Mr. Niall Egan:

I thank the committee for the opportunity to discuss the broad area of means policy and assessment in the Department. The Department operates a number of social assistance schemes where, in order to qualify for the payment, the person must satisfy a means test. A means test is a way of checking if a claimant has enough financial resources to support themselves and determine what amount of social assistance payment, if any, they may qualify for. Social assistance schemes in operation in the Department cover all the Department’s programmes throughout the course of life, from supporting children, through supporting those of working age and into supporting people in retirement. Schemes include jobseeker’s allowance, farm assist, one-parent family payment, disability allowance, carer’s allowance and the non-contributory State pension. These schemes help to ensure people without adequate means are provided with income supports by the State in order to alleviate poverty. The CSO’s Survey on Income and Living Conditions, SILC, shows poverty rates both before and after social transfers and it shows Ireland’s social protection system is extremely effective in alleviating poverty. Ireland continues to be one of the EU’s best performing countries for the poverty-reduction effect of social transfers. Without social transfers, the at risk of poverty rate would have been 34.1% rather than the current rate of 10.6%. This represents a poverty reduction effect of 68.9%. That is from this month's recently published SILC statistics.

As part of this overall system, means testing certain payments ensures the State’s resources are directed towards those who are in the most need of financial support. The Economic and Social Research Institute, ESRI, has regularly reported the benefits of targeted, means-assessed interventions as being particularly effective in the context of poverty reduction. These social assistance schemes differ from the Department’s social insurance schemes, which are dependent on a person’s social insurance contribution. However, while the personal rate is not means tested, any increases for adult dependants, which may be awarded to a person on a social insurance payment will include a means test in respect of the qualified adult. Means assessments take income and capital, such as savings, investments and property other than the family home, into consideration. For social assistance schemes, income and capital belonging to the claimant and their partner, where applicable, is generally assessable for means assessment purposes. Cash income that is assessed includes any income from employment or self-employment, income from a social security pension from another country and rental income. Capital includes all moneys held in financial institutions or otherwise, the market value of shares as well as houses and premises owned by a claimant which may or may not be put to commercial use. Property personally used, such as a claimant’s home, is not included in the means assessment.

All the claimant’s sources of income are added together and considered when deciding whether they qualify for a means-tested payment or the level at which they are paid. Many schemes support payment at a variety of rates linked to the assessed level of means, thus avoiding cliff edges in relation to a payment. Decisions on means assessments are made by deciding officers. If a person is not satisfied with the decision, they may ask for a review of the decision or make an appeal to the social welfare appeals office. The specific rules for assessment of means can vary from scheme to scheme depending on the nature and purpose of the scheme. Sometimes a certain amount of income or income from particular sources is not considered for a particular scheme, and these are usually referred to as income disregards. There are earning disregards for most schemes as well as general disregards specified in legislation which include certain social welfare income, foster care allowance, specific compensation payments and payments on moneys received from an approved charity.

The Department keeps means tests under regular review. The Minister has introduced a number of significant changes in this area in recent years. These include: providing for higher earnings disregards for disability allowance, blind pension and the one-parent family payment; expanding the list of agri-environmental schemes that qualify for a disregard, which was increased in recent budgets; and the introduction of the rent-a-room disregard to enable recipients to support those arriving from Ukraine and others in what is a tight housing market. The latter disregard was expanded recently. In 2023, significant changes were introduced to means eligibility rules for fuel allowance, which have resulted in over 35,000 additional households joining the scheme so far. In 2022, there was a significant increase in the income and capital disregards for carer's allowance. This enables more carers with modest incomes to become eligible for the scheme and allows carers and their families to earn more from employment while retaining their payment. As part of budget 2024 this was further increased to €450 for a single person and €900 for couples from June of this year. To support access to third level education, the Minister recently introduced an income disregard linked to UCD's largest scholarship programme.

The Minister has initiated a review of means testing in the Department. The aim is to complete it by the end of this quarter in order for it to be submitted for the Minister’s consideration. It is the Minister’s intention that the report will be published once she has considered it in detail. The outcome of the review will be used to inform decisions regarding any further changes to means testing, including in the run-up to budget 2025, although all prospective changes to means-testing arrangements will have to be considered in both an overall policy and budgetary context.

We look forward to hearing the committee’s views on means testing and we are happy to assist with any questions.