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B26/1993 DEEMING RATE CHANGE AND FINANCIAL INSTITUTIONS (FI) ACCOUNTS INTEREST RATES REFRESH

Document

DATE OF ISSUE: 6 May 1993

DEEMING RATE CHANGE AND FINANCIAL INSTITUTIONS (FI) ACCOUNTS INTEREST RATES REFRESH

INTRODUCTION

This instruction details an anticipated deeming rate change on pensioner savings, and an automatic refresh of financial institution (FI) accounts interest rates effective from 27 May 1993.

BACKGROUND

2.On 29 April 1993, the Minister for Social Security approved a reduction to the current rate under the deeming provisions from  5% to 4%, effective from 27 May 1993 for service pensioners (and 20 May 1993 for DSS clients).

3.The change in the deemed rate reflects the continuing fall in interest rates generally.  To ensure that service pensioners get the full benefit of this fall in interest rates, an automatic update of the bulk of "at call " accounts held by service pensioners in banks and building societies will be undertaken at the same time.

4.Further,  some 140 credit unions have also been targeted for an interest rate update - i.e. credit unions which have more than 20 cases listed against them.  This will provide coverage for  some 90% of all accounts listed under credit unions.

FI INTEREST RATES DATA

5.A copy of the data used for the update will be provided to all Branch Contact Officers for information. (A list of contact officers is at

Attachment A.)

WHO IS AFFECTED

6.It is estimated that upwards to 70,000 reduced rate service pensioner assessments nationally will be affected.

7.The new deeming rate change applies to all moneys in excess of $2000 ($4000 per couple) held by pensioners in cash or on deposit with financial institutions.  It also applies to bonds and debentures, and loans made and amounts gifted (deprived) after 22 August 1990.

8.The FI update will be applied to all FI accounts held by pensioners which can be matched i.e. accounts with interest below and above the deemed rate.  This is necessary as a change to interest rates where the deeming rate does not apply (e.g. investments below $2000/$4000) may affect the service pension rate.

ADVICES

9.All pensioners who receive an increase or a reduction in service pension due to a change in the deeming rate and/or the FI update, will receive:

1)a payment advice detailing the deeming and FI change;

2)where appropriate, a listing of all FI accounts and current interest rates held;  and

3)right of review and limited obligations paragraphs.

10.The account details section will be as per the February and September 1992 refreshes i.e. an alphabetical listing of all valid accounts reported on the FI screen (including accounts which were not updated), plus the interest rate used in the last assessment.  Balances and account numbers will not be listed. A sample advice letter is at Attachment B.

11.Full details are contained in the "System Rules Components - Deeming/Interest Rate Refresh Advices" which was provided to State Program Managers (Benefits) and System Support Officers (SSOs) under separate cover.

Printing And Despatch Of Advices

12.Printing and despatch of advices will be undertaken on a progressive basis during the period 11 to 21 May 1993. As soon as each State's advices have been lodged with Australia Post, the Advices Project Officer will inform the appropriate Branch contact officer.

ADP PROCESSING

13.The FI refresh and deeming rate change processing is scheduled from Saturday 8 May till Sunday 9 May 1993.  ADP processing guidelines, Branch processing timetable and the System Rules were provided to State System Officers on 22 April 1993.

EVALUATION

14.Due to the low pensioner inquiry rate resulting from the previous refreshes, collection of statistical information by the Branches for this exercise will not be required.

