In Budget 2006, I was pleased to announce that I proposed to establish, in September 2006, a standardised State (Non-Contributory) Pension, replacing the old age pension and, for recipients aged 66 and over, blind pension, widow/er's pension, one parent family payment, deserted wife's allowance and prisoner's wife's allowance.
All the schemes in question feature a common means disregard of EUR7.60 per week, which has not increased since the 1970s. The means disregard for the new non-contributory pension will be EUR20 per week, an increase of EUR12.40 per week. Over 30,000 pensioners who are currently in receipt of a reduced rate of payment will gain from this change. The increase in the personal rate of payment will be up to EUR12.50 per week while the qualified adult rate, where applicable, will increase by up to EUR8.30 per week. I should add that these increases are in addition to the increase of EUR16 per week in the rate of the non-contributory pension which took effect from January this year. The increase in the common means disregard will benefit all those self employed, including farmers, who are in receipt of an old age (non-contributory) pension at the moment.
As part of my pension reforms, I also announced a specific additional disregard of EUR100 per week where the pensioner is in employment. This new disregard, relating to earnings from employment, is intended as an initial incentive to facilitate non-contributory pensioners who wish to continue working, or to re-enter the workforce.
The Budget did not provide for the proposed disregard to apply to income from self-employment or to any other forms of income. Apart from providing an incentive to take up employment, this approach recognises that persons in employment incur additional expenses such as travelling expenses, clothing etc. consequent on the employment. In contrast, any expenses necessarily incurred in carrying out any form of self-employment are always disregarded when calculating means from self-employment. This means that such earnings are assessed net of expenses incurred by the person in the course of their work e.g. on petrol/diesel, purchase of equipment and raw materials etc.
By any standards, the levels of increases and revised means test arrangements announced in the Budget are exceptional. The proposed modernisation of the current arrangements is also a further demonstration of our commitment to all those who are elderly, including those who continue self-employment, including farming.
