Written answers

Tuesday, 5 July 2016

Department of Social Protection

Social Welfare Code

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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304. To ask the Minister for Social Protection the basis on which investments in shares, annuities, AVCs, insurance policies, including mortgage protection policies on a person's primary dwelling, are assessed for means testing purposes for various means tested payments including carer's allowance, disability allowance, dependent adult allowances, non-contributory pension, jobseeker's allowance and so on; and if he will make a statement on the matter. [19517/16]

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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My Department operates a range of means-tested social assistance schemes, where account is taken of the income and the value of capital, including shares, of the claimant and his or her spouse/ partner.

When assessing a claimant’s (or the claimant’s spouse/partner’s) income from earnings, social welfare legislation provides for various payments to be deducted from gross earnings for means assessment purposes including: PRSI contributions, payments to a trade union, and superannuation contributions, such as additional voluntary contributions (AVCs) and personal retirement savings accounts (PRSAs). Payments made in respect of life assurance policies, including mortgage protection policies, are not deducted from earnings for means assessment purposes.

With regards to property and capital, social welfare legislation provides that the yearly value of property (including capital) owned but not personally used or enjoyed is assessable for means testing purposes. Such property includes all monies 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. However, it does not include property such as the family home a person is personally using or enjoying i.e. residing in or, for example, a premises used by the claimant in carrying out a business.

The current assessment method, involving a disregard of an initial amount of capital and an increasing notional weekly value for amounts in excess of the disregarded amount, came into effect in October 2000 for most welfare schemes. The assessment formula is not designed to mirror potential interest or annuity rates available to investors or potential rental income from a property and no account is taken of any such income in the overall means assessment. The formula introduced in 2000 continued and enhanced the policy of ensuring that those with property and capital of modest amounts of capital receive the greater share of available support while those with larger amounts of capital are in a position to avail of it to contribute, at least partially, towards meeting their needs.

This property/capital formula applies regardless of the type of capital (including monies held in financial institutions or otherwise, the market value of shares or property). Insurance policies, such as mortgage protection policies, are not assessable as capital.

The assessment formula for most schemes, including jobseeker’s allowance for entitlement to increases for qualified adults for social insurance schemes, was last updated in 2005 – see following table - and included an increase in the initial amount disregarded from €12,697 to €20,000.

AMOUNT OF CAPITALWEEKLY MEANS ASSESSED
Up to €20,000Nil
€20,000 - €30,000€1 per each €1,000
€30,000 - €40,000€2 per each €1,000
Over €40,000€4 per each €1,000

For the purposes of the State pension non-contributory and carer’s allowance the amounts above are doubled in the case of a couple. From 2007, the amount disregarded in the case of disability allowance is €50,000, up from €20,000, and in the case of supplementary welfare allowance is €5,000, up from €520.

The general rule for assessment of pension funds or annuities is:

- Regular pension payments are treated as income for means purposes;

- The value of any cash otherwise available from a pension fund is assessed on the basis of the capital valuation of that fund; and

- Money invested in a pension fund is not assessable if it is not accessible to the claimant.

Any change to the means assessment of social assistance schemes would have to be considered in a budgetary context.

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