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If you sell all or part of your home to a financial institution or another party, for example under an equity release agreement, and you are allowed to continue to live in your home as part of this arrangement, the full amount you receive from this sale will be taken into account when calculating your means for pension purposes. The sale of residence disregard of �190,500 does not apply in the case.

Example

John is getting a State Pension (Non-Contributory) at the maximum rate. He owns his home but decides to sell a part of it to a bank for �100,000. It is agreed between the parties that John can continue to live in the house for the rest of his life. John has no income except his State Pension (Non-Contributory). He has savings of �18,000 in Post Office Savings Certificates.

The total amount of John's money (�118,000) will be assessed as means for pension purposes as follows:

 

Weekly means

 

First

�20,000.00

Nil

Next

�10,000.00 (�1 per �1,000)

�10.00

Next

�10,000.00 (�2 per �1,000)

�20.00

Balance

�78,000.00 (�4 per �1,000)

�312.00

Total

�118,000.00

�342.00

John's weekly means are now �342.00. This is over the maximum limit for entitlement to a State Pension (Non-Contributory) and in this case the pension would be stopped.

Last modified:24/09/2008
 

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