Dominic Coyleanswers your finance questions.

Nursing home subvention rules

I appreciate that if a parent goes into a nursing home and has transferred a house to a child in the past five years, it's taken into consideration when assessing the parent's income for subvention.

But how does this work? I called the health board in Cork and they told me that if a house was transferred within the five-year timeframe to me by a parent and they had to go into a nursing home, the subvention would be assessed on the current market value. I called the HSE in Dublin and they told me it's assessed on the price of the property at the transfer date.

Please confirm which procedure is correct.

Ms H.O'D., e-mail

Ah, if only it were so easy. This sort of intricacy is one of the reasons behind the announcement of a new regime this week by Minister for Health Mary Harney.

The problem - and it is a serious problem - is that the rules don't appear to specify absolutely which interpretation is correct. As a result, different health board areas have been applying the same rules in a different fashion.

A case such as yours indicates how such confusion can carry a high financial price. And in the property market of recent times, there is a significant difference between the valuation of the house now and four years ago.

The basis of assessment for subvention is set down in the Nursing Home (Subvention) Regulations 1993 - or, more specifically, the Second Schedule appended to those regulations. You can read these for yourself on www.irishstatutebook.ie.

There are several points that are relevant. First, the schedule states: "A health board may assess the value of any asset or assets transferred from the ownership of the person in the five years prior to the application [ for subvention] in assessing the means of the person."

Note, it says "may". Where the rules oblige the Health Service Executive and its predecessor health board to take a certain course of action, it states that they "shall" do something.

So there is no obligation on the authorities to consider a property which just happens to have been disposed of less than five years ago.

The schedule also states that the health board "may take into account any income which a person claiming subvention has deprived himself or herself of in order to qualify for a subvention . . ." Again there is room for manoeuvre here.

Later, the rules state that the health board "may impute an annual income equivalent to 5 per cent of the estimated market value of the principal residence . . ."

What the rules do not state in relation to a principal private residence disposed of in the previous five years is whether the assessment should be on the basis of current value or transfer value.

In the case of a business or farm disposed of in that period, the schedule does lay down that it should be based on the value of the business on the date of transfer.

That, to my mind, would provide solid support for an argument that it should be the transfer value, not the current value, that is taken into account in your case.

As I said at the outset, this will clearly be a lot more transparent under the proposed new system. However, I do believe the rules as they currently apply lend weight to the response as provided by the Dublin office to your query.

Of course, depending on the health board area in which you are applying, you may have to argue this in detail. In my view, the regulations outlined above support your case.

Pension incentive scheme eligibility

I have an SSIA account that will be maturing in March 2007. The last payment by me will be made in February 2007. On maturity, the total expected value of the fund will be €15,500, less exit tax on the interest - which is a fixed rate of 4 per cent.

I am 70, single, own my own house and am in receipt of the State contributory pension of about €11,000. Am I eligible to invest some €7,500 of this SSIA money, thereby securing the Government's promised payment of €2,500, making a total investment of €10,000?

Ms C.M., Dublin

Yes, you are. In my experience, however, you may have to fight hard to get it.

The Pension Incentive Tax Credit, as the Cowen initiative is formally called, offers people €1 for every €3 they move from a maturing Special Savings Incentive Account (SSIA) to a pension policy - up to a maximum incentive of €2,500.

The other basic rule is that your income last year must be less than €50,000.

You clearly meet those requirements. In addition, you are below the age of 75, which is the cut-off for opening a Personal Retirement Savings Account (PRSA) - the most appropriate vehicle for your pension contributions in this case. The fact that you are already in receipt of a pension does not disqualify you.

Minister for Finance Brian Cowen did subsequently introduce a further rule preventing people from cashing in their incentivised pension contribution for at least 12 months.

No problem then. Well, there shouldn't be. However, the feedback I have had from pensioners and their representative groups around the State is that it has proved anything but simple for them to avail of the scheme.

Essentially, early in the process, the Revenue sent out a bug letter putting the frighteners on the financial institutions over issuing such accounts to pensioners. Though the Revenue was subsequently forced to tone down this position, the institutions apparently remain in thrall to a tax authority that has rediscovered its remit to tackle abuse of the tax system.

The bottom line is that you are entitled to avail of this incentive and you should report any PRSA provider that refuses you to the pensions ombudsman and the financial services ombudsman.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice.

Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.