Plan for pension for all to ease anomaly

The revelation that the assets of pensioners who die are being checked against what they declared when applying for a means-tested…

The revelation that the assets of pensioners who die are being checked against what they declared when applying for a means-tested pension will have raised uncomfortable questions for many people.

These questions will concern what will happen when a pensioner in the family passes on and whether the estate will have to make a repayment - averaging £8,500 this year - to the Department of Social, Community and Family Affairs.

But it raises other questions, too, and these concern the whole matter of whether old people should be entitled to a pension as of right.

About 134,000 people get old-age or retirement pensions based on their PRSI contributions, and these are not means-tested. It does not matter what assets or other income they may have. The same applies to about 94,000 people getting the contributory widow's pension.

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But the story is different for the 106,000 people getting the non-contributory old-age pension. These are people who never built up PRSI contributions and who have to pass a means test to get the pension. Whether they get a full pension, a reduced pension or no pension at all depends on their assets.

For instance, the pension would start being reduced for a single person with savings of over £3,000.

Many of these people are farmers or self-employed people on small incomes. They face a complex system in which it is difficult for them to know what the effect of declaring an asset will be.

They may fear that such a declaration will cost them not only part or all of the pension but the medical card as well. Therefore, they do not tell the Department the whole story at the time of the means test.

Some keep money in the house for that reason, with the dreadful consequences we have become all too familiar with.

A way out of this situation would be to give everyone over 65 a certain minimum pension.

As it stands, most elderly people benefit from State pensions of one kind or another, and this proportion is likely to increase as more and more people are drawn into the PRSI net.

It may be objected that a pension for all would entitle wealthy people to a pension. But these people are almost certainly paying PRSI contributions which will entitle them to a contributory old-age pension when they retire - however unlikely the prospect of bumping into them in the weekly queue in their local post office.

By and large, those who would benefit would be people who do not have what could be regarded as a great amount of money but who have enough to deprive them of a means-tested pension at a time of life when their earning opportunities are slim.

A better way of dealing with the issue of pensioners' assets might be to implement the call by Muintir na Tire for elderly people to be allowed to deposit up to £10,000 in a financial institution without having to pay DIRT tax or losing social welfare or medical card entitlements.

This would encourage pensioners not to keep money in the house - and it was in response to security issues that Muintir made the suggestion - and it would remove the threat inherent in declaring assets.

In opposition, Fianna Fail thought that was an idea worth looking at.

There's just enough time to get a feasibility study done between now and the November Budget.