Mark Wall (Kildare South, Labour)
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401. To ask the Minister for Employment Affairs and Social Protection the cost of abolishing the means-test for the State pension (non-contributory). [40596/25]

Dara Calleary (Mayo, Fianna Fail)
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My Department provides income supports through a mixture of contributory payments (which are based on a person's social insurance record) and means-tested social assistance payments. To receive either a contributory or social assistance payment a person must qualify for that payment in their own right.

The State Pension (Non-Contributory) is a means-tested social assistance payment for people aged 66 and over, habitually residing in the State, who do not qualify for a State Pension (Contributory), or who only qualify for a reduced rate contributory pension based on their social insurance record.

The system of social assistance supports provides payments based on an income need. The means test plays a critical role in ensuring that the recipient has a verifiable income need and that resources are targeted to those who need them most.

Social welfare legislation provides that means tests take account of the income and assets of the person (and their spouse or partner, if applicable) applying for the relevant scheme. The means assessment includes income from sources such as employment, self-employment, occupational pensions and maintenance payments. It also includes property owned, other than the family home, and capital such as savings, shares, and other investments. Income earned under the rent-a-room tax relief scheme is exempt from the means test.

Abolishing the means test for the State Pension (Non-contributory) would effectively be a move towards a Universal Pension where payment would not be based on either social insurance contributions or a verifiable income need. The Commission on Pensions, in its report in 2020, estimated that the additional cost of introducing a Universal Pension at that time was an additional €2 to €3 per year depending on the design of the scheme. This estimated cost would have increased in the intervening period due to increases in payment rates and the number of recipients due to demographics. 

As the abolition of the means test for the State Pension (Non-Contributory) would require fundamental changes right across the tax and social protection systems, it is not possible for my Department to provide the costing sought by the Deputy.

I trust this clarifies the matter for the Deputy.

Mark Wall (Kildare South, Labour)
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402. To ask the Minister for Employment Affairs and Social Protection the cost of basing the means-test for the State pension (non-contributory) rate on individual income, rather than household income. [40597/25]

Dara Calleary (Mayo, Fianna Fail)
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The State Pension (Non-contributory) (SPNC) is a means-tested payment for people aged 66 and over, habitually residing in the State, who do not qualify for a State Pension (Contributory), or who only qualify for a reduced rate contributory pension based on their social insurance record.

An applicant for SPNC can have savings or assets of up to €20,000. Also an applicant is entitled to a €200 disregard on earnings meaning they can have earnings of up €200 per week from paid employment and still qualify for a full SPNC. After this, the first €30 per week of means does not affect the rate of the pension. After that first €30, the pension is reduced by €2.50 for every €2.50 of means. If a person’s assessed weekly means is over €305.00, they will not be eligible to receive the SPNC.

If a claimant is married, in a civil partnership or cohabiting, the Department will assess the couple's means when carrying out a means test for a social assistance payment. This is the case even if only one of the couple is actually claiming a payment. In the case of State Pension (Non Contributory), the total weekly means of the couple are calculated and, after disregards, halved.

The system of social assistance supports provides payments based on an income need. The means test plays a critical role in ensuring that the recipient has a verifiable income need and that resources are targeted to those who need them most.

My Department has over 90 schemes and a significant number are means-tested schemes, each with their own means test. The means test plays a critical role in determining whether an income need arises as a consequence of a particular contingency – such as disability, unemployment or caring.

Social welfare legislation provides that, for social assistance schemes, all income and capital (such as savings, investments and property other than the family home) belonging to the claimant and his or her spouse/partner, where applicable, are assessable for means assessment purposes.

The purpose of the means test is to ensure those individuals and couples with limited or no income or assets receive the most support from the State, while those with higher levels of income or assets provide for their own needs to a greater extent.

Implementing an individual, rather than household, means test for social welfare payments could give rise to a situation where a person with significant household income would have an entitlement to a payment. This would not be compatible with the overarching policy of ensuring that social welfare expenditure is targeted to those who need it most. It could also give rise to a situation where an existing recipient, qualifying under moiety currently, would receive or reduced payment, or fail to qualify, if their means were assessed in isolation.

The Department is unable to provide a costing in regards to this proposal as it does not have sufficiently granular means data to calculate a costing estimate.

Any changes to the means test could have significant cost implications and would have to be considered in an overall budgetary and policy context.