CONTACT OFFICERS

15.Contact officers for the FI accounts update and deeming rate change are as follows:

Project ManagerProject Officer

FI REFRESH/DEEMINGColette WoodfordFreda Widawski

(06) 289 6342(02) 213 7431

ADVICESTony WhelanJohn Ramsay

(06) 289 6684(06) 2896409

KAY GRIMSLEY

ASSISTANT SECRETARY

INCOME SUPPORT

ATTACHMENT A

BRANCH OFFICE CONTACT OFFICERS

STATENAMETITLETELEPHONE NOFAX NO

NSWGayle DowneyMngr A- K02/2137145 02/2137803

VICWendy Hall SSO03/2846213   03/2846797

QLDClaire McCorry  SSO07/2238835 07/2238533

SAPeter Feinler     SSO08/2132414 08/2132412

WARod Mohr    SSO09/4258417 09/2213094

TASDoug McLean   SSO002/216683 002/216602

THIS ATTACHMENT HAS BEEN RE-KEYED TO ENABLE IT TO BE LOADED ONTO THE GENERAL

ATTACHMENT B

SERVICE PENSIONER COUPLE

affected by Deeming & IRR.

BRANCH OFFICE

Centennial Plaza

280 Elizabeth Street

Sydney NSW 2000

Postal Address:

JOHN B SMITHGPO Box 3994, Sydney

SARAH SMITHNSW 2001

1029 ANZAC AVENUETelephone:

HOMEBUSH BAY 2140Metropolitan residents:

213 7777

Country residents:

008 257251

8 May 1993

YOUR FILE NUMBER

IS NX543210

Dear Mr and Mrs SMITH

This letter is to tell you about recent changes that affect your pension or allowance payments.

Change in Interest Rates and Change to the Deeming Rate

Recently financial institutions have varied their interest rates on deposit accounts (savings, passbook, statement and cheque).

Because of this change in interest rates the Government has decided to cut the assumed, or deemed, interest rate on pensioner savings from 5% to X% This new deemed rate also applies to money on loan and disposed assets.  In line with the Government's decision, we have changed the deemed rate we use in assessing the rate of service pension.

Interest rates on your deposit accounts have also been changed automatically for you.  Included in this letter are the interest rates we now have recorded for your bank, building society or credit union account(s).  No changes have been made to any fixed deposits or overseas accounts.

Payment details

The amount of pension you will receive each fortnight is set out below.  Payment at this rate will commence from 27 May 1993.


PAYMENTS TO JOHN SMITH and SARAH SMITH

Service pension   220.00   220.00

Pharmaceutical Allowance       2.60       2.60

TOTAL FORTNIGHTLY PAYMENT $222.60 $222.60

Your Accounts and Interest Rates%

ADVANCE BANK CASH PLUS STATEMENT7.5

COMMONWEALTH BANK KEYCARD3.25

     " ""4.25

     " " "5.75

IOOF BUILDING SOCIETY4.75

WESTPAC BANKING CORPORATION CHEQUENIL

Your right of review

If you do not agree with a decision affecting your rate of service pension, you may apply to have it reviewed by a delegate of the Repatriation Commission.  The Delegate may decide the original decision was correct, or may decide to change it.  If the decision is changed, your pension may be increased or reduced.

Any request for a review must be made in writing within three months of the day you receive this letter.  Your letter should state the specific grounds for your request for review.

Your obligations to the Department

Your obligations have been explained to you in previous advices.  These obligations still apply, but the relevant income and asset levels may have changed; these are shown below.

Your service pension is paid at less than the maximum rate.  You must tell the Department within 21 days if your combined income (excluding Department of Veterans' Affairs pension) rises above $797 a fortnight.  You must also tell us if the value of your assets rises above $240,000.

You can do this by telephoning or writing to us or by visiting any Department of Veterans' Affairs office.  The address and telephone number are shown at the top of this letter.  If you telephone, we may ask you to confirm information in writing or to send us certain documents which are related to the matter.

If you do not tell us of these changes you may be overpaid.  There are penalties that apply for failing to fulfil your obligations or for providing false or misleading information.  The authority for this obligation is under section 54 of the Veterans' Entitlements Act.  Please remember that obligations previously advised to you continue to apply.


Changes you have already told us about

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been included when sending this letter.  If this is the case, we will be sending you another letter as soon as the change has been put into place.

If you have any questions about any of the above matters, please contact this office at the address or telephone number shown at the top of this letter.

Yours sincerely,

G K Stonehouse

Deputy Commissioner as

Delegate of the Secretary