Vol. 474 No. 1
151 Mr. J. Walsh asked the Minister for Social Welfare the proposals, if any, he has to utilise actual market interest rates rather than arbitrary interest rates when making an assessment of savings as part of a means test; and if he will make a statement on the matter. [2619/97]
162 Mr. J. Walsh asked the Minister for Social Welfare the proposals, if any, he has to utilise actual market interest rates rather than arbitrary interest rates when making an assessment of savings as part of a means test; and if he will make a statement on the matter. [2623/97]
I propose to take Questions Nos. 151 and 162 together.
The means tests used to determine entitlement to all social assistance schemes include an assessment of the value of any capital or investments which the applicant may have. Different methods of assessment are applied in the various social assistance schemes. For example, under current provision, in the case of unemployment assistance and supplementary welfare allowance, the first £400 is assessed at 5 per cent and capital in excess of this amount is assessed at 10 per cent, while for old age pension purposes, an initial disregard of £200 is allowed, the next £375 is assessed at 5 per cent and the balance is assessed at 10 per cent.
There are about 430,000 people in receipt of a social assistance payment at present. In view of the large number of recipients involved, it would not be feasible from an administrative point of view to assess means from capital on the basis of actual returns from investments as this would necessitate frequent reviews of the entitlement of a very significant number of recipients as rates fluctuate.
The introduction of the new one-parent family payment and disability allowance, which were provided for in the Social Welfare Act, 1996, provided me with the opportunity to commence the process of standardising the provisions for the assessment of capital across all the various social assistance payments. Under the new provisions, the first £2,000 of capital is disregarded, the next £20,000 is assessed at 7.5 per cent and capital in excess of £22,000, if any, is assessed at 15 per cent.
I am extending these revised capital assessment provisions in this year's budget to include the old age (non-contributory) pension, blind person's pension, pre-retirement allowance, carer's allowance, widow's and the new widower's (non-contributory) pension schemes, with effect from October.
The substantial £2,000 initial disregard under the new arrangements will significantly reduce the effective interest rate for most recipients and will mean that claimants, in general, are not effectively assessed at 7.5 per cent until their level of capital approaches £25,000. These new arrangements also mean that a non-contributory old age pension couple will now be able to have up to £12,320 in capital and still qualify for the maximum rate of pension, i.e. an increase of £6,345 on the existing provisions.
As the means of all social assistance recipients with capital will have to be reviewed on the introduction of any changes in this area, the extension of these provisions to the remaining social assistance payments will be done progressively over a period of time in view of the significant administrative implications involved.
