{"id":307963,"date":"2026-03-01T12:38:09","date_gmt":"2026-03-01T12:38:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/307963\/"},"modified":"2026-03-01T12:38:09","modified_gmt":"2026-03-01T12:38:09","slug":"will-my-pension-fund-expose-me-to-a-higher-bill-if-my-spouse-needs-nursing-home-care-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/307963\/","title":{"rendered":"Will my pension fund expose me to a higher bill if my spouse needs nursing home care? \u2013 The Irish Times"},"content":{"rendered":"

I think I understand the terms of the Fair Deal<\/a> scheme except for how it applies to an ARF (an approved retirement fund).<\/p>\n

I draw down 5 per cent of my ARF as income. I presume that if I or my wife participate in the Fair Deal scheme then she or I will have to contribute 40 per cent of that income.<\/p>\n

But I am advised that both the value of the ARF and the net income from it are included in the calculation. Is this correct and, if so, how is it calculated?<\/p>\n

For example, if the ARF is valued at, say, \u20ac1 million, then is it 40 per cent of \u20ac1 million, even though, after tax<\/a> and USC, the ARF is worth around half that amount?<\/p>\n

And do Revenue get 40 per cent of the after-tax amount for the Fair Deal contribution on top of the 48 per cent income tax\/USC on the drawdown from the ARF?<\/p>\n

Or is the ARF treated as an asset, in which case does the 3.75 per cent contribution apply to the gross or the net value of the ARF and how is the contribution calculated? Can you please clarify?<\/p>\n

HM<\/p>\n

Well, that\u2019s one way of turning readers off their food as they read their morning paper \u2013 charging 40 per cent of your pension<\/a> fund to meet the cost of nursing home<\/a> care. <\/p>\n

Fortunately, it is not that bad although people may bridle at the rules that do apply for pension fund assets if you or your wife do need long-term nursing home care.<\/p>\n

As it happens, the sort of figures you mention also raise the issue of whether you will be successful anyway in seeking Fair Deal financial support to help cover the cost of care.<\/p>\n

Let\u2019s look at the broad rules first, then we can crunch some numbers on the basis of this notional ARF fund balance you mention.<\/p>\n

As mentioned in previous articles on this subject, Fair Deal is there to bridge the gap between what people can afford and the actual cost of nursing home care, which, in Dublin anyway, is well over \u20ac1,000 a week.<\/p>\n

The nursing home resident, if they are single\/widowed, pays 80 per cent of their income and 7.5 per cent of their assets each year to the cost of care. That 7.5 per cent is also levied on the family home but only for a maximum of three years.<\/p>\n

For a couple, where one is in care and the other at home, the figures are halved \u2013 40 per cent of family income and 3.75 per cent of assets.<\/p>\n

So what counts as income? Any earnings or pension payment, including state pension and other welfare payments \u2013 but with one crucial exemption that we will come to \u2013 along with dividends, bank interest or rental income.<\/p>\n

[\u00a0Will I have to sell my home to repay nursing home costs when my spouse dies?<\/a>\u00a0]<\/p>\n

Income is calculated net of income tax, universal social charge (USC) and any health charges such as GP, consultant or prescription fees. It is also net of any mortgage interest or local property tax. And, if you are paying maintenance or supporting the cost of a child in full-time education then that too is excluded.<\/p>\n

More recently, if you rent out your family home while you are in nursing home care then any income from that, too, is excluded from the calculation.<\/p>\n

And what about assets? Well, that covers any savings, stocks, bonds and such like and property, including the family home. However, the first \u20ac72,000 of assets is exempt from this assessment, a figure that drops to \u20ac36,000 in the case of a single person.<\/p>\n

So where does that leave you with your ARF?<\/p>\n

The ARF is seen as a cash asset. The HSE<\/a> takes the value of the fund at the time you make the Fair Deal application and charges the 7.5 per cent (or, in your case, 3.75 per cent) against that figure each year. <\/p>\n

But, and here\u2019s the good news, they do not consider the income drawn down from the fund as this would be seen as double-counting \u2013 charging twice against the same money \u2013 as what you draw down in a year will already have been included in the fund valuation at the time of the Fair Deal application. You will not be losing 40 per cent of that drawn-down ARF income.<\/p>\n

So when you were advised that both the value of the ARF and the net income from it were included in the calculation then you were wrongly advised.<\/p>\n

I\u2019ve no doubt the idea of levying any annual charge against your pension fund will jar with some people who have sensibly and assiduously saved into their pension through all or most of their working life to ensure they have sufficient funds to allow them live comfortably in retirement.<\/p>\n

I\u2019m not sure I have ever met someone who, in assessing what their financial needs might be in retirement, has factored in the cost of a contribution from their pension fund to Fair Deal. But that\u2019s the way it is.<\/p>\n

So if your ARF is valued at the \u20ac1 million you suggest \u2013 and assuming you have no other savings \u2013 the financial assessment will consider your assets to be worth \u20ac928,000. On the basis of one of you being in long-term nursing home care, the annual charge will be \u20ac34,800 or \u20ac69,600 if you are both there.<\/p>\n

Of course, you are also drawing down as much as \u20ac40,000 (the 4 per cent you are obliged by Revenue to draw down as income in year one). So your ARF is down \u20ac74,800 after year one.<\/p>\n

What you can do to address that is to request another financial review of your assets and income no sooner than 12 months after the previous one. This resets the figure and makes sure you are not paying more than you should be on the basis of your assets.<\/p>\n

Of course, if the investment performance is very strong, you may choose to stay shtum, but you should be aware that the HSE can call for a review of your finances at any time. They don\u2019t even have to wait the 12 months, although, in practice, that\u2019s not likely.<\/p>\n

The only way around having your pension assessed as an asset for Fair Deal is to take your pension as an annuity rather than putting it into an ARF. There are good financial reasons why you might not want to do this, given the bad value in annuities in recent years. <\/p>\n

But if you were to do so, you should know that any income from the annuity after tax and other exemptions listed above would be subject to the 40 per cent charge.<\/p>\n

And what about that thing I mentioned, where you might not qualify for Fair Deal at all?<\/p>\n

It depends. You have only mentioned this ARF. I have no idea if you have other income and then there is the family home, which is certainly an asset.<\/p>\n

If, when the HSE tots up your notional contribution on the basis of your assessable income and all your assets, your contribution comes to a figure higher than the full cost of the nursing home care then you will not be sanctioned for Fair Deal. <\/p>\n

In other words, you only qualify for Fair Deal if it requires the State to subsidise the cost for you; if the figures suggest that will not happen then you will be turned down.<\/p>\n

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com<\/a> with a contact phone number. This column is a reader service and is not intended to replace professional advice<\/p>\n","protected":false},"excerpt":{"rendered":"I think I understand the terms of the Fair Deal scheme except for how it applies to an…\n","protected":false},"author":2,"featured_media":8102,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,112595,246,36572,111,139,10183,69,2180,244,245,7496],"class_list":{"0":"post-307963","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-fair-deal-nursing-home-support-scheme","10":"tag-finance","11":"tag-hse","12":"tag-new-zealand","13":"tag-newzealand","14":"tag-nursing-homes","15":"tag-nz","16":"tag-pension","17":"tag-personal-finance","18":"tag-personalfinance","19":"tag-tax"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/307963","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=307963"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/307963\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/8102"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=307963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=307963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=307963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}