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.
SSIAs
I opened a special savings incentive account with Ulster Bank in June and, as my salary is paid into the account on the 26th of every month, have set up a standing order that the money for the SSIA should not be taken until after the 25th.
I have now received a letter from the bank alerting me to the fact that there is a risk with weekends and bank holidays that a monthly payment could be missed, which would lead the Revenue to consider the account to be breached. It suggests I switch dates to the 1st of the month but, as my wife has a similar SSIA, this would initially entail my having to pay £800 out of my monthly salary - i.e. £400 on 28th and £400 three or four days later on the 1st.
If necessary, I shall have to do this but I would like to check firstly that the Revenue Commissioners would in fact consider the situation described by Ulster Bank as a breach or is the bank anticipating a problem which does not actually arise?
A friend has an SSIA with another bank with lodgment due by direct debit on the 30th of the month and they have not received any similar correspondence.
Mr H.K., Galway
There are two things at issue here - first, whether your special savings incentive account would be at risk of closure and secondly why the bank has notified you of this situation after you have set up the account.
The answer to the first is clear and, unfortunately, not what you might want to hear. The special savings incentive scheme has been constructed around a calendar month basis. As such, the monthly payment into the account must take place within the month in question; for instance, December's payment must be lodged in December, electronically or otherwise, and not on January 2nd.
If through a combination of circumstances, the payment does not get lodged to the SSIA account within the relevant month, the account falls outside the criteria of the scheme and the payment will not qualify for the Government bonus. If it happens in the first year of the account's life, the account will be closed as the criteria stipulate that there must be 12 monthly payments in the first year.
The Revenue Commissioners have confirmed that a late payment, for whatever reason, would put the account in default. It does not matter if a direct debit or standing order was not processed because of bank holidays or because there was not enough money in the account.
That, in itself, can be a problem where employers are late paying staff for any reason.
The Irish Bankers' Federation has also confirmed this interpretation and added that customers of its members are being advised to set a date within the first three weeks of the month for activating direct debits or standing orders into special savings incentive accounts. This is to allow time not only for things such as bank holidays but also for delays caused by money transferring between accounts in different institutions. After all, not everyone is setting up their SSIA in the same place where they hold their current or other feeder account.
However, it seems quite clear that you were not notified of this advice before opening your account and your experience among your friends is that not only were they not notified at that time but have not been alerted since to any potential problem. The Irish Bankers' Federation will not comment about the position at any individual bank. Ulster Bank says the requirement that the regular monthly deposits must arrive within the calendar month was only clarified by the Revenue after some people had already signed up to the scheme. As a result, it has set the 25th as a cut-off point for monthly contributions.
Ulster Bank is not alone in setting out such a regime; one institution appears to have set a single date on which all payments into its SSIA accounts take place.
Ulster Bank suggests customers for whom the new rules may present difficulties should talk to their branch about how best to address the situation, with the minimum of inconvenience.
The issue of when lodgments are made is important because most people receiving their earnings electronically do so towards the end of the month and, quite properly, want to transfer their SSIA contributions when they are sure there is money in the account. In your case, it appears you have little option but to change the date of your direct debit and accept the fact that for one month you will effectively be making double contributions from your salary - i.e. on your current lodgment date of the 28th and three or four days later on the 1st.
Medical cards
Those of us over 70 years are entitled to a medical card without a means test from July 1st, 2001. Current medical card holders are, I believe, exempt from PRSI 2 per cent deduction from gross income. The question is, are the new category over-70s (without a means test) entitled to this exemption?
Mr W.MacG., Dublin
As you say, medical card holders have received certain exemptions prior to the change in the system last July. At that point, the means test was done away with for people over the age of 70. They now have an automatic entitlement to a medical card, regardless of income or status.
Assuming the 2 per cent PRSI to which you refer is actually the 2 per cent health contribution levy, you will be pleased to hear the Departments of Health and of Social, Community and Family Affairs have confirmed that all medical card holders are exempt from this levy, regardless of income or status.
It is worth noting that people in receipt of the widow's or widower's pension, one-parent family payment or deserted wife's payment are also exempt from the health contribution.
