C40/1996 LUMP SUM ADVANCE PAYMENT OF SERVICE PENSION OR INCOME SUPPORT SUPPLEMENT | Compensation and Support Reference Library, Departmental Instructions, 1996

You are here

C40/1996 LUMP SUM ADVANCE PAYMENT OF SERVICE PENSION OR INCOME SUPPORT SUPPLEMENT

Document

DATE OF ISSUE:  27 JUNE 1996

LUMP SUM ADVANCE PAYMENT OF SERVICE PENSION OR INCOME SUPPORT SUPPLEMENT

PURPOSE

The purpose of this Departmental Instruction is to provide procedural guidelines and background information on the 1995/96 budget initiative which allows certain pensioners to access a lump sum advance of pension.

2This initiative is effective from 4 July 1996.

BACKGROUND

3Currently, service pensioners and income support recipients are unable to access an advance on their pension to meet often unplanned living expenses such as emergency replacement of white goods, car repairs/replacement and/or household maintenance expenses.  Under this initiative they are able to receive an advance of up to $500 to assist in meeting such expenses.

RATIONALE

4The availability of advances of service pension (SP) or income support supplement (ISS) provides pensioners with greater choice and flexibility in how they meet their needs.  Pensioners with little or no income, apart from their pension, are expected to be the main beneficiaries of this proposal.

LEGISLATION

5Amendments to the Veterans' Entitlements Act 1986 (VEA) for the advance payment provisions were introduced in the Veterans' Affairs Legislation Amendments (1995-1996) Act (No.2) 1995.  Royal Assent was received on 11 December 1995.  The eligibility and payability rules in respect of advance payments of SP and ISS are included in new Part IIID of the VEA.


WHICH PENSIONS CAN BE ADVANCED

6The only types of pension that can be advanced are:

  • age service pension;

  • invalidity service pension;

  • partner service pension;

  • carer service pension; and

  • income support supplement.

Please note that a pensioner receiving a war widow(er) pension or disability pension only (including the special rate) is not eligible for a lump sum advance.  War widow(er) pension or disability pension is not included as part of this budget initiative.

ELIGIBILITY CRITERIA

7A service pensioner or ISS recipient is eligible for an advance payment of pension if:

  • a SP or ISS is payable to the person;

  • the person was receiving a SP, an ISS, a social security pension or a social security benefit continually during the three months immediately preceding the person's application for an advance payment;

  • the Commission is satisfied that the advance payment will be used to assist in meeting the person's living expenses; and

  • the Commission is satisfied that the person will not suffer severe financial hardship as a result of having to repay the advance payment by deductions from ongoing payments of pension.

8              A person is not eligible for an advance payment if he or she owes a debt to the Commonwealth under sections 205 or 205A of the VEA or if there is an advance payment of pension still outstanding.

Note:  Current procedures apply for obtaining information from the Department of Social Security.  Refer DI C20/96.

APPLICATION

Who can apply

9              Any person receiving a SP or ISS can apply for an advance payment of their pension.  Both members of a couple may apply, at the same time if they wish.  In these cases two application forms will be required.  Repayment is by way of deduction from their SP, ie if the veteran applies and is granted a lump sum advance, the deduction is made from the veteran's SP only.


Form

10              Application for an advance payment of SP or ISS must be made on approved form D556 'Application for Lump Sum Advance Payment'.

11              An application may be lodged by:

  • the pensioner who wants to receive the advance; or

  • a person who has the pensioner's authority and is acting on behalf of the pensioner.

12              The applicant must be an Australian resident and be residing in Australia when the application is lodged.  (For Australian resident see section 5G of the VEA.)

Assistance to pensioner to calculate ability to repay lump sum advance

13              Significant emphasis is placed on the pensioner making their own decision about their ability to repay an advance of their pension.  To help pensioners who request assistance in deciding whether they can afford to repay an advance, a new form D557, 'Application For Lump Sum Advance, Income/Expenses Calculator' has been developed.

Note:  As a general rule, completion of this sheet is not obligatory and is intended as a guide to assist pensioners when making their decision about their advance.  However, in cases where the delegate has some doubt about the pensioner's ability to manage on a reduced income, the delegate may require the form to be completed (refer para 17).

Application may be withdrawn

14              An application for an advance payment may be withdrawn by the applicant or the person acting on behalf of the applicant at any time prior to the application being determined.  The withdrawal may be made either verbally or in writing.

DETERMINATION OF THE ADVANCE

15              If the pensioner indicates on the application form that they can afford to repay the advance, and there is nothing recorded to suggest that the pensioner cannot make that decision, the delegate then has no reason not to be satisfied that the pensioner can manage on a reduced pension.


