Exceeding savings threshold - Non-Contributory Pension

makeorbrake

So my parents are on the non-contributory pension. With that, there is a restriction on savings - 20k per person. They're over by a few thousand and have gotten a letter requiring them to submit bank statements.

For years I've been telling them to keep any excess in cash. Lest anyone think that what I've suggested to them is unethical let me explain that these are the most fiscally responsible people I know. They're not the most financially savvy - but the one thing that they taught me was to be financially responsible. They shouldn't have any excess - but they do because they are the model of financial responsibility.

So...given that background my question is what happens now? They're elderly and of course they're worried that the pension will be cut or whatever else.

Does anyone have any experience as to what happens in cases such as this - as I'm at a loss as to how to advise them.

The Nutty M

A 93 year old man I know got that letter a week after his birthday. He went to his solicitor who was going to write to the department with all his details. The solicitor visit was December 21 and there has been no correspondence since.

Time will tell what happens.

hawthorne

https://www.boards.ie/discussion/2058233877/exceeding-savings-threshold-non-contributory-pension

Advising folks to keep cash at home and not declaring it is a bad advise. It is simply fraud.

As a pensioner on the non contributory pension you can save up to 20k per person- or 40K per couple. You have to declare everything.

If you are over the limit, the pension will be reduced. It will be reduced until you are under the limit again.

gov.ie - Operational Guidelines: State Pension Non-contributory (www.gov.ie)

Quote from the link:

Weekly means assessment:

First €20,000.00Nil

Next €10,000.00€1.00 per €1,000.00

Next €10,000.00€2.00 per €1,000.00

Balance€4.00 per €1,000.00

spuddy4711

They could each “gift” you €3000 every year.

makeorbrake

So if they spend it right now - what happens? The reality is that they've been frugal - and every so often they accumulate some cash and spend it on house renovations, etc.

duffman13

You said a couple of k over, it would be a significant reduction but every thing counts.

Generally, if you can clear down some excess and get statements on 1st of March, that would be ideal. Big tickets items like home insurance, Car Insurance, Property Tax, Car Tax can all be paid annually, so if not already doing so, get them to pay anually now. If in a contract not due to expire soon for utilities, a couple of small lump sum payments will reduce the balance of savings.

As mentioned they could each gift you 3k which you could return at a later point if they need it.

Another option is investments, first 20k is exempt. Find something extremely stable and invest 20k in it?

TooTired123

Please don’t encourage your elderly parents, who have been honest and true all their lives, to commit fraud at this hour of their lives.

If they’re both on a non contributory pension then that means that for whatever reason, they didn’t make enough PRSI/SI contributions in their lifetime to qualify for a state con pension.

So at 66 they asked the state to help support them financially as they approached retirement. The State has a responsibility to examine the possibility that they could support themselves with no help at all, so requires evidence of savings investments etc.

Each can have 20000 and still get the full non con pension. If you have 30000 then the pension is reduced by 10. If you have 40000 it’s reduced by a further 20. If you have 50000+ then it is reduced by a further €4 per 1000.

This is very fair. If your parents have so much savings that they lose their entire pension then they can apply once again once the savings have reduced sufficiently for them to reqaulify.

Means testing is very black and white. Unless they can show that they don’t in fact have the money then the pension will be reduced accordingly.

TooTired123

https://www.boards.ie/discussion/comment/118661969#Comment_118661969

The €3000 gifts will be classed as “depriving yourself of an asset” so will be included in the means test. Investments are also included in the means test.

TooTired123

https://www.boards.ie/discussion/comment/118661884#Comment_118661884

This money will be included in the means test. It will be classed as depriving yourself of an asset.

hawthorne

Any large amounts of money given away as "presents" will be declared as "willfully depriving oneself of assets" and will be still seen as property of the pensioner in a means test. Same thing if you just gamble it away or waste it on a lavish lifestyle.

You can, however, spent that additional money on home improvements like new triple glazed windows or better insulation. You can buy yourself a new car as well. Any improvement or reasonable spending ( as opposed to wasting the money) is fully legal. So there are ways out of this situation.

TooTired123

Sometimes it’s hard to break the habits of a lifetime but I wish that adult children would encourage parents to use their savings to make their lives as comfortable as possible rather then hoarding money “for a rainy day”.

Of course it’s prudent to have enough put aside for an emergency, and I understand the need to have enough to cover your own funeral. It’s also understandable to want to have something to offer a family member if they have an emergency.

So €20000 would definitely cover all those things and that’s why that amount is disregarded in the means test.

I regularly encounter elderly people with considerable savings who are reluctant to spend any money on household improvements which would make life much more pleasant (new windows, doors, security, downstairs bathroom, stairlift, more comfortable car etc) but who are excluded from the Local Authority grants because of the means test.

I encounter elderly people who are angry and won’t go to the GP because they are excluded from the medical card scheme. They have GP visit cards but don’t want to pay for prescriptions even with the Drugs Payment Scheme.

Geuze

https://www.boards.ie/discussion/comment/118666369#Comment_118666369

If they are over 70, and don't qualify for the GMS medical card, then their income exceeds 550 / 1,050 per week.

In that case they can afford any pharma.

TooTired123

https://www.boards.ie/discussion/comment/118666387#Comment_118666387

Yes you and I know that but lots of them are deeply resentful of having to pay a max of €100 per month for drugs. I have experienced full blown tantrums about it.

starbaby2003

https://www.irishtimes.com/business/personal-finance/can-state-come-looking-for-state-pension-repayment-after-mother-dies-1.4801057

It sounds like the can also ask for the overpayment back.

TooTired123

https://www.boards.ie/discussion/comment/118666542#Comment_118666542

They absolutely can, and do. The fact is that this money came out of public funds, and if was paid out when it shouldn’t have been, then it has to go back in. It doesn’t matter whose fault it is that it was paid out. It has to go back.

When the Dept write to you offering you a payment the letter stipulates that if there is any “change in your circumstances” that the onus is on you to notify them.

BrianD3

https://www.boards.ie/discussion/comment/118665188#Comment_118665188

How is living a lavish lifestyle "depriving oneself of capital". I'd love to see how that would go in court. One person's lavish is another person's frugal.

Ginger83

Any purchase should be shown on a bank statement with invoice or receipt to verify.

Withdrawing and spending large amounts of cash will leave more questions to be answered.

hawthorne

https://www.boards.ie/discussion/comment/118667116#Comment_118667116

I know what you mean. It might be difficult to prove in some borderline cases. But if you are in and out of the bookies 24/7/365 gambling away considerable sums, having free drink sessions with your buddies, going on costly world cruises or suddenly employing servants, you are clearly guilty of depriving yourself of some assets. It would be clearly visible that your income as pensioner does not match your lifestyle and that there must be some money you use you want to get rid off.

ATC110

https://www.boards.ie/discussion/2058233877/exceeding-savings-threshold-non-contributory-pension

 "the one thing that they taught me was to be financially responsible"

If this is the case, why aren't they entitled to a contributory state pension from their PRSI contribution record?

If they haven't paid PRSI then they're not entitled to a non-means tested payment; that's for those who've paid in to the scheme.

Their non-contributory pensions should be reduced accordingly and topped up with their own savings.

I don't understand the point of this post apart from trying to scam the system.

makeorbrake

Thanks to those who have responded helpfully to my query - that's very much appreciated.