Mark Wall (Kildare South, Labour)
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124. To ask the Minister for Employment Affairs and Social Protection if he will consider changing the means-test for the state pension (non-contributory) from gross to net income; and if he will make a statement on the matter. [50029/25]

Dara Calleary (Mayo, Fianna Fail)
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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.

My Department has over 90 schemes of which a significant number are means-tested schemes, each with their own means test, on both a statutory and non-statutory basis. The means test for any scheme, including State Pension (Non-Contributory), 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 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 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.

When assessing income from employment for the purposes of social assistance schemes, PRSI contributions, pension contributions and trade union subscriptions are deducted from gross earnings. These deductions from insurable employment are set out in Chapter 6 of Part 3 of Statutory Instrument 142 of 2007.

If overall net rather than gross income was assessed for State Pension (Non-Contributory), it would mean that changes in tax rates or tax reliefs could change the claimant’s entitlement and significantly increase the complexity of the means assessment and inevitably prolong the assessment process.

People pay varying amounts of tax depending on their level of earnings and personal circumstances. Allowing taxation as a deduction in the means test could mean that the social welfare system, in effect, refunds a person's tax liability. Also, a person may see the benefit of a reduction in their tax bill, which would increase their net pay, eroded through an associated reduction in their social welfare payment.

It would also have significant budgetary implications and would give rise to inconsistencies in how means tests are applied across schemes.