16              For cases where there is some doubt that the service pensioner or ISS recipient would be able to manage on a reduced income for the duration of the repayment period, the delegate may require the completion of the new form D557, 'Application For Lump Sum Advance, Income/Expenses Calculator'.  Examples of where this form may be required are:

  • the service pensioner or ISS recipient is residing in a nursing home and a large part of their income may already be committed to cover fees; or

  • the service pensioner or ISS recipient has been granted hardship to repay a previously lump sum advance payment; or

  • the service pensioner or ISS recipient may have an advance pharmaceutical allowance; or

  • the service pensioner or ISS recipient is receiving SP or ISS under the hardship provisions or under the pensions loans scheme.

17              The decision to grant an advance payment must be based on the eligibility criteria as detailed in paragraphs 8 and 9.  An application for an advance payment cannot be rejected because of the available amount of cash resources a service pensioner or ISS recipient may have.

Cases under suspension

18              If an application is received for an advance payment of SP or ISS and the pensioner is under suspension, the pensioner does not meet the eligibility criterion, “SP or ISS is payable to the person”.  Sections 36A, 37A, 38A, 39A and 45B of the VEA provide that if SP or ISS is suspended, it ceases to be payable to the person.  In order for the advance payment application to be considered, the suspension would need to be dealt with first.

19              If SP or ISS has been suspended prior to the lodgement of an application for lump sum advance, the pension must be reinstated from a date at least 3 months prior to the lodgement date of the application.  If not, the applicant does not meet the criterion, “the person was receiving a SP, and ISS, a social security pension or a social security benefit continually during the three months immediately preceding the person's application for an advance payment”.


AMOUNT OF ADVANCE

20              The amount of the advance is the lesser of the following:

  • 6% of the *annual payment rate; or

  • $500; or

  • the amount of the advance payment sought.

*Note:  Annual payment rate is defined in subsection 67(C)(3) of the VEA.  It is the rate of SP or ISS payable to the person on the last pension payday before the application for the advance payment is determined.  The rate of SP or ISS includes any additional amount payable such as rent assistance, pharmaceutical allowance and dependant children but excludes any remote area allowance or telephone allowance payable.  War widow(er) pension or disability pension cannot be included as part of the 'annual payment rate'.

Example:  Anne applied on 16 July 1996 for a $400 advance payment of her partner service pension (PSP).  On the 18 July 1996 a delegate of the Commission was satisfied that Anne met the eligibility criteria.  Anne's rate of service pension (including pharmaceutical allowance) on 4 July 1996 (last pension payday prior to the advance payment determination) was $200 per fortnight.

Therefore the annual payment rate is $5200 ($200.00 ? 26).

Calculation of the advance amount

6% of the annual payment rate = 6% of $5200 = $312 ; or

Maximum limit = $500; or

Amount sought = $400.

The amount that can be advanced to Anne is $312.

21              If a service pensioner or ISS recipient applies for an advance of SP or ISS and is ineligible for the amount requested, the pensioner should be contacted.  There may be instances where, unless the pensioner is granted the amount requested, they may no longer wish to proceed with their application.

Minimum limit

22              The legislation does not provide for a minimum amount of advance payment of pension.


23              However, any requests for an advance payment of SP or ISS of say less than $50 should be discouraged.  An application for an advance payment of less than $50 may indicate that the pensioner would find it difficult to manage on a reduced pension and therefore would not be eligible for the advance payment.  In these cases, the delegate may require the applicant to complete form D557, 'Application For Lump Sum Advance, Income/Expenses Calculator'.

24              As a general rule, where there is a need to meet living expenses that are of a minimal amount, it is expected that the pensioner should rely on their fortnightly pension payment.

PAYMENT OF THE ADVANCE PAYMENT

25              Once the delegate of the Commission is satisfied that the pensioner is eligible for the advance payment, the amount granted should be paid on the next practicable pension payday on which the pensioner is paid an instalment of pension.  The payment must be paid as a lump sum.  Subsections 67B(1) and (2) of the VEA refer.

26              Subsection 67(4) of the VEA provides that an advance payment should not be paid if SP or ISS is cancelled or reduced to nil before the day on which the advance payment would have been paid.

Emergency Payment

27              In cases of emergency, the pensioner can request an immediate payment of the lump sum advance either by cash or cheque.  Subsection 67B(3) enables a delegate of the Commission to determine in writing the day an advance payment can be paid.

28              Once the delegate authorises an immediate payment, existing local procedures for emergency payment of pension should be used and the Lump Sum Advance System should be updated accordingly.  System examples will be provided in separate documentation.

ADVANCE PAYMENT DEDUCTION

Calculation/repayment

29              The advance payment deduction is calculated by dividing the full amount of the advance payment by 13.  This rate of deduction from the pension ensures the advance payment is repaid in six months.  The deduction is calculated automatically by the Lump Sum Advance System.  Examples will be provided in separate documentation.

