Question: My father died recently. We have been told by the solicitor dealing with his will that he owes money to social welfare.

I am concerned as to how this came about. If there is a liability to be paid, where does the money come from?

Answer: Generally, payment of debts comes from the residue initially, then cash bequests. It is only a matter of last resort that property would be sold to pay the debts of an estate. However, if your father’s will specified who was to pay debt or from what bequests debt should be deducted, then that would take priority.

Contributory/non-contributory state pension

If a person did not make the required number of PRSI contributions, they may be entitled to claim a non-contributory pension.

This State pension is based on a pensioner’s means which considers the value of any income received and/or any savings, investments and assets held by the person in receipt of the pension (and if applicable their spouse/civil partner/cohabitant) whether solely or jointly held. It should be distinguished from a contributory pension which is not means tested.

The majority of pensioners receive contributory pensions based on their PRSI contributions over the years while they were earning an income on which they paid tax and PRSI.

A single person with no other means can have savings/property of up to €40,999 and qualify for a full pension, currently €237 per week. Thereafter, the pension payment is reduced for additional assets over the €40,999 limit. If you have savings/property up to €98,999, a pensioner can qualify for a minimum pension, currently €4.50 per week. These figures are doubled for a pensioner couple.

Disclosing means for non-contributory

There is an obligation on a person who applies for the non-contributory pension to fully declare his or her means. If the means are not fully disclosed at the time the pension is applied for, or subsequently where there is a change in means, this will come to light when the will is being dealt with.

The executor dealing with the will is obliged by law to provide the Minister for Social Protection with a copy of the deceased person’s assets at the date of death. The schedule is compared by the department against the last means report provided by the department’s social welfare inspector of the deceased pensioner.

If there is discrepancy between the two – for example, the existence of a previously undisclosed bank account or a substantial increase in capital – the social welfare inspector will request transcripts of bank statements and other documentation to establish whether an overpayment exists.

If there is an overpayment, social welfare legislation gives the department the right to recover from the estate of the deceased any pension monies overpaid. This would need to be repaid within 30 working days of the decision letter. In exceptional circumstances and where the department has been requested in advance, a further period to furnish the payment may be permitted.

On receipt of the requested amount, a formal decision will be issued by the deciding officer. The personal representative of the deceased pensioner will be afforded the right to have the decision reviewed or to appeal the decision to the independent social welfare appeals office.

The department has stated that it would expect a pensioner receiving a non-contributory pension to spend all or most of their pension each week in meeting their normal day-to-day living expenses. It has highlighted that if the pensioner chooses to save part of their pension, those savings will be means tested in the same way as saving from any other source.

Depending on the amount of savings the pensioner accumulates, this could result in a reduction in (or withdrawal of) a pensioner’s entitlement to a non-contributory pension. Consequently, pensioners in receipt of the non-contributory pension should be made aware of the impact of saving their pension and the risk of clawback.