the euro has not changed the provisions in any way, a degree of mathematical complication has inevitably occurred. My Department is currently examining a range of options designed to simplify the present system and I look forward to considering these as part of the budget process later this year, having regard to available resources.