30              An advance payment deduction is not to be made from the pension on the same payday that the advance payment is made.  Deductions should commence from the payday after the advance payment has been made to the pensioner.  Subsection 67D(2) of the VEA refers.

31              The pensioner may repay the advance payment in a shorter period of time by making a one off additional repayment or by requesting a higher fortnightly deduction rate.


32              It is only at the pensioner's written request that fortnightly deductions may be increased.  The delegate must be satisfied that the pensioner would not suffer severe financial hardship as a result of the increased fortnightly deductions.

33              When the pensioner makes a one off additional repayment, it is necessary for the examiner to find out whether the pensioner wishes to reduce the fortnightly deduction rate for the remainder of the original repayment period or continue to repay at the original rate of deduction for a reduced number of fortnights.  Processing examples will be provided in separate documentation.

Rounding

34              The amount worked out for the advance payment deduction is rounded to the nearest 10 cents (rounding 5 cents upwards).

Hardship

35              There may be situations where the advance payment deduction causes severe financial hardship.  The pensioner can apply in writing to have the rate of deduction decreased or stopped.

36              A new form D555, 'Application for Lump Sum Advance, Hardship Claim Form' has been developed for this purpose.

Calculation under hardship

37              The pensioner must provide details of the change in circumstances that:

  • was unforseen; and

  • exceptional; and

  • would result in them suffering severe financial hardship if required to continue paying the advance payment deduction that would otherwise apply.

38              For example, an increase in council rates etc may result in an the pensioner's expenses increasing and the pensioner no longer being able to manage on the reduced rate of pension.

39              Form D555 requires the pensioner to indicate how long they expect their changed circumstances to continue to affect their ability to repay at the current rate and how much they think they can afford to repay.

40              Additional information is also sought on the pensioner's fortnightly income and expenses in order to give the delegate an indication of their capacity to repay.


41              If the delegate is satisfied the criteria as stated in para 39 is met, they may determine in writing that the advance payment deduction can be reduced or stopped.  The delegate must specify a period and a review should be set for the end of that period to resume the higher deduction rate.

Note:  In the event that an application for an advance payment of pension is received from a pensioner who has suffered severe financial hardship whilst repaying an earlier lump sum advance, a delegate of the Commission may not be satisfied that the pensioner can manage on reduced pension and therefore decline the new application. In these cases, the delegate may require the applicant to complete form D557, 'Application For Lump Sum Advance, Income/Expenses Calculator'.

Review of hardship

42              If a person's circumstances change during a period where the rate of repayment has been decreased or stopped because of hardship, a delegate can review the earlier decision and resume or increase deductions providing that the delegate is satisfied that the pensioner would not suffer severe financial hardship.  The decision must be in writing.  The rate of repayment cannot be higher than the rate set prior to hardship being determined.

43              As a work practice where a hardship decision is in force, it is recommended that the rate of repayment for the outstanding amount is reviewed in line with the indexation of pensions.

Rate insufficient to cover repayment

44              There may be situations where the amount of SP or ISS is insufficient to cover the amount of advance payment deduction.  This might occur where the pensioner undertakes employment during the period where the advance payment is being repaid.

45              Where the reassessed rate is less than the amount of the deduction, the amount of deduction is taken to be the amount of SP or ISS in payment.

46              The amount of SP or ISS in payment includes any additional amount payable by way of rent assistance, pharmaceutical allowance and dependant children but excludes any amount payable by way of remote area allowance or telephone allowance.  War widow(er) pension or disability pension is not included in the 'annual payment rate' and therefore cannot be used as a 'top up'.

47              For cases where the reassessed pension rate is less than the advance payment deduction, repayment of the full amount of the advance will mean that the repayment period will exceed 13 fortnights.  A sample standard letter to cover this scenario is at

Attachment A7.

48              Where SP or ISS is subsequently increased prior to the advance being fully repaid, the repayment rate should increase in line with the rate of SP or ISS.  However, it cannot be more than the original rate of deduction.  Examples of how these cases will be processed on the system will be provided in separate documentation.

49              Reports will be produced for these cases detailing the new repayment rate and end date.

Payability protected

50              If the rate of SP or ISS is reduced to nil because of an advance lump sum deduction, payability of SP or ISS is retained.

Transfer out/in cases with an outstanding advance payment deduction

51              Where there is an outstanding advance payment deduction and action has been taken to transfer payment of SP or ISS to another State, the lump sum advance system will also need to be updated.  Information about the advance will be recorded on the lump sum advance history screen.  A copy of the history screen must be attached to the file by the out going State Office.  This information will enable the incoming State Office to record the advance details on the lump sum advance system after the SP or ISS payment has been transferred in.  Examples of how these cases will be processed will be provided in separate documentation.

