Willie Penrose (Westmeath, Labour)
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Question 5: To ask the Minister for Social and Family Affairs the reason his Department continues to treat joint bank accounts as income for the purpose of assessing entitlement to a qualified adult allowance; if his attention has been drawn to the fact that such treatment can sometimes mean that pension lump sums and redundancy lump sums when saved in a joint account are assessed as income for the qualified adult allowance; his plans to change this practice, as requested by the senior citizens' parliament; and if he will make a statement on the matter. [4761/06]

Séamus Brennan (Dublin South, Fianna Fail)
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I consider that the current arrangements concerning entitlements to a qualified adult allowance are reasonable in the circumstances, particularly having regard to a number of important improvements I introduced in budget 2006.

As the Deputy is aware, in the case of contributory pensions and most other contributory and non-contributory social welfare payments, a qualified adult allowance, QAA, is payable in respect of a spouse or partner who is wholly or mainly maintained by the claimant.

Account is taken of the spouse or partner's income for the purposes of determining whether the spouse is wholly or mainly dependent. A spouse or partner's income includes income from employment, self-employment, income from other sources such as rents from the letting of property, income from occupational pensions and foreign social security payments, as well as income from capital.

Where capital is in the joint names of the claimant and spouse or partner, both parties are the legal owners of the capital. As a result, in such cases, my Department assesses half the capital against each, as the Deputy knows. Prior to budget 2006, a qualified adult allowance at the maximum rate was payable where the spouse-partner's income was less than €88.89 per week and tapered reduced rates were payable where income was greater than that but less than €220 per week. A qualified adult allowance was not payable where income exceeded €220 per week.

On budget day, as part of my reform programme, I was pleased to announce a number of further improvements to these means testing arrangements, including an increase in the spouse's income threshold for entitlement to the qualified adult allowance from €88.88 to €100 a week. This improvement comes into effect on different dates, depending on the scheme, during the course of 2006. Another improvement to the means testing arrangements features an increase in the upper threshold for entitlement to a tapered rate of QAA to €240 with effect from January last, and to €250 when the lower threshold increases to €100.

When these improved arrangements are in place, and assuming that the spouse-partner has no other means, a full rate QAA will be payable where the spouse has capital of up to €58,000. Capital between €58,000 and up to €95,000 will give entitlement to a reduced rate of QAA. This will mean that a pension or redundancy lump sum, to which the Deputy's question refers, lodged in joint names, would have to be in excess of €116,000 before it would affect entitlement to a full rate qualified adult allowance.

If at any time the amount of capital held by the spouse or partner, either jointly or singly, is reduced, they can request my Department to reassess their entitlement to a QAA payment.

The provisions I have outlined offer substantial flexibility to those couples where a pension or redundancy lump sum is a factor, but the matter will be kept under review.

Willie Penrose (Westmeath, Labour)
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I thank the Minister for his detailed and comprehensive reply. He is aware that this proposal emanated from the senior citizens' parliament, which is deeply concerned about it. That group has articulated a number of significant issues concerning the elderly who have served this country well. We should therefore pay particular attention to the matters raised by the group.

In a number of cases, spouses were fully deprived of the adult dependant allowance simply because the husband — in most cases, although it could be the wife in other cases — invested a lump sum in the joint names of himself and his wife, which he had received due to redundancy, early retirement, severance or a commuted lump sum. These payments, which are made in lieu of wages, salaries or pensions foregone, have been subject to tax provisions. They are clearly identifiable as a result of the man's employment so this is not something that is mixed into a basket of items which the Minister is unable to identify or trace. The documentation and back-up is there to make them easily identifiable. The investment of this type of lump sum in joint names is made purely for easy withdrawal in the event of the death or incapacity of the other party. The Department's interpretation is that a spouse in this situation is deemed to be the owner of half the value of the lump sum, as the Minister said, which can place her above the level at which she can qualify for the adult dependant allowance.

I acknowledge that the Minister has increased that level significantly. He has stated that before losing the full allowance, a pension or redundancy lump sum, lodged in both names, would have to be in excess of €116,000. The senior citizens' parliament considers this to be both unjust and illegal. Under the Building Society Acts the first person named on a joint account is deemed to be the sole owner of the account. This was the case even where mutualisation occurred. The people we are concerned about are likely to be spouses who remained at home to nurture and care for children and looked after the home while the man was the sole wage earner. That was the case in the old days, although it is not so much the case now. It is likely to apply to women who were forced to leave employment when they got married, under the terms of the marriage bar.

This issue does not apply to people who are on contributory old age pensions or spouses who have independent means through inheritance or other resources. I ask the Minister to review the situation in the context of people who are being deprived of something, although in legal terms it is not strictly theirs, because of a rampant process of imputation in the Department. The Minister's Department tends to impute matters without examining their background, which is an accountant's way of dealing with them. This issue should be reconsidered in the interests of fairness and equity to ensure that, in normal circumstances, those people will get that to which they are entitled.

Séamus Brennan (Dublin South, Fianna Fail)
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If the Deputy is asking me to review it——

Willie Penrose (Westmeath, Labour)
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Yes.

Séamus Brennan (Dublin South, Fianna Fail)
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——I will certainly do so. Now that he has raised the matter, I will have it monitored. There is, however, substantial flexibility here. If there is a joint account, say, from a redundancy or pension lump sum, and a couple is involved, one of whom is in receipt of a qualified adult allowance, they will have the choice of lodging the lump sum in their joint names or to one person. If they lodge it to one person, it will not be accessible and does not affect the other person who will get the qualified adult allowance even if the spouse has over €116,000 in his or her account, because that would not be counted. If, on the other hand, they put the lump sum into a joint account, the rule is that we assess half of that as the means of the person who is seeking the qualified adult allowance. They may be disbarred from it for that reason.

In short, there is no reason for any couple not to use the flexibility that is there. They can choose to put the money in the name of one person or in both names. If they choose the latter, it may affect their benefits but if they put it in one name, it almost certainly will not affect their benefits. Therefore, it is fairly logical what advice they should be given. Unfortunately, there are dotted lines to this in the whole legal area of probate, to which the Deputy has referred.

Willie Penrose (Westmeath, Labour)
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It is a complicated matter.

Séamus Brennan (Dublin South, Fianna Fail)
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I suspect that it is complicating life somewhat for them.

Willie Penrose (Westmeath, Labour)
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Yes, it is.

Séamus Brennan (Dublin South, Fianna Fail)
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I will monitor the situation but there is sufficient flexibility there for a lump sum not to be the cause of ruling out a person getting a qualified adult allowance, which was the Deputy's main concern. As I said in my initial reply, if they have it in a joint account and wish to reassess that and split it up, we will certainly co-operate with them.