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11.1.1 Overview of Effective Dates and Pension Periods
Last amended: What does a pensioner receive on a payday?
An instalment of service pension or ISS is paid fortnightly in arrears with respect to the number of days in the pension period the person is eligible and the pension is payable. A system of daily entitlement means that pension variations may be effective from any day in the pension period, and that an instalment of pension may be made up of different daily rates.
What is the effective date for a grant of pension?
Grants of service pension and ISS may take effect from the day of determination, or on an earlier or later day specified in the determination.
Variations and terminations - section 54 obligations
Where a person notifies of a change in circumstances that results in an increase in service pension or ISS, the date of effect for the increase will be the day the person notifies of the change, or the day the change occurs, whichever is the later. Where the result is a reduction, suspension or cancellation in pension, the date of effect is an automatic determination under the VEA. However, to arrive at this date of effect, the decision maker has to determine whether the person has or has not complied with their obligations under s54 of VEA.
Dates of effect under section 54
Variations and terminations – general
For increases, reductions, suspensions or cancellations of service pension or ISS that do not result from a pensioner's compliance or non-compliance with section 54 obligations, the effective date is discretionary. The effective date may be the day the determination is made, or another day specified in the determination.
The date of effect rules and the related section 54 obligations require that there be a specified event or change in circumstances, known to the pensioner, that can be notified to the Department. In some cases, for example with private trust or companies, sole traders or partnerships, changes to the rate of income or asset value may not be known until the end of the financial year when an income tax return or financial statements are completed. In these cases the date of effect may be based on the receipt of the income tax return or other evidence that confirms a change in the entity's income or asset value.
Correction of a Manifest Error
The correction of a pension determination, involving the replacement of information used at the time of the initial determination which is subsequently proven to be wrong, is not subject to the usual date of effect rules applying to notifications.
Manifest error involves incorrect use of information
Manifest error may arise where a delegate reasonably had knowledge of, or access to, all the relevant facts necessary for an assessment but makes an incorrect decision. As the usual date of effect rules are expected to generally apply to determinations, a finding of manifest error which allows a departure from the date of effect rules should be carefully considered. For example, it would not arise where the information which changes an assessment was notified in an obscure way and a careful assessor could not reasonably have been expected to know about it.
Breaches of natural justice
A finding of manifest error may cover the situation of not taking known relevant facts into account when making a decision, as well as taking irrelevant facts into account. Both these situations are regarded as breaches of natural justice under the Administrative Decisions (Judicial Review) Act 1977
Invalid determinations are cancelled
A finding of manifest error results in the determination being regarded as invalid. The correction of an invalid determination involves the cancellation, and replacement, of the original decision, rather than a reassessment as a result of new circumstances being notified. The requirement that invalid pension assessments be corrected (when the original information used is later shown to be wrong) from the commencement date allows a favourable pension adjustment to be made retrospectively in these cases.
Original date of effect is maintained
For example, a delegate may act on information received about a person's veteran status, relationship, residency, or asset value, at the time of making a determination, which is later proven to be incorrect, and that it was not reasonable for the delegate to have acted as he/she did on the information received. It is also possible that a calculation error or input error which produces an incorrect assessment may be made. Invalid pension assessments resulting from the unreasonable use of incorrect information or calculation error must be corrected from the date that the error arose, and are not limited by the date of effect rules that otherwise apply to favourable determinations. The original date of effect of the replacement determination is maintained.
A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.
ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.
According to subsection 5Q(1) (b), of the VEA a pension period is a period of two weeks that starts two days before a payday (i.e. Tuesday) and ends two days before the next payday (i.e. close of business Monday).
The date of effect, or effective date, is the day on which a certain incident or 'event' begins affecting a pension assessment.