Dáil Éireann debate -
Thursday, 21 Nov 2002

Vol. 557 No. 6

Written Answers. - Social Welfare Benefits.

Richard Bruton

Question:

219 Mr. R. Bruton asked the Minister for Social and Family Affairs the rules for valuing savings in assessing eligibility for means-tested social welfare payments; and if he has made provision for changes in these rules in 2003. [23063/02]

Michael Ring

Question:

224 Mr. Ring asked the Minister for Social and Family Affairs the way in which her Department calculate the interest earned on savings for assessment purposes; when this formula will be adjusted to reflect the current market returns; and her views on whether it is reasonable that people are being assessed as earning 10% interest, when they cannot get 3.5% actual interest return. [23069/02]

Minister for Social and Family Affairs (Mary Coughlan)

I propose to take Questions Nos. 219 and 224 together.

In assessing means for social assistance 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 fluctuate or whenever capital is moved from one investment option into another.

The Social Welfare Act, 2000 provided for the introduction of a new assessment method for capital and property which came into effect in October of that year. This new method applies to all social assistance schemes, other than supplementary welfare allowance.

Under this 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. These revised arrangements considerably benefited both single and married old age non-contributory pensioners by up to €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 equivalent 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. This new system continues 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. Any changes to the current method of assessment of capital and property would have significant financial implications and could only be considered in a budgetary context.