B47/1993 Managed Investments - System Enhancements and Data Refresh

DATE OF ISSUE: 13 September 1993

Managed Investments – System Enhancements and Data Refresh

PART A:ENHANCEMENTS TO THE MANAGED INVESTMENTS SYSTEM: SCREEN, REPORTS AND ADVICES.

PART B:MANAGED INVESTMENTS - 30 September 1993 GLOBAL AUTOMATIC  DATA REFRESH RUN

INTRODUCTION:

The purpose of this instruction is to provide details of:

• changes in screen design, reporting facilities and advices to pensioners introduced in the Managed Investment area since 1 April 1993;

• the global automated data refresh and processing run for managed investments for 30.9.93; and

• the capping of rates of return for MIs at the same rate determined by the DSS.

PART A -ENHANCEMENTS TO MANAGED INVESTMENTS SYSTEM: SCREEN, REPORTS, ADVICES.

2.Following implementation of the 1992/93 Budget changes, the managed investment database and on-line screens have been progressively refined to simplify access and understanding for examiners.

3.These amendments have taken place in 4 areas, being:

• screen design and access,

• support data information,

• MI fortnightly schedules explanations, and

• pensioner advices

Screen Design & Access

4.A new 'toggle' facility has been added to the PP.MI screen allowing

examiners to select a specific product in a client's assessment and with minimum key strokes view the history details of that product on the PP.MS screen (formerly the old PP.II screen).

5.This is achieved on the PP.MI screen by placing either a 'M' or 'MS' in the action field next to the product whose details you wish to view and then pressing 'ENTER'.  The current database history for that product will then be displayed without having to access a number of screens as required under the existing PP.MS screen search mechanism.  The method of accessing a product via the PP.MS is still available and unchanged.

6.The procedure for returning to the first page of the PP.MI screen from the PP.MS screen also remains unchanged in that the letters 'MI' are inserted in the top left hand corner of the screen.

7.There have been minor amendments to existing help screens and the inclusion of new profit help screens for MIs in recognition of the policy changes from 1 April 1993.  The help screen for MIs, fees and  profit are now available and as previously can be accessed by pressing the PF12 key when viewing details on the relevant screen i.e. the profit help screen can only be accessed when viewing the profit (PP.PF) screen then pressing PF12.

Note: General help information on fees is available when the help facility is accessed via the PP.MI screen but a more detailed fee help screen is provided if the help facility is accessed via the fees screen.

Support data

8.Support data information has been amended to provide a fee breakdown on each relevant product.  Additional messages such as fee only, superannuation exempt and funeral exempt have also been added to the support data to highlight these particular cases.

Fortnightly schedules

9.Amendments have been made to the messages appearing against cases listed for manual action on the fortnightly output schedules.  The wording of the messages has been expanded to make the reason for generation of the case on the schedule clearer.

Pensioner advices

10.There have been changes in both the format and content of pensioner advices generated from the routine daily, fortnightly and global managed investment (MI) reassessment runs the principal of these being:

• the inclusion of a new profit/loss table; and

• a key recorded under each product name, with an accompanying guide below the table providing a simple explanation of the assessment method.

11.Paragraphs generated on the fortnightly MI runs for cases involving the automatic deletion of profit, fees and the loss of superannuation exemption have been amended.  A sample of these paragraphs and existing tables appears at Attachment A.

12.Managed investment advices issued as part of the quarterly advice program provide pensioners with only a short paragraph indicating that their investments have been reassessed and a list of their current holdings.  Advices issued for a global update run in conjunction with the current quarterly advice program therefore do not contain the specific advice paragraphs at attachment A such as fee deletion, profit deletion etc.  The inclusion of these paragraphs is however under review for future quarterly advices.

New share offsetting provisions

13.Details of the provisions relating to the offsetting of negative share income and fees against managed investment income and vice versa will be the subject of further instruction once the changes to the assessment of shares is resolved.

PART B -MI GLOBAL AUTOMATED DATA REFRESH

14.A MI global run for payday 30 September 1993 is currently scheduled in conjunction with pension indexation and a number of other initiatives.  Processing of the MI Global update will be run in accordance with existing MI and quarterly advices procedures.

Function of the global run

15.The global Managed Investment System (MINVS) run will be performed in addition to the routine fortnightly MINVS runs.  Unlike the fortnightly run however, the global run will be for all clients who hold managed investments in order to align the clients details assessed for each investment with the latest data contained on the Managed Investment Database. Auto reassessments will reflect changes which have occurred to the percentage rate of return, unit price or cents per unit on a client's managed investments.  The run is also programmed to verify other MI data which, if missing or altered, will generate a manual case.

