Questions And Answers

I have a query re social welfare pensions and would like some advice about my entitlements. I commenced paying social welfare stamps in 1953 and continued doing so until I got married in September 1961, when I ceased working in paid employment. I understand that I have a total of 388 stamps paid and I would like to know if I am entitled to any sort of pro-rata

retirement pension next February when it should fall due. I understand the Department of Social, Community and Family Affairs last year was to give recognition to the years of paid employment given up by a housewife in order to rear a family?

Ms P.C., Wicklow

You are quite right about the provision made by the Department of Social, Community and Family Affairs for women who gave up paid employment to stay at home and raise a family. It was, in fact, first introduced in April 1994 at which stage the years a woman stayed at home to raise a child/children up to the age of six were discounted when calculating the number of PRSI contributions accrued in determining eligibility for contributory old age pension.

A second phase kicked in in April the following year, at which time children up to the age of 12 were considered as valid in exempting years from the benefits equation. A woman can claim a maximum of 20 years outside the system in this way. It does not merely cover the raising of a family; the care of incapacitated adults is also covered by the provision with the same overall threshold of years.

The bad news from your point of view is that it is not retrospective; as such, while it will no doubt be a great comfort to working women today who wish to take a break to raise a family, it is of little comfort to you.

As a result, when assessing your entitlement to a contributory pension, you will have to include all those years from the date you first paid stamps in 1953 to the date you reach retirement age. As it happens, it was only in 1953 that PRSI payments included a pension element.

In your case, I do not believe the figures will tot up. In order to receive the maximum available non-contributory old age pension, you need to average 48 weekly payments or credited payments for every year since 1953 - or from the first subsequent year that one started paying PRSI - to the end of the tax year before your 65th birthday. To obtain even the minimum non-contributory pension, you would have to average 10 payments a year. Given that the parenting provisions instituted recently do not apply in your case, I gather you would fall some way short of this on the basis of 388 weekly PRSI contributions as you state in your letter. I agree with the sentiment that it seems manifestly unfair that some mothers should be able to avail of a PRSI relief in respect of time spent in the home while others cannot. It might be worth your while to approach the National Federation of Pensioners' Association to see if it is lobbying the Ministers for Finance and for Social, Community and Family Affairs for a change in the law to expand the scope of the relief. The federation's address is 32 Parnell Square, Dublin 1 (Tel: 01878 2541). It is an umbrella organisation with the stated aims of protecting and promoting the interests of pensioners in regard to social welfare, taxation, health, superannuation and related matters.

Alternatively you might consider tackling the National Council on Ageing and Older People, a civil service advisory body which advises the Minister on all aspects of welfare and the elderly. It can be found at Corrigan House, Fenian Street, Dublin 2 (Tel: 01-6766484; Fax: 01-676 5754).

In 1997, I invested the proceeds of a British inheritance in the Isle of Man. I received the first annual payment in February of this year, arising from the encashment of units. As a result, it was subject to capital gains tax (CGT) rather than income tax. I duly declared this payment in my tax return and was surprised to be told by the Revenue Commissioners that because my funds were offshore, I was not entitled to the £1,000 CGT annual exemption and was liable to pay CGT at the higher 40 per cent rate, not the newer 20 per cent one. Are my Constitutional rights being compromised here?

L.C., Sligo

Well now, I'm no authority on Constitutional rights, so I'll leave them aside for the moment. On the more prosaic subject of the tax code, I have both good and bad news for you. Having checked with the Revenue again, I am told it is indeed the case that you would be liable to pay capital gains tax at the higher 40 per cent rate. This, however, is not simply because your investment is offshore, but because of the nature of that investment. As you are dealing in disbursing units in offshore funds, you come under the higher rate; had your investment been in shares, albeit held offshore, they would only have attracted the newer 20 per cent capital gains tax.

On a cheerier note, I am assured that you are entitled to an exemption on the first £1,000 per annum regardless of the location of the funds on which a capital gains liability arises. I would suggest you raise the issue again with the Revenue or perhaps go to an accountant who is well-versed in the vagaries of offshore investments.

I am in receipt of a contributory old-age pension. I also claim for an adult dependant (my wife) as her only income is £18 a week pension from the UK. However, I have savings bonds which mature in September next year. These amount to £95,000 and are in joint names. Do the bonds affect my claim for adult dependant allowance? If necessary, I could transfer the bonds into my sole name.

Mr P.J., Kilkenny

As you are the claiming pensioner and you receive a contributory old-age pension, it is deemed to be based on your historical contributions, as is the dependant allowance element, according to the Revenue Commissioners. As such, it is not means tested and the maturing bonds should not affect it. However, they might affect your income-tax situation as they will constitute additional income in the family unit.

Had your pension been non-contributory, any savings would have been taken into account, including the bonds. However, it would have been pretty academic in such circumstances as £95,000 of savings would have put you well over the means test limit for such a pension.

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