Unrepaid advance payment to a deceased pensioner

52              If a pensioner dies during a period where a lump sum advance payment is being deducted from their pension, the balance of the advance outstanding, at the time their pension ceases to be payable, becomes a debt to the Commonwealth.  In the majority of cases action to cease the payment of SP or ISS would occur part way through the bereavement period.  The debt is recoverable from the estate and normal procedures for the recovery should apply.

53              When calculating bereavement payment (BP) any amount of advance payment of pension that has been made and not repaid is disregarded.

Example:  Veteran is receiving SP of $263.50pf ($25.00pf is being deducted to repay an advance).  The partner is receiving SP of $288.50pf.  The veteran dies 6 fortnights after receiving a lump sum advance.  In the calculation of the BP the $25.00 deduction is disregarded, for example;

Calculation for BP

Combined pension couple rate (CPCR)$288.50 ? 2=              $577.00pf

Reassessed survivor's (spouse) individual rate$348.00pf

Difference between the CPCR and the reassessed survivor's rate$229.00pf

BP is 7 fortnights @ $229.00=$1603.00

Debt

54              If a pensioner has received an advance payment of SP or ISS and the pension ceases to be payable before the advance payment has been fully repaid, then the outstanding amount becomes a debt.  Section 205(1AB) of the VEA refers.

55              The waiver provisions are to avoid unnecessary calculation of minimal debts where it is obviously not cost effective to recover.  However, these debts are different to a breach or misrepresentation of circumstances and recovery action should be taken in the first instance.

56              A further change in circumstances may result in the SP or ISS becoming payable and the debt could then be recovered.  For example, the veteran commenced work and SP was reduced to nil, after a short period the veteran ceased work and SP was again payable.

WinPORS

57An attribute will be added to WinPORS under 'Causes' to enable recording and identification of debts arising from advance payments of SP or ISS.  State Offices will be notified when the attribute is available.

TAXATION

58              The lump sum advance of SP or ISS becomes taxable income as it is repaid.  For example, if a veteran on age service pension is granted a lump sum advance of $400, the fortnightly rate of deduction of $30.80 is added to the veteran's taxable pension amount each fortnight until the lump sum amount is repaid.

CLAIMS MANAGEMENT SYSTEM (CMS)

Classification

59A CMS classification type will be automatically generated for grant, repayment and variation action for every lump sum advance case as the case is added or updated through the Lump Sum Advance System.  Each case will move through registration to case finalisation on CMS as the Lump Sum Advance system is actioned.  There is also a 'case withdrawn' stage for cases which are withdrawn for any reason.

60Mandatory attributes will be automatically recorded however additional attributes, to identify particular aspects of individual cases, can also be added on CMS for grant and variation cases.  Attachment B lists the classification types, stages and attributes for CMS recording updating and reporting information.

Reports

61Normal statistical and case reports will be available for lump sum advances cases from CMS.

RIGHT OF REVIEW

62              S57 review rights have been amended to apply to any decision to grant or reject an application for an advance payment of SP or ISS.  A delegate's decision to grant or vary an application for severe financial hardship in connection with an advance payment is also reviewable under section 57.

QUALITY ASSURANCE

63              It is recommended that a percentage check of determined advance payment applications form part of your normal quality assurance program.

SYSTEM

64              A new PC stand alone system will pay the lump sum advance of SP or ISS and initiate and control repayment of the advance from the fortnightly SP or ISS instalments.

65              Processing examples will be provided in separate documentation.

ADVICES

66              Initially all advices are provided as sample standard letters.  The following scenarios that need to be covered are:

  • Lump sum advance grant*. Attachment A1

  • Lump sum advance rejection. Attachment A2

  • Lump sum advance variation*.  Attachment A3

  • Lump sum advance final repayment*.  Attachment A4

  • Lump sum advance variation under hardship. Attachment A5

  • Lump sum advance transfer in*.  Attachment A6

  • Lump sum advance rate insufficient, vary repayment. Attachment A7

67              *These advices will eventually be included in the daily advices.  They will become automatic sometime following the implementation of PIPS/PC.

QUESTIONS AND ANSWERS

68Attachment C offers some questions and answers to assist in answering enquires and correspondence.

ATTACHMENTS

69              The following attachments are provided:

Attachment ASample standard letters

Attachment BCMS codes

Attachment CQuestions and answers


ENQUIRIES

70              Any questions regarding this instruction should be directed to the Policy Implementation Unit in South Australia:

Robyn Del CasaleAssistant Director(08) 213 2321              (LAN S-B-PI-1)

PETER REECE

DIVISION HEAD

COMPENSATION

Error! Bookmark not defined.1 of 79Error! Bookmark not defined.


