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Pension Bonus Bereavement Payment
Pension bonus bereavement payment
If pension bonus scheme (PBS) member dies before submitting a claim for pension bonus, their bereaved partner may be eligible to claim a pension bonus bereavement payment (PBBP), in lieu of the bonus payable to the deceased member. The PBBP applies to members who die on or after 1 January 2008.
Who is an eligible partner
A partner is not defined specifically for this purpose, but is taken to mean the partner of the PBS member as per section 5E(1) VEA immediately before the member died.
Calculating pension bonus bereavement payment
In working out the amount of PBBP, the deceased PBS member is taken to have made claims for both the designated pension and pension bonus just before they died. Disregard any PBBP employment income and any income of a kind specified in an instrument made under subsection 45UUB(2) VEA in working out the rate of the designated pension for the purpose of applying the pension bonus formula.
Conditions for bonus to be payable
If the rate of the designated pension immediately prior to the member's death is zero (after applying the modified test), then the bonus bereavement payment will also be zero. The minimum accrual of one year's bonus also applies. That is, the deceased PBS member must have accrued at least one full year bonus period of 365 days.
Employment income is disregarded
Certain kinds of income will not be assessed for pension bonus bereavement payment purposes. This reflects the fact that, under normal circumstances, most people cease work before claiming their pension bonus. This provision seeks to provide a similar outcome with no income from employment or leave payments affecting the rate of their designated pension and therefore the amount of their pension bonus.
PBBP employment income
PBBP employment income includes work-related income such as salary, wages, leave payments and business income of the deceased PBS member or the surviving partner. Periodic compensation payments for loss of earnings has also been declared as disregarded income. Income from work that does not meet the definition of gainful work, such as the management of family investments, is not disregarded from the means test in calculating PBBP.
PBBP income discount – limited application
The PBBP income discount only applies with respect to the bonus bereavement payment calculation. Any ongoing employment income will affect the rate of pension payable to the surviving partner, as well as the calculation of any bonus payable to the partner in their own right.
The pension bonus scheme closed to new entrants on 20 September 2009. Existing members can continue in the scheme under the rules that existed prior to 20 September 2009. The pension bonus scheme provided an incentive for older Australians to remain in the workforce and defer receipt of income support pension. The incentive was a bonus, payable if all eligibility criteria and rules were satisfied.
The pension bonus was a once-only, tax-free lump sum payable to a person who, on reaching their special date of eligibility, voluntarily deferred retirement for at least one year and registered as a member of the scheme. The pension bonus was claimed at the same time as claiming pension and is calculated using the annual rate of basic pension payable at grant, multiplied by the bonus periods accrued.
Designated pension is defined in section 45TA VEA and relates to the pension bonus scheme. Designated pension means:
- age service pension, or
- partner service pension, or
Designated pension under the Social Security Act 1991 means age pension
Gainful work is defined as work for financial gain or reward as an employee, self-employed person or otherwise. Irregular, infrequent and minor absences are to be treated as gainful work.
Management of family financial investments or domestic duties in relation to a person's place of residence does not count as gainful work.
The Commission has discretion to treat an activity as gainful work.