C28/2003 Treatment of ISS Ceiling Rate where a Limitation is applied to War Widow's Pension

Purpose

The purpose of this instruction is to ensure that:

• the correct procedure is followed for processing compensation reduced WWP cases; and
• the correct ceiling rate for these cases is applied.

Background

It was identified from the June 2003 Statutory Increase - list of cases requiring attention, that incorrect ceiling rates were being recorded for certain compensation reduced war widow's cases.

Target Population

30 cases have been identified nationally where the incorrect ceiling rate is being applied.  The following State by State breakdown gives numbers of war widows affected:

New South Wales — 16

Queensland — 7

Victoria — 4

Tasmania — 2

South Australia — 1

Western Australia — 0

WWPs who qualify for ISS

The definition of a war widow or widower is given in s5E of the VEA, and includes war widow(er)s receiving a pension payable under Part II or Part IV of the VEA or in receipt of a WWP paid by a foreign country.  To qualify for ISS a person must be an Australian war widow(er) in receipt of a compensation pension, paid under Part II or IV of the VEA, in respect of the death of an Australian veteran or mariner.

Definition of a compensation reduced pension

A pension payable to a war widow(er) under Part II or Part IV of the VEA is compensation reduced if that WWP has been reduced as a result of the payment of:

• a similar pension by another country; or
• any other periodic or lump sum compensation payment for the death of the veteran.

Increased ceiling rate of ISS

Because these war widow(er)s have received, or are receiving, other payments in respect of their veteran partner's death, the normal ceiling rate rules do not apply.  SCH6-A6 to SCH6-A9 of the VEA outlines the method for calculating the increased ceiling rate that applies to ISS if WWP is compensation reduced.

The increased ceiling rate relating to compensation reduced rate is calculated to be the sum of:

• the normal ceiling rate; and
• the amount of the reduction in the Part II or Part IV pension.

Provisional payment rate of ISS

In determining the provisional payment rate of ISS, the increased ceiling rate is compared against the income and assets reduced rates of ISS.  The provisional payment rate is defined as being the lower of the three rates.

Therefore, because of the operation of the income and assets tests, ISS can never be paid at greater than the maximum basic rate of service pension, even though the increased ceiling rate may exceed the MBR.

Automatic rate cases

The majority of these cases (apart from the VSO cases) are being processed as 'automatic' assessments by the State Offices through PIPS and by batch processing runs.  To ensure that the ceiling rate will be reviewed for these cases whenever there is a change to the rate of compensation, or a SI to the rate of WWP, it is necessary that these cases be recorded as manual assessments.

Further, in most cases, the increased ceiling rate has been incorrectly recorded as the current normal rate of ISS (currently $134.40).  Therefore, the rate of ISS currently being paid in these cases may be incorrect.

In a number of other 'automatic' cases the correct increased ceiling rate has been recorded.  However, as the cases are 'automatic', the increased ceiling rate will not be reviewed each time there is a variation to the rate of compensation or WWP payable to the client.  Therefore, these war widow(er)s will be assessed using what is effectively an historical ceiling rate.  The impact is that over a period of time, clients will be underpaid should the income/assets reduced rate exceed the increased ceiling rate.

Manual rate cases

When an examiner processes a case where the WWP is limited by a compensation adjustment, a manual calculation must be performed to determine what income support ceiling rate should be applied.

If the increased ceiling rate is calculated to be greater than the normal ceiling rate, the examiner must update the income support ceiling rate field in PIPS to that figure.  The increased ceiling rate must be recalculated each time there is a variation to the compensation amount received by the war widow(er), or there is an increase which affects the rate of WWP.

Recording IS ceiling rate

To determine the rate of ISS payable to a pensioner, the correct ceiling rate must be calculated.  While ISS can never be paid at a rate greater than the MBR, the correct ceiling rate should be recorded in PIPS to ensure data integrity and to help assist in identifying target populations with an adjusted ceiling rate.  This figure should not simply be entered as MBR.

Action required by State Offices

The above mentioned compensation reduced WWP/ISS cases must be processed manually to ensure that the correct ceiling rate is being applied.  A list of cases to be actioned will be sent out shortly to each State Systems Support Officer under separate cover.

In addition, States should ensure that the increased ceiling rate is recorded in the income support ceiling rate field of PIPS.

Note: These instructions should also be applied for any new grants of ISS where a client's WWP has been compensation reduced.

Contact

Any queries regarding this instruction should be referred to Joel Kitto, Income Support Branch, National Office on (02) 6289 6658.