Manual cases

16.A certain number of manual cases will be produced for the fortnightly MINVS runs, though these are expected to be a small quantity.  Manual cases for the global run will include those types of manual cases normally generated by the fortnightly run.

17.The auto-update run will produce additional categories if an investment has a product code recorded as "S" (special).  In these cases staff should contact their local Investment Policy Officer (IPO) to obtain the applicable assessment rules.  Manual action will be required to update these case types on the PP.MI screen, i.e. all data must be manually entered and calculated, this includes the rate of return, asset value, fees and the net fortnightly income.

18.When reviewing a case where a special product is currently recorded on the 'MI' screen, data should be checked to ensure information has been inserted in all relevant fields.  If no information is recorded in the income or asset field, consult your IPO.  If information is present in all appropriate fields, the IPO need only be consulted if uncertainty still exists as to whether the data need be updated.

Schedule for initial global managed investment run

19.The global run for the MINVS is scheduled to  run for pay-day             30 September 1993.  All cases with recorded Managed Investments should be cleared of frozen status by 12.00 pm E.S.T. on 9 September 1993.  A full timetable of events relating to the 30 September 1993 updates has been provided to the SSOs in each state and any queries on processing scheduling should be directed to your local SSO.

Processing of manual cases

20.The majority of manual cases and their treatment will be familiar due to their presence in fortnightly MINVS runs. Note that Attachment 1 to DI B42/91 and DI B25/93 may be used as a guide on how to process these cases and to the application of effective dates.  However, treatment of cases generated due to the presence of a product code "S" and product code change cases should be verified with the relevant Branch Office IPO.

Dispatch of advice/obligations statements

21.Full details relating to the dispatch of advices is contained in the September 1993 Quarterly Advices DI B45/93.  Pensioners are scheduled to receive advices between 21-29 September and Branch Offices will be notified when the advices are lodged with Australia Post in each state.

Managed Investments Database

22.Information for updating Managed Investment rates of return are provided by automatic transfer through the Department of Social Security using information provided by the company 'ASSIRT'.  In order to centralise the handling of data transfer and associated issues, Joe Danaro of the Sydney Branch Office has been nominated as the Managed Investment Database Officer.  Joe will be undertaking a variety of tasks associated with the running of automatically transferred ASSIRT/DSS Managed Investment updates and is available for the resolution of IPO referred pensioner queries.

Capping of Rate of Return

23.The Commission has approved capping of the rate of return at 50%  for all managed investments to align this department with DSS policy.  This action has been taken to provide parity in the assessment of MIs with those assessment rules applied to shares and in realisation of the fact that high percentage rates of return are often unrealistic as they are not maintained for a significant period of time.

24.Effective from 30/9/93, rates of return in excess of 50% will be automatically capped by 'ASSIRT' prior to transmission via DSS onto this department's managed investment database.

Revised treatment of newly released managed investments

25.The current formula used in calculating the rate of return for a managed investment traded for less than 12 months is to be modified.  At present the rate of return applied in the pension assessment is calculated by extrapolating the return for the part year to date thereby converting the current return to a projected yearly return.  It is recognised that extrapolation could lead to an unrealistically high rate of return in comparison to a calculation based on the actual rate of growth/income performance.

26.It is intended that extrapolation to a yearly rate of return for such investments will no longer occur and only the current and actual return will be measured for managed investments traded for less than 12 months.  After a product has been traded for 12 months the rate of return will automatically convert to calculation under the standard formula.  All rates of return will have the correct formula applied prior to transmission from ASSIRT/DSS to this department.  IPOs in each state will be notified as soon as this proposal has received Commission approval.

Contact officer

27.The contact officers for further general enquiries are Tim Adams, Income Support, telephone (06) 289-6412 or Nigel Parmenter (06) 289-6068.  ADP related enquiries should be directed to Paul Wood Benefits SM&S, telephone (06) 289-6799.  Joe Danaro can be contacted on (02) 213-7395, or by facsimile on (02) 281-2083.

KAY GRIMSLEY

ASSISTANT SECRETARY

INCOME SUPPORT

ATTACHMENT A

Advice # 1:

Sample of current MI tables generated as part of daily or fortnightly advices.

