Can State come looking for State pension repayment after mother dies?

I am writing regarding a letter I’ve got from the Department of Social Protection regarding my late mother’s old age pension. The department is claiming back six years of her old age pension because they say she was not entitled to receive the pension due to having too much money in her bank account.

My mother died almost two years ago, aged 97, so she would have been drawing the non-contributory pension since she was 70. She lived frugally and was always able to save up to half of her pension each year. This, in time, added up to more than what the department allow people to have in their bank accounts.

So, when she died in April 2020, I as her son and executor of her will was surprised that the department issued such a demand. Six years pension demand comes to more than €76,000. Can this be possible and is there any way her solicitor or I can contest this demand?

Mr J.M., email

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Your mother’s generation seems to have been hard-wired to save when they could, even though they often had very little of the comforts many of us take for granted.

She would have grown up at a time when welfare support was limited in the extreme. We forget, as the debate rages currently about what age the State pension should be paid at and at what rate, that the old age pension didn’t exist at all in Ireland until 1908. And it was cut in the early years of the new State in the mid-1920s. Broader social supports were also not available in the way we take for granted.

So people like your mother valued the independence that a financial cushion afforded. And I’m sure that “rainy day fund” was of great reassurance to her as she got older in being confident that she could afford the things she needed.

There are two forms of the State pension in Ireland – contributory and no-contributory.

The contributory State pension is payable to people who have accrued enough social insurance payments – PRSI stamps – over their working lives.

Then there is the non-contributory State pension, available to those without sufficient working record/PRSI stamps. And for people of your mother’s generation, that included a lot of women who either worked in the home by choice or who were excluded from the workforce under the marriage bar.

It is payable up to €252 a week for those over the age of 80, and €242 for anyone between 66 and 80. All those quoted weekly payments are the current 2022 rates: they’d have been lower when your mum was alive.

The non-contributory pension is designed as a subsistence payment: in other words it was never designed as something that would allow people to accrue savings on the back of the weekly payments. At the current rate of €242 for those under the age of 80, it delivers an income of just over €12,500. And as it is payable to those with limited financial resources, the expectation is that this is the minimum they need to be able to live while meeting their basic financial needs.

Means tested

Critically, and understandably, it is means tested. If people have independent financial resources, the State is not expected to subvent their living costs.

Under the means test, when your mother applied for the non-contributory pension, they would have looked at her cash income and any savings or investments that she had at that time.

The income side is straightforward and I assume her income would have amounted to little or nothing outside of any welfare support – which is excluded – at the time.

Moving then to the key element of your question, the first €20,000 of savings or investment assessed is exempt, so there is nothing to stop anyone building up savings of up to €20,000 while on a non-contributory pension.

Over that figure, the next €10,000 is considered to give you €1 in weekly income per thousand euro of savings. So if you had savings of €27,000, the first €20,000 is ignored and the next €7,000 is considered to give you €7 a week in income.

Over €30,000, savings are assumed to yield €2 in weekly income per €1,000 up to €40,000. Over that level, every thousand euro is deemed to give you weekly income of €4.

These sums are offset against your pension payment. So, in our example above, with €27,000 in savings, a person on the State non-contributory pension would see their weekly pension payment cut by €7.

Her home, assuming she owned it, would not have been taken into account. If she sold it, either to buy more suitable accommodation or to move into a nursing home, sheltered accommodation or to live with a person claiming a payment for their care, the sale proceeds would not be considered either – unless she had more than €190,500 left after finding suitable alternative accommodation.

If so, anything above that figure would be taken into account.

Repayment

In your mum’s case, when she got the payment, she was fully compliant but, as she set some of it aside, her savings were building up. You say she was, at times, saving up to half the sum: that’s up to €6,000 or so in more recent years, and given she was on the pension for up to 31 years, you can see how she might breach the savings threshold.

The crux is that, under Department of Social Protection rules, this is a self-certified payment. It was up to her to let them know when she was being paid too much. She obviously didn’t do that.

And, if it comes to the department’s notice that she is/was non-compliant, they have the right to seek repayment. This is the case with any non-contributory welfare payment, not just the pension.

Her death has no effect on this. The department is entitled to claim any money overpaid from her estate.

Can you contest it? You can certainly ask how they have assessed the six-year bill – and you should – but if the department’s figures are correct, you have no cause to challenge it. The money would be owing and must be repaid.

You will have access to any of her savings accounts records and also to the payments she would have received from the department, so, if there is a dispute, you should be able to work out her situation.

I am assuming they are not saying that she should have got nothing at all for the last six years but, rather, that her payments should have been reduced over a considerably longer period, with the cumulative sum owing now amounting to the equivalent of six years’ payments.

Your responsibility

Essentially, any money owing is a claim on her estate in the same way as any other outstanding bill at the time of her death. And, assuming the sum is confirmed, it will have to be paid before the estate is distributed in accordance with the will she left. And, as executor, it is your responsibility to make sure that happens.

The bill from the department is certainly an unwelcome surprise to those who might have expected to inherit but, on the positive side, at least your mother was able to enjoy her final years in the comfort of financial security – and apparently blissfully unaware that, by saving as much as she did, she was undermining her own right to the full weekly payment.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.