BUDGET 2021: €1.75 COLA increase, better pensions and a new round of vouchers

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  • Pensioners to get €5 weekly increase
  • All workers to get additional day of vacation leave
  • Another round of tax refunds

The Cost of Living Adjustment, more commonly known as COLA, will be €1.75 per week, reflecting the low inflation rate experienced over the past 12 months. The increase will be given to all employees, pensioners and people on social benefits. Students will also see the COLA increase reflected in their stipends.

Workers will also be getting an extra day of leave this year, to make up for public holidays lost because they fall on a weekend.

The government will also be giving another tax refund cheque. This year, the refund will be between €45 and €95. Low-income families will receive the highest amounts. Upwards of 218,000 people will benefit from this measure, which will cost €16 million.

Another round of COVID-19 vouchers is on the way. This time round, people will be given €60 in red vouchers, which can be redeemed at restaurants and accommodation, and €40 worth of blue vouchers which can be used at various shops or services. Anyone who turns 16 by the end of this year will receive the vouchers. More details about the €50 million scheme will be announced at a later stage.

Children’s and fostering allowances

Families with a combined income not exceeding €25,318 will see their allowance increased by €70 for every child. The allowance for the remaining families will increase by €50 for every child. More than 40,000 families, and over 60,000 children will benefit from the €3 million scheme.

The thresholds of the InWork benefit are being extended. The threshold for couples where both adults work is being increased to €35,000. For working single parents, the threshold is being increased to €23,000. For couples where only one adult works, the threshold is being increased to €26,000.

The Foster Care Allowance is being increased by €530 a year, for a total of €5,720 per year.

As from next year, couples who adopt locally will benefit from an allowance of €1,000.

Pensions

Apart from the €1.75 COLA increase, pensioners will be given an additional €3.25 per week, meaning that they will benefit from a €5 weekly increase.

This translates into a €260 increase for people on a retirement, invalidity and non-contributory pensions. 93,000 pensioners are set to receive the increase.

In order to ensure that these increases are not lost to tax, the taxable ceiling on pensions is being raised to €14,058.

The Supplementary Assistance benefit is given to couples and single individuals who have a low income. The amount given will be increasing by anywhere between €70 and €108.

Additionally, the €150 that is given to people aged 65 and over who are at risk of poverty is being extended to all those who qualify for the Supplementary Assistance benefit. The measure will cost €2 million.

Elderly persons who did not qualify for a pension because they stopped working at some point in their lives and did not pay enough Social Security contributions will see their yearly €200 bonus topped up by another €50, for a total of €250 per year. Those who paid NI for more than five years will see their bonus increased to €350. 11,000 people are set to benefit from this measure.

Elderly people living in care homes will continue receiving the €300 (over 75) and €350 (over 80) yearly bonus.

Through legal amendments, the surviving partner in a Civil Union or Cohabitaiton will also be recognised as widowers.

Service pensions will be increased by €200 which will not be considered in the assessment of the social security pension. The sum that will be exempt will be €2,866.

The Carers Allowance will be increased from €5,291 to €6,000. Parents who stop working to look after their disabled children will from next year receive a benefit of €300.

€9 million are being allocated to address past injustices. Compensation will also be given to former dock workers who suffered from asbestosis.

Free bus rides and government bonds

The free Tallinja card will be given to anyone from the age of 70 upwards. Previously, it was given to people over the age of 75. 19,000 people are set to benefit from this measure.

The government will again issue the 62+ Savings Bonds, which have a higher interest return rate than bonds offered by commercial entities. Over the past four years, 27,500 pensioners invested over €400 million in such bonds. It is expected over 6,000 pensioners will invest in the bonds next year.

Private pensions and property purchases

With the aim of further incentivising third pillar pensions, the amount that is exempted from tax is being increased by €1,000 to €3,000.

When it comes to property, schemes for first and second time buyers as well as on the purchase on property in Urban Conservation Areas and restoration schemes are being continued.

In the case of the First Time Buyers Scheme, the amount that is exempt from Stamp Duty is being increased from €175,000 to €200,000.

The government had previously lowered stamp duty from 5% to 1.5% on the first €400,000 when purchasing a property, and from 8% to 5% when selling. This will continue for promises of sale signed by 31 March 2021 which lead to a contract signed by the end of next year.

In the case of property donated by parents to their children for residential purposes, the amount exempt from tax is being increased from €200,000 to €250,000. The remaining amount will be taxed at 3.5%.

The scheme that saw the duty on the transfer of a business reduced to 1.5% is being continued.

Authors and co-authors earning royalties from the sale of their books will now be taxed at a flat 15%.

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