Does it pay not to work?

[DeeFox]

There is a letter into the Independent today in which a person describes a friend of his who lost his job.

Person was previously earning €35,000 gross, €28,854 after tax.

Now person is unemployed. Receives supplementary welfare allowance for family of four children of €443.90 per week or €23,083 annually.
Mortgage interest supplement - in this case €14,400 per annum.
Back to school and footwear payment for 4 children - €905 annually.
Medical card - estimated at €500 annually - although likely to be more considering there are two adults and 4 children.
This gives a tax free annual income of €38,888 - an increase of €10,034 on previous income.

Is this possible??! This country will have serious trouble dragging itself out of the recession if these type of figures are not examined and reviewed by the Government. I know there are no easy answers but this seems to be a crazy unsustainable situation considering the growing number of people availing of benefits.

 

[Caveat]

Wow. Can anyone confirm if this is all likely to be accurate or not?

Mortgage interest supplement - in this case €14,400 per annum.

What's the story with this - are these payments limited/finite or do you continue to receive them as long as you're unemployed?

 

[Howitzer]

The premise of the letter was that you might as well quit your job and live on the dole. Well most of those benefits are only available if you've been made redundant, and then only for a limited period of time.

But hey, why let the facts get in the way of a good story.

 

[Caveat]

The premise of the letter was that you might as well quit your job and live on the dole. Well most of those benefits are only available if you've been made redundant

Very easily arranged. People asking to be 'let go' as a cover for quitting happens all the time.

 

[NorthDrum]

Received from a friend . .

The figures in the letter do not add up at all and the circumstances presented are untypical:

• A person in theses circumstances with a dependent spouse and 4 children would have a total net income of €44,222 not €28,854 as claimed in the letter.
• While it is possible that they could have a total social welfare income of €47,466 (€3,200 more than their income from employment), this would be very untypical.
• A typical social welfare income for a family in these circumstances (incl the average mortgage interest supplement payment) would be €39,243 – or €5,000 less than they would get in employment. People with lower levels of outstanding mortgage debt, and those whose mortgages only contain a small interest element, could end up with a lot less than this.

Inaccuracies In The Income From Employment Figures

• The annual net income for a married one earner couple with children (Full PRSI A class) earning €35,000 per annum is €31,154. (Deductions would be income levy €700, health levy €1400, income tax €610, PRSI €1135.84).
• A family with 4 children and a net income from employment of less than €800 per week would also qualify for a Family Income Supplement payment from the Department of Social and Family Affairs (the net income in this case is €666 per week). This would give them an extra €81 per week or €4,212 per annum.
• The letter ignores the fact that they would also be entitled to child benefit while working, which for 4 children would be €8,856 per annum.
• Their total net income from work, FIS & child benefit would therefore be €44,222, not €28,854 as claimed in the letter.

The Family Circumstances Set Out In The Letter Are Also Very Untypical

• Child Related Welfare Payments - In 2007 only 7% of families receiving child benefit had 4 children or more. 75% of families receiving child benefit had only 1 or 2 children.
• Mortgage Payments – A person on a gross income from employment of €35,000 (total net income incl child benefit of €44,222) who could get a mortgage big enough to require repayment at €18,000 per annum would be unusual. (It may however be possible that the family had a larger income at some point in the past). While it is possible for a person with such a large mortgage to get a mortgage interest supplement of €1200 per month, the average weekly mortgage interest supplement payment at the end of 2008 was €96.63 per week. In a year, this would amount to €5025.

It Is Possible (Though Quite Untypical) For Welfare To Pay More Than Work For A Family In These Circumstances

• If they were getting a mortgage supplement payment of €1104 per month or €13,248 per annum, this would bring their annual social welfare income to €47,466 – which would be €3,200 more than their income from employment. (This would be twice the average mortgage supplement).

 

[gipimann]

Colm Rapple's article in the Irish Mail on Sunday debunked this story too, he gave much the same breakdown as Northdrum has above.

If a mortgage interest supplement of €1200 per month was being paid (and it would be very unusual to be that high), it would have a limited duration of 12 months as an exceptional case. After that, the family would be asked to re-negotiate with the lender or, at worst, sell up and find cheaper accommodation.