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5.6.11 Bonus Payable to a War Widow/Widower who has Deferred Age Pension
Last amended: 22 April 2014
Bonus periods applicable to war widow/widower who has deferred age pension
In certain circumstances, a person who has been deferring age pension then becomes a war widow/widower before claiming age pension and their bonus, may have bonus periods accrued at Centrelink included in the calculation of their bonus by DVA. To have these bonus periods included in the bonus calculation, a war widow/widower must:
- have either been registered as a member of the Centrelink scheme before becoming a war widow/widower or, in the opinion of Commission, could have been so registered before becoming a war widow/widower,
- not have received a social security pension or benefit (other than a carer payment) at any time since reaching age pension age,
- not have claimed pension bonus under the social security law before becoming a war widow/widower, and
- have registered as a member of the DVA pension bonus scheme in respect income support supplement (ISS).
Person who has claimed but never received bonus under social security law
At some time before becoming a war widow/widower, it is possible for a war widow/widower to have claimed, but never received, age pension and bonus. If the person made such a claim at Centrelink but received no payment, either because they were ineligible or not payable, the period during which they deferred age pension can still be included in the calculation of the DVA bonus.
Bonus period accrued under social security law included in bonus calculation
A period during which a person has deferred age pension prior to becoming a war widow/widower may be treated as if it is a bonus period under the VEA. For this to occur Commission must determine that had the person applied for the bonus in respect of that period immediately before becoming a war widow/widower, that period would have accrued as a bonus period under social security law. This requires Commission to determine a number of matters, including whether particular periods were periods of accruing membership and whether the person or their partner passed the work test for those periods. If the person was not registered at Centrelink, the Commission must also determine from what date the person could have been registered.
Calculation of overall qualifying period
A person can accrue a maximum of five qualifying bonus periods with the most recent bonus periods taken into account when the bonus is calculated. The number of bonus periods accrued under the VEA will affect whether and to what extent any bonus periods accrued under social security can be included in the calculation of the bonus. Any decision made by a war widow/widower concerning when to claim pension and bonus should take account of this. Once five years has been accrued, any additional full-year bonus periods will take the place of the earlier bonus periods. As a result, the bonus periods accrued at DVA (which may attract a lower bonus because of the ceiling rate) will gradually replace those accrued at Centrelink (where payment is not subject to a ceiling).
Example of overall qualifying period calculation where war widow/widower has deferred age pension
Mrs Calley worked for three years after reaching age pension age and was deferring age pension. Her husband, who was a veteran, died just after the third anniversary of her registration for the scheme. She became a war widow upon his death, so then registered for the scheme with DVA and continued to work for another twelve months. Her overall qualifying period is four years. Her first bonus period commences on the date of her registration for the Centrelink scheme.
How bonus rules vary for war widows/widowers who have deferred age pension
Generally the rules applicable to the DVA pension bonus scheme apply to these war widows/widowers. However, the rules vary in the following respects:
- the person's first bonus period will normally not commence on the date the person first became an accruing member of the DVA scheme. It could commence as early as the first date the person became an accruing member of the Centrelink scheme,
- it is not necessary for a war widow/widower who meets the above criteria to have accrued any bonus periods since becoming a war widow/widower, provided she has accrued a minimum of one bonus period at Centrelink.
- If, for example, a woman has been accruing bonus periods at Centrelink and, upon the death of her veteran husband, she ceases work and claims ISS, she can claim her bonus from DVA without having deferred ISS for any period.
- It would also be possible for a person who becomes a war widow/widower after the age of 70 to have accrued bonus periods at Centrelink up until the day before becoming a war widow/widower, but at that point the widow/widower would cease accruing,
- if the war widow/widower has only accrued a part-year period of accruing membership at Centrelink, that period can be included in the calculation of the bonus if, when aggregated with a period accruing at DVA since becoming a war widow/widower, that period would amount to one year,
- if the war widow/widower has only accrued a part-year period of accruing membership with DVA, that period can be included in the calculation of the bonus if, when aggregated with a period accrued at Centrelink before the person became a war widow/widower, that period would amount to one year,
- if the war widow/widower was subject to a compensation preclusion period while deferring age pension, that period will reduce the length of the overall qualifying period, and
- any differences between the assessment of age pension and income support supplement will be reflected in the calculation of that part of the bonus which is based on the period age pension was deferred.
Example of pension bonus calculation – change in pension deferred
An age pension is a means tested income support payment paid by Centrelink or DVA on behalf of the Department of Families, Housing, Community Services and Indigenous Affairs. The majority of age pensions are paid through Centrelink. However, eligible veterans who have an accepted disability or receive a disability pension from DVA, but do not have qualifying service, may be paid their age pension by DVA. Their partner may also receive their age pension from DVA, if eligible.
A war widow/widower is generally a person who immediately before their partners death, was the partner of, or was legally married to:
- a veteran; or
- a person who was a member of the forces; and
- who is receiving:
- a war widow's/widower's pension; or
- a pension that is payable under the law of a foreign country that is, in the opinion of the Commission, similar to a war widow's/widower's pension.
Refer to 5E(1) of the VEA for the full definition.
Centrelink is a Government service delivery agency responsible for delivering a range of Commonwealth Government services (including social security pensions and allowances) to the Australian community through a network of more than 400 Centrelink offices.
The Department of Veterans' Affairs.
Means carer payment under the Social Security Act 1991.
Age Pension Age refers to pension age as defined under the Social Security Act 1991, that is, pension age for people other than veterans.
The social security law includes:
- the Social Security (Administration) Act 1999; and
- the Social Security Act 1991;and
- the Social Security (International Agreements) Act 1999.
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.
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.
Veterans' Entitlements Act 1986.
The ceiling rate of service pension and income support supplement (ISS) is applied to all war widows/widowers when assessing the rate of pension. This amount was previously frozen at $124.90 per fortnight, however, since legislation was introduced in September 2002, is now indexed twice yearly in line with percentage increases in the maximum rate service pension. A higher ceiling rate can apply, however, in the following cases:
If a person:
became a war widow/widower-pensioner before 1 November 1986,
has continually received service pension, social security pension or ISS since that date, and
the rate of pension immediately before that date was more than $120.10
in such a case the ceiling rate is equal to the pre-November 1986 rate plus 4%.
If a person:
is a person to whom ISS is payable,
is not permanently blind, and
whose Part II or IV pension is [glossary:compensation reduced:DEF/Compensation reduced pension],
the ceiling rate is the sum of the ceiling rate as calculated above and the amount of the reduction in the Part II or Part IV pension. The maximum ceiling rate cannot exceed the maximum rate of single service pension. For ceiling rates refer to SCH6-A4 to A9 of VEA. The amount of increase to the ceiling rate pension under Part II or Part IV is worked out by using the formula in SCH6-A9 of the VEA.
For the purposes of Part VI of the VEA, a reference to a veteran is taken to be a reference to:
- a veteran as defined in subsection 5C(1) of the VEA;
- a member of the Forces as defined in subsection 68(1) of the VEA; or
- a member of a Peacekeeping Force as defined in subsection 68(1) of the VEA.
For the purposes of Part VII of the VEA, according to subsection 5C(1), veteran means a person (including a deceased person):
- who is taken to have rendered eligible war service, or
- in respect of whom a pension is, or pensions are, payable under subsection 13(6) and
- in Part III and Part VIIC of the VEA includes a person who is:
- a Commonwealth veteran, or
- an allied veteran, or
- an allied mariner.