Attachment A1

Lump Sum Advance of Pension Advice: Grant of advance

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

GRANT OF LUMP SUM ADVANCE OF PENSION

This letter is to advise you of the grant of your recent application for a lump sum advance of your pension of {Amount advanced}.

{Although you applied for an advance of {Amount applied for}, the maximum advance you are eligible for is {Amount advanced} which is 6% of your annual payment rate.}

{We have arranged for your lump sum advance to be paid with the next fortnightly pension payment on {date}.}

{As requested by you, you have received your Lump Sum Advance by an immediate payment at this office.}

{As requested by you, your Lump Sum Advance has been paid to you by cheque posted to the above address.}

Lump sum advance repayment details

Your lump sum advance will be repaid by fortnightly deductions from your pension payment starting from {Date of first deduction}.  There will be{12} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}.

If an unforeseen and exceptional change in your circumstances means that repayment of the lump sum advance causes severe financial hardship because of your reduced fortnightly pension payment, you can apply through this Department to have the repayment amount reviewed.

Payment Details

Details of your total fortnightly payment during the repayment period are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Less lump sum advance repayment{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

If you are not satisfied with any aspect of this decision, you may apply to have it reviewed by a Senior Delegate of the Repatriation Commission.  If you decide to apply for a review, you must lodge your application within three months of receiving this letter.  A request for a review must be in writing and set out the reasons why you are seeking the review.

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

Yours sincerely,

{Title}


Attachment A2

Lump Sum Advance of Pension Advice: Rejection of advance

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

NOT ELIGIBLE FOR LUMP SUM ADVANCE OF PENSION

This letter is about your recent application for a Lump Sum Advance of your pension.

A delegate of the Repatriation Commission has determined that you are ineligible for a lump sum advance payment because{ you currently have an outstanding debt to the Commonwealth / you are not in receipt of an income support pension from this Department / you have not been in receipt of an income support pension from either this Department or from the Department of Social Security for at least 3 months / you have a current lump sum advance outstanding / you may suffer severe financial hardship from reductions in instalments of pension as a result of recovering the advance payment from future instalments of pension / you have indicated that the advance payment will not be used to meet living expenses}.

You may reapply at any time {once you can meet the above eligibility requirement / if your circumstances change}.

If you are not satisfied with any aspect of this decision, you may apply to have it reviewed by a Senior Delegate of the Repatriation Commission.  If you decide to apply for a review, you must lodge your application within three months of receiving this letter.  A request for a review must be in writing and set out the reasons why you are seeking the review.

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

Yours sincerely,

{Title}


Attachment A3

Lump Sum Advance of Pension Advice: Variation to repayment rate.

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

VARIATION OF REPAYMENT OF LUMP SUM ADVANCE OF PENSION

{This letter is to advise you of a variation to the repayment of your lump sum advance of pension following your payment of {Amount of repayment}.  The new repayment details as arranged with you are shown below.}

{This letter is to advise you of a variation to the repayment of your lump sum advance of pension following your request to increase your fortnightly payments.  The new repayment details are shown below.}

Variation to Lump Sum Advance Repayment Details

Your lump sum advance repayment will be varied from {Date of first varied deduction}.  There will now be {number of fortnights} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}.

Payment Details

Details of your total fortnightly payment during the varied repayment period are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Less lump sum advance repayment{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

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

Yours sincerely,

{Title}


Attachment A4

Lump Sum Advance of Pension Advice: Final repayment

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

FULL REPAYMENT OF LUMP SUM ADVANCE OF PENSION

This letter is to inform you that your Lump Sum Advance repayment is now completed and that you may now apply for a new Lump Sum Advance if you wish.

Payment Details

The total fortnightly payment you receive will be varied from {date} and the details are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

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

Yours sincerely

{Title}


Attachment A5

Lump Sum Advance of Pension Advice: Hardship application

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

VARIATION OF REPAYMENT OF LUMP SUM ADVANCE OF PENSION: HARDSHIP

This letter is about your recent request to vary your repayment of the Lump Sum Advance of your pension on the grounds of hardship.

*{A Delegate of the Repatriation Commission has determined that you are eligible to have your fortnightly repayments varied under the hardship provisions  Your repayments details are shown below.}

{A Delegate of the Repatriation Commission has determined that they are not satisfied that the change in your circumstances would result in you suffering severe financial hardship by continuing repayment at the current rate.  Your fortnightly repayments are the same as previously advised and are set out below.}

Lump Sum Advance Repayment Details

*{Your current outstanding lump sum advance of {Amount outstanding}will be repaid by reduced fortnightly deductions from your pension payment starting from {Date of next deduction}.  There will be{Number of remaining deductions} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}}.