BRANCH OFFICE

Centennial Plaza

280 Elizabeth Street

Sydney NSW 2000

Postal Address:

GPO Box 3994, Sydney NSW 2001

Telephone:

SP — Metropolitan Residents: (02) 2137777

BO STREET — Country Residents: 008 257251

WODEN NSW 2428

Facsimile: (02) 2812083

30 September 1993

YOUR FILE NUMBER IS NA00

Dear Mrs SP,

VARIATION TO YOUR PENSION AND/OR ALLOWANCE

This letter is to advise you of a change to your pension assessment.

Payment Details

The amount of pension you receive will be varied from 30 September 1993.  Payment will be made at the rate shown below.

Service Pension              241.10

Pharmaceutical allowance              5.20

Total fortnightly service pension$246.30

TOTAL FORTNIGHTLY PAYMENT$246.30

The amount will be credited each fortnight to account number 690097-81, in the name of SPIFF at the State Bank of New South Wales.

Fringe Benefits

As a service pensioner you are eligible for service pension fringe benefits.

Your Income and Assets

The Income and assets on which your service pension rate is based are shown in the income and assets list below. You presently receive a service pension under the income test.

Financial Institutions and Cash

For service pension purposes, financial institution accounts include money deposited in banks, building societies or credit unions. The income from financial institution accounts is calculated by multplying each balance by the interest rate and dividing by 26. This gives a fortnightly income amount.

The interest rate used for financial institution accounts is either the actual interest rate payable or a deemed rate. An interest rate of 4% will be deemed on money which has an actual interest rate of less than 4%. Significant amounts of cash will also have interest deemed at 4%.

Interest will not be deemed on the first $2,000 ($4,000 per couple) 'First' means the $2,000 ($4,000 per couple) in financial institution accounts or cash which earns the least interest (including NIL).

Actual — Assessed

Account — Interest — Interest per

Institution — Number — Balance — Rate — fortnight

Bank Accounts

0402CQ SB OF NSW CHQ — 690097-81$1,097.00 — 00.00%$00.00

0402FD SB OF NSW FD — 690097-61$9,967.00 — 11.25%$43.12

0402FD SB OF NSW FD — 690097-60$4,500.00 — 13.00%$22.50

Managed Investments

Managed Investment — Units — Asset — Rate of — Fee — Income Per

Value — Return/Deduction — Fortnight

Cents — Per(Less Fee

Per Unit — Fortnight — Deduction)

• ENVOY INC-PRODUCT

NAME IS DISPLAYED AS

FIFTY CHARA — 500$1,250.00 — 7.950%N/A$3.82

Ongoing Income Only

• FUND MANAGER 2-

MANAGED FUND — N/A$0 00 — 11.000%$6.73-$6.73

Ongoing Income Only

Managed Investment — Units — Asset — Rate of — Fee — Income Per

Value — Return/Deduction — Fortnight

Cents — Per(Less Fee

Per Unit — Fortnight — Deduction)

• MELISSA INC-FUNERAL

FUND — N/A$0.00 — 6.500%N/A$0.00

Ongoing Income Only

• GENESIS INC-ZERO

RATE — 4,000$8,000.00 — 0.000%N/A$0 00

Ongoing Income Only

• P C MICHAEL TRUST -

ROLLOVER FUND 2 — 10,000$25,000.00 — 4 400%N/A$42.30

Ongoing Income Only

• GENESIS INC -

NEGATIVE — 1,000$2,000.00-9.000%$1.11-$8.03

Ongoing Income Only

• MANAGER XREF-XREF

CODE — 12,000$12,000.00 — 0.000c — N/A$0 00

Income Plus Profit

• GENESIS INC-SPECIAL

1,000$1,000.00-7 900%N/A-$3 03

Special Rules Apply

• GENESIS INC-SPECIAL

SUPERANNUATION — 5,000$0.00 — 0.000%$9.13$0.00

Currency Exempt

• ENVOY INC-ZERO NON

UNITISED — N/A$7,000.00 — 5.500%N/A$14.80

Ongoing Income Only

• ENVOY INC-ZERO

BUYBACK UNITISED — 1,000$0.00 — 5.000%N/A$0.00

Ongoing Income Only

• ENVOY INC-RATE

BLANK FOR BEFORE

DATES — 2,000$2,000.00 — N/A — N/A$0.00

Income Plus Profit

• MEMOREX-TEN

FLEXIBLE DISKS — 500$500.00 — 5.000%N/A$0.96

Ongoing Income Only

TOTAL INCOME FOR PENSION PURPOSES$44.09

GUIDE TO TABLE

Ongoing Income Only - Income is assessed as it accrues based upon any dividends and any rise or fall in the value of the investment over a 12 month period, and only whilst the investment is held.

