Dáil Éireann Debate, Tuesday - 25 July 2023
681. Deputy Pádraig O'Sullivan asked the Minister for Social Protection if consideration will be given to increasing the capital disregard threshold of €20,000 as part of the means assessment for a personal rate State pension (non-contributory) entitlement; and if she will make a statement on the matter. [35769/23]
View answerThe Department of Social Protection provides income supports through a mixture of contributory payments (which are based on a person's social insurance record) and means-tested social assistance payments. The State Pension (Non-contributory) is a means-tested payment for people aged 66 and over, habitually residing in the State, who do not qualify for a State Pension (Contributory), or who only qualify for a reduced rate contributory pension based on their social insurance record.
The system of social assistance supports provides payments based on an income need. The means test plays a critical role in determining whether or not an income need arises as a consequence of a particular contingency – such as disability, unemployment or caring. This ensures that the recipient has a verifiable income need and that resources are targeted to those who need them most.
Social welfare legislation provides that means tests take account of the income and assets of the person (and their spouse or partner, if applicable) applying for the relevant scheme. The means assessment includes income from sources such as employment, self-employment, occupational pensions and maintenance payments. It also includes property owned, other than the family home, and capital such as savings, shares, and other investments.
The assessment of capital reflects an expectation that people with reasonable amounts of capital and property are in a position to use that capital, or to realise the value of the property, to support themselves without having to rely solely on a means-tested welfare payment.
While savings are assessed in the means test, most social protection schemes have a general capital disregard, meaning the full amount of the capital is not assessed.
In the case of the means assessment for a personal rate of the State Pension (Non-contributory), the first €20,000 (€40,000 for a couple) of capital an applicant holds is fully disregarded; the next €10,000 is assessed at €1 per thousand, the next €10,000 is assessed at €2 per thousand, with the remainder assessed at €4 per thousand.
The capital assessment formula is not designed to reflect interest or annuity rates available to investors and no account is taken of interest or dividend payments received in the means assessment.
I have introduced a number of changes to means testing in recent years, including providing for higher income disregards for Disability Allowance and Carer's Allowance. These disregards ensure that, where people are in receipt of a social assistance payment and are working, their income from work, to the level of the income disregard, is not assessed in the means test.
Any changes in this regard would have to be considered in the overall policy context, however I have committed to a carrying out a broad review of means testing this year which will include consideration of means test provisions. This review is ongoing and I hope to complete it in Quarter 4.
I trust this clarifies the matter for the Deputy.
