Overview of Direct Credit

Last amended: 30 July 2012

Preference for direct credit

Direct credit is the preferred method for pensioners to receive their regular DVA payments and involves the electronic transfer of funds directly into an account owned by the pensioner, including a joint account, with a bank, building society or credit union, as specified by the pensioner.

Generally the account into which direct credit payments are to be made must be an account that is nominated and maintained by the person to whom the pension is payable. In order to ensure that the payment is being made to the pensioner, ideally the account title should match the current pensioner name as recorded on VIEW. However payments can still be made to the account if a link can be established between the payee name and a historical name recorded in notes on VIEW.

Where appropriate, a file note should be added that differences in the payee name and the pensioner have been investigated and a link exists between the two names.

The specified account may be referred to as the client destination, payability destination, payment [glossary:destination:] or default destination.    

Initial payment destination nominated with claim

A person's payment destination is usually nominated on their clai — m form for pension or allowance.    

Payment destination must be made to the pensioner

A person's pension must be paid into an account that is nominated and maintained by the person to whom the pension is payable. Usually where the account is held in the pensioner's name it is clear that the pensioner is the person that maintains and operates the account. A person's pension cannot be paid to a company account as a company is regarded as a separate entity to a pensioner under the VEA, (or SRCA and MRCA) so the person who maintains and operates the account is not clear. This applies regardless of whether the pensioner is the person that maintains or operates the account on behalf of the company. Section 430 MRCA specifies that the account must be maintained by the person, or jointly with another person. While the SRCA does not contain similar bank account clauses, the general policy is to also make SRCA payments directly to an account that is either in the name of the person, or jointly with another person.

There is another provision in the VEA which covers payments to another party, being an agent, but this is a special circumstance and there is no suggestion that payments to an alternate legal entity such as a pensioner's company are intended by the wording of these provisions.    

Inalienability of pension payment

The rationale for ensuring that a pension payment is made into an account nominated by and maintained by the pensioner is to ensure that the pension payment is actually made to the pensioner. If the pension payment is made into a company account, then this protection is lost because the payment is not being made to the person, but rather to the company. Also, there is the prospect of data-matching and information requests becoming overly complicated if payments were made to accounts other than in the pensioner's name.    

Note: The inalienability provisions applicable for SRCA & MRCA payments at Section 112 SRCA and Section 425(3) MRCA are equivalent to that listed at Section 125 VEA.

Data collection of payment destinations

The DVA form D0905 Pension Payment – Amended Account Details requesting provision of account details may be issued to the payee for completion and return, or the information may be obtained by phone, directly from the pensioner, or authorised third party. This will generally occur where a person becomes eligible for a payment that does not require a claim, but there was either doubt about the accuracy of an old payment destination or there is no known payment destination. On return of the completed form, add or amend the payment destination. If obtaining details by phone, complete a Phone Notification Amended Account Details worksheet before amending the payment destination.    

Changing the payment destination

The default destination remains in place indefinitely, unless the pensioner notifies that the financial institution or the account number has changed. Such changes are referred to as method of payment or MOP changes, which may be notified by the pensioner or authorised third party either in person, by phone or in writing.

Receiving a request to change the payment destination

When a person notifies an amendme — nt to their payment destination:

• ensure that the notifying person is au — thorised to request the change,
• clarify whether the new payment destination is to replace, or is additional to, the existing default destination, i.e. a split payment, and
• advise the person to keep the old account open until a payment is received in the new account, in case there is a delay in the new destination taking effect.

Note: Conducting the above checks will assist in preventing a payment being returned to DVA and requiring retrieval and reissue, which causes a delay in payment to the pensioner.    

Splitting the payment

It is possible to split the person's payment by direct credit to a second payment destination. This destination must be the person's own account, it may not be to a third party. This is usually done by adding any additional payment destination and adding an instruction.    

Storage requirements for notification of payment destination changes

Requests for changes to payment destinations, notified by the pensioner or pensioner partner, received by phone are required to be stored for a period of 12 months minimum, before destruction. Notifications received in person, or in writing are to be sent to the Senior Payments Officer in the state location that is responsible for the person having their account destination changed.     

Notifications by an authorised third party are eventually attached to the C file, or if there is no C file, the M file after audit by the Senior Payments Officer, as notifications provided by third parties are assessed as presenting a higher risk to the pensioner.    

Note. The minimum storage requirements have been determined in accordance with the Records Disposal Authority and taking into account the statute of limitations for summary offences in the VEA, the risk to the department and the volume of notifications received by the department.

Summary of storage requirements for payment destination changes

This table summari — s — es the manner and period of retention for notifications of payment destination changes made by pensioners, their partners, or their authorised third party representatives.