Income Plus Profit - In addition to any income distributions that may currently be assessed, capital growth profit may also be assessable if the investment matures, or it is sold, surrendered, transferred, gifted, or it is fully or partially withdrawn.

Special Rules Apply - Special income and asset assessment rules apply. Your nearest DVA office can advise if any income is to be assessed upon withdrawal.

Currently Exempt - Superannuation Fund Investment is exempt from the income and asset tests until the holder of the investment reaches pension age or makes a withdrawal.

Managed Investment Profits/Losses Assessed On Realisation

Managed Investment — Date — Profit/Loss — Income Per

Withdrawn — Amount — Fortnight

• ENVOY INC - PRODUCT NAME IS — 10/01/93$200.00$7.69

DISPLAYED AS FIFTY CHARA

• D F JOHNSON - TERMINATED

PRODUCT — 12/05/93-$150.00-$5.76

• MANAGER XREF-XREFCODE — 01/04/93$750.00$28.84

• D F JOHNSON - CROSS REFERENCED

PRODUCT — 15/12/92-$500.00-$19.23

TOTAL INCOME FOR PENSION PURPOSES$11.54

Miscellaneous Investments

• Life Insurance - AMP With a surrender value of $8,500.00.

The total of your fortnightly income as listed above is $121.25. The total of all your assets listed above is $82,814.00.

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 decreased.

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.

Advice # 2:

Sample of optional paragraphs generated on a fortnightly run.  Note: MI tables are also produced.

BRANCH OFFICE

Centennial Plaza

280 Elizabeth Street

Sydney NSW 2000

Postal Address:

GPO Box 3994, Sydney NSW 2001

ACE EARNEST

46 BOWES STREET — Telephone:

WODEN SA 5211 — Metropolitan Residents: (02) 2137777

Country Residents: 008 257251

Facsimile: (02) 2812083

YOUR FILE NUMBER IS NSS00

Dear Mr EARNEST,

CONTINUATION OF YOUR PENSION AND/OR ALLOWANCE

This letter is to advise you of a change to your pension assessment.

Managed Investments: Fees

When we work out the rate of your service pension. the reasonable cost of any entry and exit fees incurred on managed investments that are assessed using a percentage rate of return are maintained for a period of 12 months from the date the fee is incurred.

Entry and/or exit fees apply for the investments shown below, and these fees have been a deduction from your investment income. As twelve months have now passed since you purchased or made a withdrawal from the investment/s, the deduction no longer applies.

• AUTOMATIC - PERFORMANCE FUND 1

The income and asset values now recorded for all your managed investments are shown in the managed investment income and asset table/s below.

Managed Investments: Performance of Product

For service pension purposes the rate of return and the asset value of certain managed investments are used to work out the rate of pension payable to you. The performance of your investments listed below has now varied. This has resulted in a change to the income and asset amounts held for your investments.

• RAVAL INC - QUALITY FUND

The income and asset values now recorded for all your managed investments are shown in the managed investment income and asset table/s below.

Managed Investments: Superannuation fund

For service pension purposes the value of investments in Deferred Annuities, Approved Deposit Funds or other superannuation funds are disregarded under the income and assets tests until the investor reaches pension age (i.e. for veteran service pensioners, 55 years for females and 60 years for males; for all other service pensioners, 60 years for females and 65 years for males).

Once pension age is reached normal income and asset rules apply to the investment. This has resulted in a change to the income/asset amounts used to work out your rate of service pension. Set out below are the investments thst are no longer exempt for service pension purposes.

• REXEL-SELECT BOND l

The income and asset values now recorded for all your managed investments are shown in the managed investment income and asset table/s below.

Managed Investments: Profit/Loss Amount Deleted

When we calculate the rate of your service pension, any profit made on withdrawals from specific types of managed investments is held as part of your income for twelve months from the date of withdrawal. Losses are offset against profits on other similar investments, but only when the twelve month assessment periods overlap.

As twelve months have now passed since you made a withdrawal from this type of investment, the amount of profit/loss for your investment/s listed below is no longer being held.

• AUTOMATIC - PERFORMANCE FUND

Payment Details

Your pension will be continued at the rate shown below.

Disability pension at special rate$571.70

Service pension              260 30

Additional pension for children              360.50

Pharmaceutical allowance              2 60

Total fortnightly service pension$623.40

TOTAL FORTNIGHTLY PAYMENT$1195.10