Dáil Éireann Debate, Thursday - 6 April 2006
256 Mr. G. Mitchell asked the Minister for Social and Family Affairs if he will amend the rules regarding the means test for senior citizens applying for the non-contributory pension where a person can have up to €190,500 disregarded from the proceeds of the sale of their home, but if they borrow or sell a share of their home they are not entitled to any disregard; and if he will make a statement on the matter. [13992/06]
View answerI assume the Deputy is referring to equity release products. These and other similar products allow home owners to benefit from some of the capital tied up in their homes, while continuing to live in them. The introduction of these products has implications for social assistance payments where the claimant is aged 65 years or over.
Social assistance payments are designed to provide financial support for people who do not qualify for one of the contributory pension or benefit schemes. Entitlement to these payments is based on a means test which is intended to ensure that available resources are targeted at those most in need. Accordingly, any resources that a claimant and his or her spouse or partner may have are assessed. These resources may include cash income, property or an asset which could bring in money or provide the claimant with an income.
Sums of money raised through equity release schemes are assessable under the Department's capital assessment rules. Under this method the first €20,000 of the capital is disregarded; the next €10,000 is assessed at €1 per €1,000; the next €10,000 is assessed at €2 per €1,000 and any sums remaining in excess of €40,000 are assessed at €4 per €1,000. These allowances are doubled in the case of a couple. Sums of money which are spent or disposed of immediately are not included in the means assessment.
The sale of residence provisions, to which the Deputy also refers, are designed to facilitate certain persons in receipt of a means tested payment from this Department in selling their principal residence for the purpose of buying or renting alternative accommodation; moving into a private nursing home; moving in with a carer in receipt of carer's allowance or carer's benefit in respect of them or moving to sheltered or special housing in the voluntary, co-operative, statutory or private sectors. The remaining balance of the gross proceeds of the sale of the residence is exempt from the means test, subject to a ceiling of €190,500.
These provisions apply to recipients of disability allowance, blind person's pension and those over 66 years of age who receive a means tested payment from this Department and are intended to facilitate choice for certain people who might previously have been living alone or in unsuitable accommodation. In contrast, equity release arrangements are designed to provide an income stream for older people and it is considered appropriate that these should be assessed for means test purposes.
