Overview of Exemptions from Payment by Direct Credit

Last amended: 6 July 2006

Circumstances in which an exemption will be granted

It is the Commission's current policy to only grant an exemption from a direct credit payment (i.e. allow a cheque payment) where:

• the payee cannot access funds via direct credit, but can demonstrate that they can access funds via a cheque payment, or
• where payees have difficulties in using new banking technology including Automated Teller Machines (ATMs), where there is no other banking facility available.

Previous grounds for exemption

Prior to July 1999 an exemption from a direct credit payment was allowable in a variety of circumstances, including where:

• the pensioner had difficulty accessing financial services because of distances involved, a lack of transport services, or inadequacy of the financial services in the area in which the pensioner resides,

• the pensioner was old, frail or had a medical condition that made it difficult for them to visit a financial institution to access services,
• a legal or administrative barrier prevented the person operating an account with a financial institution,
• language or cultural difficulties prevented the person from operating an account with a financial institution, or
• personal difficulties or homelessness made it difficult for the person to operate an account with a financial institution.

Note: Where an exemption based on the above factors was approved prior to July 1999, that exemption may continue. New exemptions should however only be considered against the Commission's current policy position.

Unacceptable reasons for exemption

The Commission's policy requires that there be a lack of access to a direct credit arrangement, or proven difficulty in using the available banking technology, before allowing an exemption. Exemption from direct credit payment is not allowed where it is claimed only on the basis that a pensioner:

• is overseas,
• is moving from place to place (e.g. as an itinerant worker or holiday traveller) since national services are offered by most banks,
• does not wish to pay financial institution duties,
• will only use a financial institution that does not have a branch in his or her vicinity,
• only receives part payment,
• does not have an account with a financial institution,
• simply has a preference for cheques, or
• wants exemption but cannot provide a reason for his or her preference.

Temporary exemption from direct credit

A temporary exemption from direct credit payment can be granted in situations where account details are temporarily unavailable or a pensioner is temporarily unable to operate an account.

How is pension paid where exemption from direct credit is granted?

Where an exemption from direct credit is granted to a pensioner, that person's pension instalments must instead be paid by either group payment or cheque payment.