I will be 66 in April and am entitled to the old age contributory pension. Will my pension be taxed?
Must I send in tax returns like I've done in the past? Also, do I have to declare some money that I have in An Post savings certificates?
Mr J.H., Kerry
When it comes to income tax, pensioners are like everyone else. If their income exceeds the exemption levels for income tax, they will have to pay the tax. However, if the old age contributory pension is your sole income, you will not need to worry about this. The full old age contributory pension for those who have made enough PRSI contributions during their working life is €179.30 a week or €9,323.60 a year. That is well shy of the € 16,500 income limit below which a pensioner does not have to pay income tax. For married couples, that limit is doubled.
Do you have to complete a tax return? It's probably no harm, although if you are relying on just the old age contributory pension, tax will not be an issue.
Savings do not impact on the contributory pension. It is paid as a right to those who accumulate sufficient PRSI contributions. As such, there is no need to declare this money which, in any case, is tax-free.
If you were looking to avail of a means-related pension, then savings would enter the equation.
Irish Nationwide
Would it be your opinion that householders with mortgages may be considered to be entitled to receive shares in Irish Nationwide Building Society when the new demutualised company emerges in the future?
Mr A.F., Dublin
Borrowers are likely to benefit from moves to demutualise Irish Nationwide. They will have a say in any formal proposal to demutualise.
The situation with borrowers is, in one sense, clearer than it is for savers. Anyone who has taken out a mortgage with Irish Nationwide to buy a house or apartment and who still has a minimum of €625 to pay off on the loan will be eligible to vote on any conversion proposal.
While the legislation provides for borrowers to have a say in any conversion proposal, it does not apparently grant them an automatic right to benefit under such a proposal if passed and acted upon. Having said that, borrowers benefited in the demutualisation of Irish Permanent and First Active and Irish Nationwide have said that they expect a similar situation to pertain in this case.
It would be a shock if borrowers were not to benefit and I could not see the society putting forward any such proposal. After all, any proposal voted on by borrowers that cuts them out of a windfall would be struggling to win approval.
Do remember, by the way, that any windfall at Irish Nationwide will come not when the society is demutualised but when the demutualised group is sold off.
Adult dependant
In a recent question on pensions, you indicated that a man with a pension of €31,000 might be able to receive an adult dependant allowance in respect of his wife. As the person in your question paid a reduced rate PRSI in the Civil Service, he is not entitled to a contributory old age pension and is therefore only receiving an occupational pension. These do not usually include payments for dependants. How can he, therefore, qualify for the adult dependant allowance?
Mr P.McG., e-mail
Several people have been on to me in relation to my statement about adult dependant's allowance and they are correct. Employees in the Civil Service pay a reduced rate of Pay Related Social Insurance (PRSI).
Thus, they would not be eligible for the old age contributory pension and instead receive a Civil Service pension.
The main impact is that people in such a position would not be able to claim benefits relating to the State old age contributory pension - including the adult dependant allowance.
Unmarried partners
My son returned to Ireland last year after working in London for years with his Italian partner. Since then, he has obtained employment, but she has not yet found a suitable job. He is not allowed to claim a tax allowance for her even though he is supporting her. However, when she applied for a social welfare allowance, she was told that, because he is supporting her, she is not entitled to it. Is there any way around this convenient and unjust anomaly?
M.S., Meath
Welcome to the anomalies of the Irish tax system. It is, as you say, unfair that your son and his partner are caught on both sides of the tax/welfare divide.
It seems reasonable that someone who is being supported should not be eligible for welfare payments. After all, such payments are based on need and, normally, means. If your son is supporting his partner, then his means would naturally come into the equation and her need would lessen.
However, if he is supporting her, he has a financial liability and it seems a nonsense for our tax system to be blind to that. If she is not an independent person for welfare purposes, the same should apply on tax and he should be able to claim relief.
After all, if they were married, he would be able to claim a tax allowance for her.
Is there any way around it? For the moment, I doubt it, although at some stage it is likely that the tax system will be adjusted to take account of the realities of modern family units.
That, however, may be too late for your son and his partner.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. No personal correspondence will be entered into.
