2.6.6 Changes in payability (rate reduction or termination) | Compensation and Support Reference Library, Overpayment Management Manual, Ch 2 What is an Overpayment?, 2.6 Causes of Income Support Overpayments

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2.6.6 Changes in payability (rate reduction or termination)

2.6.6.1If there is no loss of basic eligibility, but an incorrect rate of payment occurs as a result of the Department's failure to take action to vary the rate of payment when the pensioner has fulfilled their obligations, an overpayment exists.

2.6.6.2The rate of pension is reduced or terminated from the day after the end of the notification period. However, the portion of the overpayment caused by the delay may be waived at the delegate's discretion under this manual's Section 7.18 Waiver. This may apply if the Department failed to action the pensioner's PIR within 6 weeks from the first payment which caused the debt or within 6 weeks from the end of the relevant notification period. Prior to 13 July 1999, an overpayment did not exist and pension was adjusted from the next convenient payday.

2.6.6.3For example, a service pensioner notifies the Department of increased earnings, within 14 days of the event. However, action to reduce pension is delayed, and does not occur until 42 days after the end of the pensioner's 14-day notification period. Service pension is retrospectively reduced from the day after the end of the notification period. However, the delegate may apply discretion to waive the portion of the overpayment that occurred due to a delay in processing outside the 6-week period.

2.6.6.4It should be noted that as with other types of manual overpayments, manual overpayments caused by administrative error are usually not calculated unless it appears that the overpaid amount will be $200 or more. The cost-effectiveness of time spent in calculating the debt and effecting recovery should be considered. Amounts estimated to be less than $200 may be waived under subparagraph 206(1) (b) (ii) VEA. Where full and immediate recovery of an overpayment over $200 is not possible or appropriate, the delegate may make a decision to waive, write-off or defer the debt. Generally the first decision that should be made is whether the debt can be recovered by withholdings or instalments, or whether the overpayment should be deferred. If it is not possible to recover or defer the debt, the delegate must consider whether the debt should be written-off or waived.

Note:Debts calculated through PIPS are automatically recovered via DMRS regardless of how small the debt is because it is cost effective to do so. Only debts <$50 where the debtor is no longer in payment may be considered for waiver under s ubp aragraph 206(1)(b)(ii) VEA.

2.6.6.5Where a pensioner advises of a change in circumstances outside their prescribed notification period, the reduction takes effect from the date of event.

For example, a pensioner's income increases but they fail to advise the Department of the increase within the 14 day notification period. The pension rate is reduced from the date of event – that is, the date that the pensioner's income increased.