{Your current outstanding lump sum advance of {Amount outstanding}will continue to be repaid by fortnightly deductions of {Amount of deduction} from your pension payment.  There will be{Number of remaining deductions} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}}.

Payment Details

Details of your total fortnightly payment during the repayment period are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Less lump sum advance repayment{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

If you are not satisfied with any aspect of this decision, you may apply to have it reviewed by a Senior Delegate of the Repatriation Commission.  If you decide to apply for a review, you must lodge your application within three months of receiving this letter.  A request for a review must be in writing and set out the reasons why you are seeking the review.

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

Yours sincerely,

{Title}


Attachment A6

Lump Sum Advance of Pension Advice: Transfer In

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

TRANSFER OF YOUR REPAYMENT OF LUMP SUM ADVANCE OF PENSION TO {NEW STATE OFFICE}

This letter is about the repayment of your Lump Sum Advance of pension previously granted to you by {Transfer out State Office}  The repayment arrangements will now be administered from this Office.

Lump sum advance repayment details

Your lump sum advance repayment will recommence from {Date of next repayment deduction}  and be repaid by fortnightly deductions from your pension payment.  There will be {Number of remaining full payments} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}.

Payment Details

Details of your total fortnightly payment during the repayment period are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Less lump sum advance repayment{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

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

Yours sincerely,

{Title}


Attachment A7

Lump Sum Advance of Pension Advice: Rate insufficient, vary repayment

Reference:{Pensioner's Reference}

Contact:{Contact Name}

Telephone:{Contact Phone}

{Pensioner's Name}

{Pensioner's Street}

{City} {State} {Postcode}

Dear {Mr/Mrs}{Pensioner's Name}

VARIATION OF REPAYMENT OF LUMP SUM ADVANCE OF PENSION

This letter is to advise you of a variation to the repayment of your lump sum advance of pension following the reduction in your rate of pension payment.

As your new rate of {service pension /ISS} is now insufficient to pay the full instalment for your lump sum advance repayment, we have arranged to vary your repayment rate and the details are shown below.

Variation to Lump Sum Advance Repayment Details

Your lump sum advance repayment will be varied from {Date of first varied deduction}.  There will now be {number of fortnights} deductions of {Amount of deduction} plus a final deduction of {Amount of final deduction} on {Date of final repayment}.

Payment Details

Details of your total fortnightly payment during the varied repayment period are shown below.

{Disability pension}{Amount}

Service Pension{Amount}

Less lump sum advance repayment{Amount}

Pharmaceutical allowance{Amount}

Total fortnightly service pension{Amount}

---------------

TOTAL FORTNIGHTLY PAYMENT{Amount}

---------------

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

Yours sincerely,

{Title}

Error! Bookmark not defined.1 of 79Error! Bookmark not defined.


ATTACHMENT B

New CMS classifications for Lump Sum Advance

ITEM    CLASS TYPE NAME     NUM  CATEGORY   PROC

                   1   LUMP SUM GRANT        983    SPP

                   2   LUMP SUM RECOVERY     987    SPP

                   3   LUMP SUM VARIATION    988    SPP

The above classifications will be automatically generated.  Lump sum grant and Lump sum variation will be classified when the case is being processed on the Lump Sum system.

Lump sum recovery will be classified after batch processing has occurred.

Attributes for Lump Sum Grant

NEXT:                 CNS - CLASS TYPE ATTRIBUTES (CL.A)               13/05/96

PSWD:                                                             PAGE 01

                    CLASS TYPE NUM: 983 LUMP SUM GRANT

ITEM   ATTRIBUTE NAME      NUM  STATES   ITEM   ATTRIBUTE NAME  NUM  STATES

   1  EXAMINER DETERMINED   945  NVQSWT   13 OVERPAYMENT EXISTS  709  NVQSWT

   2  LS ADVANCE EXISTS     705  NVQSWT   14 SAME DAY SERVICE    115  NVQSWT

   3  LS APPLY FULL AMOUNT  701  NVQSWT   15 VAFIS               973  NVQSWT

   4  LS APPLY PART AMOUNT  702  NVQSWT

   5  LS GRANT PART AMOUNT  704  NVQSWT

   6  LS GRANT SAME AMOUNT  703  NVQSWT

   7  LS NO PENSION 3 MOS   706  NVQSWT

   8  LS PAY RATE TOO LOW   708  NVQSWT

   9  LS TRANSFER OUT       712  NVQSWT

  10  LS UNABLE TO MANAGE   707  NVQSWT

  11  OFF FILE PROCESSING   105  NVQSWT

  12  OUTREACH              930  NVQSWT

Attributes for Lump Sum Recovery - None exist

CLASS TYPE NUM: 987 LUMP SUM RECOVERY

ITEM   ATTRIBUTE NAME      NUM  STATES   ITEM   ATTRIBUTE NAME      NUM  STATES

REORDER:   (Y) OR NEW CLASS TYPE NUM:

