Fair Deal - Treatment of Pension Fund?

Hi OKGo

Do you know the answers to the questions that I referred to earlier? It would be great if you had time to go through these specifics as it will help to get to the bottom of this.
 
@RoseMc - Unfortunately I don't. My experience of the FDS was much more straight forward. It was an elderly relative where the income and assets were fairly modest and nothing as complicated as an ARF.

Just my opinion but I think the ARF is straight forward to assess (ignoring the double counting) but much more difficult to fund the payment if the applicant does not have cash deposits to meet their payment
Asset: 500k @ 7.5% = €37.5k
Income: 500k @ 5% = €25k + €13k (State Pension) = €38k
Net income =~€31k
Net income after allowable deductions = €27k
Assessed incomed = €27k @ 80% = €21.5k

Ignoring any PPR, in my example the assessable amount would be €37.5 + €21.5 = €59k

But I can see the difficulty in trying to fund this without any cash assets. It means you need to drawdown a much larger portion of the ARF which then adds to your income. I have no idea how FDS deals with that scenario
 
Thanks very much, OKGo

Your candour is genuinely impressive - so many people on internet boards like to bluff and prevaricate when uncertain about things. Very refreshing to read a post from someone who clearly knows a lot about a subject yet is able to admit the limit of his/her knowledge.

My understanding is the Gordon is a financial specialist so he also is trying to get to to the bottom of this. It must be said that there have been a lot of valuable contributions on this thread.
 
The tax treatment is designed by those with prospectively significant DB pensions. How do you think such matching assets are treated?;)
 
RoseMc said:
The tax treatment is designed by those with prospectively significant DB pensions. How do you think such matching assets are treated?;)
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I think that the permanent government, the civil service, will do what they usually do and rule in their own interests but I'm interested in the specifics.
 
NoRegretsCoyote said:
It's not relevant. 80% of your DB pension is taken by the HSE until your death as it is assessable income. After that a DB pension has no value.
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Okay, so 80% is taken by the HSE. That's what I was trying to find out.
Does that apply if there is a dependant with no other income?
 
Purple said:
Does that apply if there is a dependant with no other income?
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It is 40% of a couple's income.

TBH the system seems much more favourable to the estate planning of someone with an ARF than a public servant with a DB pension.

It is unlikely that 7.5% pa of an ARF will see it exhausted before you die.
 
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NoRegretsCoyote said:
TBH the system seems much more favourable to the estate planning of someone with an ARF than a public servant with a DC pension.
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Surely the opposite is the case if an ARF is treated as an assessable asset and drawdowns are treated as assessable income.
 
I know this thread is a little stale but I got a meaningful clarification from HSE yesterday which I wanted to share. We are looking at a situation similar to the OP. ARF and wondering if money taken from the ARF would be counted as income (which would effectively mean a fairly punitive double charge situation). Here is an extract from the HSE response:


Approved Retirement Funds and the NHSS Financial Assessment

1. An ARF is assessed as a cash asset. The encashment / surrender value of the Approved Retirement Fund at date of application is assessed as a cash asset, in line with Schedule 1 of the Nursing Homes Support Scheme Act 2009 (as amended).

2. A withdrawal from an ARF is not assessed as income - it stands as a withdrawal from a cash asset. Although the nature of ARFs causes the regular withdrawals to be treated as income for Revenue purposes, a withdrawal, is not the same as income for the purpose of the Nursing Homes Support Scheme financial assessment and is not assessed.

3. Tax, PRSI and Universal Social Charge which may become payable on any withdrawals from an ARF are an allowable deduction in relation to income.
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We will still need to apply every year to reduce the amount payable from the ARF to reflect the money taken out during the previous year (unless we can agree something sensible with them at the outset whereby payments reduce over time to reflect the 7.5% reduction in fund value).

What is particularly encouraging is that HSE recognise that the tax payable on withdrawals from the ARF can be set against other income (in this case the contributory state pension) so those taxes will reduce the amount that is payable to the HSE out of that income (on the usual 80:20 basis).

Hope this helps someone. I've asked HSE to update their generally available guidance because I could not find any information along these lines after weeks of research and it shouldn't be a state secret.
 
Joey99 said:
Hope this helps someone. I've asked HSE to update their generally available guidance because I could not find any information along these lines after weeks of research and it shouldn't be a state secret.
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That's a classic Joey99 - fair play.

Following on from your very helpful update of post #32, has anyone worked out at what ARF levels that FD no longer makes sense for a single person and/or couple?
 
SGWidow said:
That's a classic Joey99 - fair play.

Following on from your very helpful update of post #32, has anyone worked out at what ARF levels that FD no longer makes sense for a single person and/or couple?
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Seems like this would be a function of (a) the amount payable for your nursing home (it varies but the HSE rates are published and accessible on Citizens Information), (b) your assessable income, and (c) your assets. Once the 80% of income and 7.5% of assets exceeds the cost of your nursing home there would be no point availing of Fair Deal.
 
Sister just mentioned to me that "something" is due before Goverment in the next week or two to address changes to the Fair Deal Scheme. Anyone have information on this?
 
noproblem said:
Sister just mentioned to me that "something" is due before Goverment in the next week or two to address changes to the Fair Deal Scheme. Anyone have information on this?
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I understand (perhaps among other tweaks) there is something going before Government to deal with the anomalous treatment of ARFs but I have no specific information beyond that
 
Legislation to ease the financial burden of the Fair Deal scheme on farmers will be brought before the Dáil within the next three months, the Junior Minister for Older People has pledged.

The change to the Nursing Home Support Scheme (NHSS) is to cap contributions based on farm and business assets at three years where a family successor commits to continuing the operation when the owner is in care.

Ms Butler said she also wants to give people the option of choosing between nursing homes and their own home in their later years.
The Waterford TD said she will be enacting a statutory home-care scheme which was commenced by her predecessor, Jim Daly.


https://www.independent.ie/business...-aims-to-ease-burden-on-farmers-39932632.html
 
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