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Dáil Éireann díospóireacht -
Tuesday, 15 Apr 1997

Vol. 477 No. 5

Written Answers. - Social Welfare Benefits.

Brendan Smith

Ceist:

265 Mr. B. Smith asked the Minister for Social Welfare if he will raise substantially the level of savings to be excluded from calculation of a means test in relation to a non-contributory old age pension; if he will put in place a realistic figure of interest rate returns on savings; and if he will make a statement on the matter. [9708/97]

The means tests used to determine entitlement to all social assistance payments include an assessment of the value of any capital or investments which the applicant may have. Different methods of assessment have been applied in the case of the various social assistance schemes. For example, for non-contributory old age pension purposes an initial disregard of £200 is currently allowed, the next £375 is assessed at 5 per cent and the balance is assessed at 10 per cent, while for unemployment assistance and supplementary welfare allowance purposes, the first £400 is assessed at 5 per cent and capital in excess of this amount is assessed at 10 per cent.

The introduction of the new disability allowance payment in October 1996 and the one-parent family payment in January this year provided me with the opportunity to commence the process of standardising the provisions for the assessment of capital across all of the various social assistance schemes on a phased basis.

Under these new arrangements 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.

The recently enacted Social Welfare Act, 1997 provides for an extension of these revised capital assessment provisions to apply to non-contributory old age pensioners and also to recipients of pre-retirement allowance, carer's allowance, blind person's pension, widow's and the new widower's non-contributory pension. In view of the substantial numbers of recipients affected, the revised provisions will come into effect from October this year.

The substantial £2,000 initial disregard under the new arrangements will significantly reduce the effective interest rates 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 single old age non-contributory pensioners will qualify for the maximum rate of payment where they have capital of up to £6,160. The equivalent amount of capital for a couple will be £12,320, i.e., an increase of £6,345 on the existing provisions. An old age non-contributory pensioner will still qualify for a reduced rate pension where he or she has capital of up to £35,500 in the case of single person, or £71,100 in the case of a couple.

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