My husband started work in 1920 and paid insurance stamps until the mid1950s when it stopped being compulsory. When the scheme restarted, compulsorily, in the mid1960s, he was not allowed contribute because of his age. As a result, upon his retirement, he had no State pension. Surely, we should be entitled to something in the light of the earlier contributions?
Mrs A.C.P., Dublin
All of us now take the provision of a contributory State pension, funded out of the Pay Related Social Insurance payments we make throughout our working life, for granted. But unfortunately, for Mrs A.C.P. and her husband this has not always been the case. Until 1953, social insurance contributions contained no pension element. At that time, social insurance payments covered sick benefit, maternity, unemployment and disability, to the extent that they were covered at all.
Although contributions after 1953 contained a pensions element, social insurance contributions were not payable above a certain income threshold a threshold that tended to eliminate a good portion of white-collar workers.
It was only in 1973 that social insurance contributions were again levied on all employees. Of course, by that time, Mrs A.C.P.'s husband was deemed too old to contribute. The rules state that initial contributions, for pension purposes, must be made 10 years prior to the date of retirement generally no later than 56 years of age. There must be a minimum of 156 monthly payments and in order to get the maximum pension available the contributions must average 48 per year worked, according to the Department of Social, Community and Family Affairs.
It seems unfair that Mrs A.C.P.'s husband could have worked for 53 years and still not be able to benefit from a contributory pension, but that appears to be the case. I am assured the issue has even been taken before the Ombudsman previously, but without success. As Mrs A.C.P. points out in her letter, in the light of her family's inability to claim any State contributory pension the highly-publicised promises from the Government radically to improve the level of contributory pensions take on a hollow ring.
The best hope for Mrs A.C.P. seems to be for herself and her husband to apply for a non-contributory pension. Even if they have previously done so, it would be worth re-applying, as their circumstances may well have changed in terms of age, income and general health. If it was found that they were entitled even to minimal non-contributory pension payments, it would leave the couple open to claim for electricity, television, heating fuel, certain food allowances and possibly even telephone rental.
Regarding the recent communications in your column on the transfer of share ownership into joint names by spouses for the purposes of capital gains tax exemptions, can you tell me what would be the implications of the death of either partner in relation to capital acquisitions tax and probate tax, or indeed any other tax, in a situation where the couple had made wills leaving everything to one another?
Mr D.K., Dublin
The transfer of assets between spouses after death is a reasonably simple process. For the purposes of the Revenue Commissioners, probate tax is deemed to be nil and capital acquisitions tax (CAT) does not apply.
If, however, the shares were to pass to a child, a more distant relative or a non-relative, both probate tax and CAT apply to greater or lesser degrees.
Looking first to probate tax, the general rule is that the tax is levied on the deceased's estate at a rate of 2 per cent on all estates where the net value is £10,980 or over in 1998. There are certain exemptions in relation to property and pensions. As far as payment of the tax is concerned, there is a 1 per cent per month discount on the amount levied, for all bills settled within nine months; beyond that time, there is a similar 1 per cent a month interest charged on the bill.
In relation to CAT, children or the dependant children of deceased children, may inherit up to £188,400 free of tax; for siblings, nieces, nephews and all other grandchildren, the tax free limit is currently £25,120 and for all other more distant relatives or strangers, the threshold is £12,560.
In ascertaining the current value of the shares passing hands, the Revenue Commissioners will take the value as that in the statement of affairs, generally drawn up by the executor.
However, it is important to remember that the thresholds, although pertaining to estates of people who have died in 1998, are cumulative. All inheritances since June 1982 are taken into account when determining the tax bill under CAT and the tax itself is levied on a sliding scale.
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