PF: 12=HELP 14=HOLD 15=END 16=RESUME 19=PGUP 20=PGDN

CLASS TYPE NUM has no attributes

Attributes for Lump Sum Variation

PSWD:                                                         PAGE 01

                    CLASS TYPE NUM: 988 LUMP SUM VARIATION

ITEM   ATTRIBUTE NAME      NUM  STATES   ITEM   ATTRIBUTE NAME      NUM  STATES

   1  LS CLIENT DECEASED    717  NVQSWT

   2  LS CLIENT REQ VARY    713  NVQSWT

   3  LS HARDSHIP VARY      714  NVQSWT

   4  LS ISS/SP CANCELLED   718  NVQSWT

   5  LS REFER DEBT COLLCT  711  NVQSWT

   6  LS REPAYMENT FULL     716  NVQSWT

   7  LS REPAYMENT PART     715  NVQSWT

   8  LS TRANSFER OUT       712  NVQSWT

REORDER:   (Y) OR NEW CLASS TYPE NUM:

PF: 12=HELP 14=HOLD 15=END 16=RESUME 19=PGUP 20=PGDN

CMS Class groups

NEXT:                CNS - CLASS TYPE CLASS GROUPS (CL.G)              13/05/96

PSWD:                                                         PAGE 01

                    CLASS TYPE NUM: 983 LUMP SUM GRANT

     ITEM    CLASS GROUP NAME    CODE      ITEM    CLASS GROUP NAME CODE

       1   NON PIPS CASES        NPS

NEXT:                CNS - CLASS TYPE CLASS GROUPS (CL.G)              13/05/96

PSWD:                                                         PAGE 01

                    CLASS TYPE NUM: 987 LUMP SUM RECOVERY

     ITEM    CLASS GROUP NAME    CODE      ITEM    CLASS GROUP NAME CODE

       1   NON PIPS CASES        NPS

NEXT:                CNS - CLASS TYPE CLASS GROUPS (CL.G)              13/05/96

PSWD:                                                         PAGE 01

                    CLASS TYPE NUM: 987 LUMP SUM VARIATION

     ITEM    CLASS GROUP NAME    CODE      ITEM    CLASS GROUP NAME CODE

       1   NON PIPS CASES        NPS

CMS Stages

NEXT:                   CNS - CLASS TYPE STAGES (CL.S)       13/05/96

PSWD:                                                             PAGE 01

                    CLASS TYPE NUM: 983 LUMP SUM GRANT

     ITEM    STAGE NAME          NUM       ITEM    STAGE NAME          NUM

       1   CASE FINALIZATION     199

       2   CASE WITHDRAWN        899

       3   REGISTRATION          370

NEXT:                   CNS - CLASS TYPE STAGES (CL.S)      13/05/96

PSWD:                                                      PAGE 01

                    CLASS TYPE NUM: 987 LUMP SUM RECOVERY

     ITEM    STAGE NAME          NUM       ITEM    STAGE NAME      NUM

       1   CASE FINALIZATION     199

       2   RECOVERY ACTIVE       405

NEXT:                   CNS - CLASS TYPE STAGES (CL.S)                 13/05/96

PSWD:                                                             PAGE 01

                    CLASS TYPE NUM: 988 LUMP SUM VARIATION

     ITEM    STAGE NAME          NUM       ITEM    STAGE NAME          NUM

       1   CASE FINALIZATION     199

       2   CASE WITHDRAWN        899

       3   REGISTRATION          370

Error! Bookmark not defined.1 of 79Error! Bookmark not defined.


ATTACHMENT C

QUESTIONS AND ANSWERS

1.What is an advance payment?

Eligible SP and ISS pensioners will be able to advance part of their future payments into an up front lump sum payment, in effect an interest free loan.  The advance payment was introduced to allow pensioners more flexible payment arrangements which gives them more choice in how they meet the living expenses of themselves and family members.

2.How does a pensioner apply for an advance?

To apply for a lump sum advance the pensioner must complete an Application for Lump Sum Advance Payment Form D556.  The usual provisions for lodging applications apply.  The pensioner must be an Australian resident and in Australia when the application is lodged.  Provision has been made for a person to sign on the pensioner's behalf if the pensioner is unable to sign the application.

3. Which pensions can be advanced?

  • age service pension

  • invalidity service pension

  • partner service pension

  • carer service pension

  • income support supplement

War widow(er) or disability pension cannot be advanced.

4.How is eligibility determined?

