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Sunday 27 May 2018

Explainer: How farmers can now avail of invalidity pension benefits

Invalidity pension benefits are now available to farmers
Invalidity pension benefits are now available to farmers

Martin O'Sullivan

Until last year there was no Social Welfare benefit available to farmers or indeed self-employed people generally who became unable to work due to long term illness or injury.

However, from December 1, 2017 farmers and the self-employed who have been paying Class S PRSI (which covers the vast majority) will be entitled to an invalidity pension in the event of long term illness or injury.

Entitlement to the pension should not be confused with Illness Benefit which is a more short term benefit payable to employed workers paying PRSI classes A,E,H and P but not Class S.

One of the main differences is that to qualify for the invalidity pension one has to cease self-employment and notify Revenue accordingly. While the pension proper is not means tested any additional payments for an adult dependent or child dependent are means tested.

This means that any income or assets that a farmer possesses or is in receipt of will not be counted provided of course that he/she has ceased their registration as self-employed but any income a spouse, partner or dependent child has may affect entitlement to increased payments for those dependents.

QUALIFICATION

To qualify for the payment, applicants will need 260 (equivalent to five years) PRSI paid contributions (Class A, E, H or S) since they started paying social insurance and 48 PRSI paid or credited contributions (Class A, E, H or S) in the last complete contribution year or the second last contribution year before the date of their claim.

You will need to have paid PRSI in either of the two years prior to the year in which you make the claim.

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Unfortunately, voluntary contributions will not qualify. You may get an increase in your payment for an adult dependant and any child dependants you may have.

You cannot claim an Increase for a Qualified Child with your Invalidity Pension if your spouse, civil partner or cohabitant has an income of over €400 a week.

MEDICAL CRITERIA

The pension is a payment for people who are permanently incapable of work because of an illness or incapacity. A Deciding Officer from Social Welfare will examine your claim based on the following qualifying conditions:

A claimant must be regarded as permanently incapable of work, which is defined as: incapacity for work of such a nature that the likelihood is that the claimant will be incapable of work for life, or

An incapacity which has existed for 12 months prior to the date of claim, and where the Deciding Officer or an Appeals Officer is satisfied that the claimant is likely to be unable to work for at least a further 12 months.

Claimants do not have to submit medical evidence with their application but if Social Welfare require medical evidence following receipt of your application you will receive two forms, one to be completed by your GP and the other for completion by yourself.

You may also submit specialist reports and/or any other medical information you have in support of your claim.

It is important that you complete and return these forms promptly so that your entitlement on medical grounds can be determined as quickly as possible.

QUALIFIED DEPENDENTS

If you are married, in a civil partnership or cohabiting, you may get an allowance for a qualified adult and qualified children.

If you have children living with you and you are single, widowed, a surviving civil partner or separated, you may get an allowance for a person, aged 16 or over, who is caring for your child(ren), provided the person is living with you and you are supporting them.

You will get the full increase for a qualified adult if they have an income or are assessed to have an income of not greater than €100 per week.

If they have an income or are assessed to have an income of €101 to €310 per week you will get a partial increase. If the qualified adult's income is in excess of €310 per week you will not get any adult dependent increase but you may get a half rate child dependent increase if the qualified adult's income is less than €400 per week.

The various entitlements are summarised on table B. A child dependent is a child up to age 18 who normally lives with you and is being maintained by you. Sometimes, a child who is not living with you can also be your child dependant if you are supporting them.

If your spouse, civil partner or cohabitant has savings, investments or property which is not let, but is capable of being put to profitable use (other than their own home), the capital is assessed on the basis of the first €20,000 being exempt, the next €10,000 at €10 per week, the next €10,000 at €30 per week and the remainder at €4 per €1,000 per week.

The payment which is subject to income tax is made up of a standard personal rate for yourself and extra amounts for a qualified adult and qualified children.

Martin O'Sullivan is the author of the ACA Farmers Handbook. He is a partner in O'Sullivan Malone and Company, accountants and registered auditors; www.som.ie


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