Q&A: Dominic Coyle
Eating into penisoners’ income
We are aged 78 and 82 with a total pension of €47,000 per year made up of a private pension and the old age pension. We cannot work out what exactly we have lost over the past few years – i.e. ESB, phone allowance etc. Not that it will make any difference in the long run (we’re blessed to have those pensions, particularly as my husband is not in good health) but just out of curiosity, we would like to know.
Ms W.B., Dublin
The main change of people in your position has been the reduction in the value of the household benefits package. This has been reduced twice in recent years to the best of my knowledge.
The package payable to people over the age of 70, and certain others, comprises three benefits – free TV licence, a phone allowance and an electricity/gas allowance.
Back in September 2011, the phone allowance was cut from €21.41 plus VAT to €18.36 plus VAT. This year it has been cut further, to €9.50 a month. Effectively, your payment has fallen from €25.90 a month to €9.50.
The energy allowance, covering either electricity or gas, was changed to a flat rate of €35 a month this year – or €420 a year. Back in 2011, it was also curtailed. The gas allowance fell then from a maximum of €489 a year to €393. Electricity was messier. They used to pay the standing charge plus the public service organisation levy alongside 2,400 units of electricity a year – a figure that fell to 1,800 a year in 2011.
There has been no change to the free TV licence.
That aside, you will also have been affected by a reduction in the income tax exemption threshold for people over the age of 65 which was reduced in 2010 from €30,000 for an individual and €40,000 for a couple to €18,000 for an individual and €36,000 for a couple – effectively bringing your income into the tax net earlier.
Finally, as far as I can see, you will also be worse off following the introduction of the Universal Social Charge in January 2011. It replaced the health contribution and the income levy.
However, over the age of 70, you would not have paid the health contribution and the income levy did not apply to pensioners whose income was below €40,000 annually for a couple (€20,000 for an individual) – and you did not include the state pension in assessing this level of income.