Written answers

Tuesday, 24 May 2005

Department of Social and Family Affairs

Social Welfare Benefits

9:00 pm

Photo of Seymour CrawfordSeymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 244: To ask the Minister for Social and Family Affairs the scale which is used to decide the benefit that will be placed against investment of over €20,000 in the case of the widow's non-contributory pension; if it will be at a realistic level; if it will be a notional figure (details supplied); and if he will make a statement on the matter. [17004/05]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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On budget day, I was pleased to announce that the amount of capital disregarded for means test purposes for a wide range of schemes, including widow-widower's non-contributory pension, will be increased to €20,000 from June next, an increase of over €7,300. The enhanced disregard applies to all capital regardless of where it is held, whether in an special savings investment account, a credit union, with An Post or any other account with a bank or other financial institution. The new arrangements will mean, for example, that a non-contributory widow-widower pensioner, with no other means, can have capital of up to €28,000 and still qualify for a pension at the maximum rate.

A pensioner aged 66 or over can have capital of up to €76,000 —€70,000 in the case of a widow or widower aged under 66 — and still qualify for a minimum pension. For the purposes of assessing the value of capital and property, a notional assessment method will continue to be used. The use of the notional method avoids the necessity of frequent reviews of the entitlements of a very significant number of recipients whenever interest rates fluctuate or whenever the capital is moved from one investment option into another. As part of my review of the current capital arrangements, I also took the opportunity to improve and simplify the notional assessment formula.

Under the new method the first €20,000 of capital will be disregarded; capital between €20,000 and €30,000 will be assessed on the basis of €1 weekly means for each €1,000 of capital; capital between €30,000 and €40,000 will be assessed on the basis of €2 weekly means for each €1,000 of capital; and capital above €40,000 will be assessed on the basis of €4 weekly means for each €1,000 of capital.

The new system reduces the effective rate of assessment at all levels of capital while continuing with the policy of ensuring that those with lower amounts of capital receive the greater share of available support. These improvements are designed to ensure that social welfare means testing arrangements do not act as a disincentive to claimants to become savers or penalise those who have been regular savers in the past.

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