To be eligible for an advance:

  • service pension or an income support supplement must be payable;

  • the applicant must have been receiving SP, ISS or a pension or benefit from DSS continuously during the 3 months immediately preceding the application for the advance;

  • the Commission is satisfied that the advance will be used to assist in meeting the applicant's living expenses;

  • the Commission is satisfied that the applicant will not suffer severe financial hardship as a result of having to repay the advance payment by deductions from ongoing pension payments; and

  • the applicant does not owe a debt to the Commonwealth or have another advance outstanding.

5.What is a living expense?

The VEA does not define a living expense.  The term should be broadly interpreted.  Applications should be very carefully considered before rejection is considered on the grounds that the purpose for which the advance is requested is not a living expense.


Examples of living expenses are food, rent, holidays, paying off debts, paying the rates, purchase of whitegoods, household maintenance costs, car repairs, etc.

6.How will we determine that a person will not suffer severe financial hardship when repaying the advance?

Significant emphasis will be placed on the pensioner making their own decision about their ability to repay the advance.  Form D557 is available to assist the pensioner in making that decision if they request such assistance.  This sheet enables the pensioner to detail all their income and expenses.

If the pensioner's net income covers their expenses and there is also sufficient to cover the rate of repayment of the advance, the delegate may approve payment of the advance.  It is not necessary for an amount to be left over to allow for possible emergencies.

An application should not be rejected where there is some doubt that hardship will arise; where significant doubt exists an application may be rejected.

7.Verification

It is NOT necessary to verify the purpose for which a pensioner requests an advance.

It is NOT necessary to verify if the advance was in fact used for this purpose.

It is NOT necessary to verify that the pensioner will not suffer financial hardship unless there is significant reason (eg if the pensioner has previously claimed hardship).

8.What is the maximum advance payable?

The maximum amount of the advance is the smallest of the following:

  • 6% of the annual payment rate; or

  • $500; or

  • the amount of the advance sought.

For example: Anne applies for a $400 advance of her PSP.  Anne's rate of pension on the last pension payday was $200.00 per fortnight.  Therefore her annual payment rate is $5,200.00 ($200.00 x 26).  6% of $5,200.00 is $312.00.  The maximum amount that Anne can have advanced is therefore $312.00.

NB: It is important to note that partnered rate pensioners will not be eligible for the maximum advance of $500 until such time as CPI increases raise the maximum partnered rate to $320.60.

9.How is the advance paid?

Advance payments will normally be paid as a lump sum with a fortnightly instalment of pension on the payday after the advance is approved.  If the advance is required more urgently it is possible to have the advance paid either by  cheque or in some cases by cash.

10.How is the advance recovered?

An advance is recovered by deductions from the fortnightly pension payment.  It is recovered over 13 fortnights at the rate of the advance divided by 13.  For example, an advance of $350.00 is recovered by deducting $26.90 a fortnight for 13 fortnights.

11.Can the pensioner repay the advance at a faster rate?

Yes.  The pensioner may request a higher rate of deduction.  The request must be in writing and the delegate must be satisfied that the pensioner would not suffer severe financial hardship as a result of the increased deductions.

The pensioner may also make extra cash or cheque payments to reduce the amount outstanding.  The pensioner may then choose to have a reduced fortnightly deduction for the remainder of the original repayment period, or repay at the original rate of deduction for a reduced number of fortnights.

12.How often can a pensioner apply for  an advance?

A pensioner may reapply for an advance as soon as they have repaid any previous advance.  The standard repayment period is 6 months but if the pensioner has repaid the advance in a shorter period, he/she can reapply immediately.

13.Can an advance become a debt?

Yes.  If a pensioner has received an advance payment of SP or ISS and the pension ceases to be payable before the whole of the amount of the advance is recovered, then the outstanding amount is a debt.

If a pensioner transfers between service pensions (eg CSP to PSP) the advance repayment also transfers.  Likewise, if the pensioner transfers to another State Office, the advance repayment also transfers.

14.What happens if a person is repaying an advance and applies for the deduction to be reduced because he/she is in severe financial hardship?

A reduction in the advance deduction amount may only be considered if the pensioner is in severe financial hardship because of unforseen and exceptional circumstances.  A determination will need to be made to reduce the fortnightly deduction.  Form D555, 'Application for Lump Sum Advance, Hardship Claim Form' must be completed.  This form asks the pensioner to specify the circumstances which have caused hardship and allows the delegate to compare the pensioner's income and expenses. If the reduction is approved, the new deduction amount and the period of the reduced deduction must be specified.

15.What happens when a person dies and an advance has not been fully repaid?

Any amount of an advance outstanding when a pensioner dies will become a debt and standard debt recovery procedures will apply.  When calculating bereavement payment, any amount of advance outstanding is disregarded.