Purpose

The purpose of this Departmental Instruction is to provide policy information and procedural guidelines outlining the joint 1997/98 Department of Veterans' Affairs (DVA) and Department of Family and Community Services (FaCS) Budget initiative, referred to as 'Date of Effect' (DoE) in DVA and the 'Payment Cycles Project' in FaCS.

RJ Hay

BRANCH HEAD

INCOME SUPPORT

Introduction

The 1997/98 Budget introduced an initiative that changes the way in which DVA and Centrelink will calculate and pay income support.  The Date of Effect (DoE) initiative (known as the 'Payment Cycles Project' in Centrelink) makes adjustments to the rules determining when changes to a pensioner's circumstances become effective, and when they are reflected in the pension instalment.

Objective of DoE

The objective of the initiative is to achieve greater efficiency, equity and accuracy in the reassessment of income support entitlements when pensioners' circumstances change.  This will be achieved through changes to the way we calculate and pay income support pensions and a shorter notification period.  These changes will ensure that pensioners receive their exact entitlement for each day, and changes in entitlement will be reflected in the pension instalment earlier.

Entitlements affected by DoE

The initiative will affect income support entitlements, ie:

• service pension;
• income support supplement (ISS); and
• age pension payments.

Associated allowances will also be affected, ie:

• rent assistance (if received in respect of income support pension);
• telephone allowance;
• pharmaceutical allowance; and
• remote area allowance.

These allowances will be affected in that they will commence and end on particular days, rather than on paydays.  All allowances except for telephone allowance will also be paid on a daily basis.  For a more detailed explanation, see Part 1.3  Date of Effect policy – rules., 'Daily Entitlement' sub-part.

Entitlements not affected by DoE

The DoE changes do not affect disability pension, war widow/ers pension and allowances paid under Part VI of the VEA, ie:

• clothing allowance;
• attendant allowance;
• bereavement payment in respect of disabled veterans;
• funeral benefits;
• decoration allowance;
• Victoria Cross allowance;
• recreation transport allowance;
• vehicle assistance allowance;
• special assistance;
• temporary incapacity allowance;
• loss of earnings allowance;
• travelling expenses; and
• Veterans' Children Education Scheme.

Implementation date

The implementation date for the DoE initiative is 13 July 1999.

Legislation

The legislative amendments for DoE are contained in the Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act 1998.  This is Act No 132, 1998.

Purpose

The purpose of this chapter is to identify significant changes to the Veterans' Entitlements Act 1986 (VEA) (and the Social Security Act 1991 (SSA)), and to explain their impact in relation to the 'Date of Effect' 1997/1998 Budget changes being introduced from 13 July 1999.

Act 132, 1998

The Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act, No. 132, 1998 was assented to on 24 December 1998. This Act contains the changes to both the VEA and SSA necessary to effect the Date of Effect Budget initiative.  Schedules 4 and 7 relate to the VEA.  Schedules 1, 2, 3 and 6 relate to the SSA.  Schedule 5 relates to amendments to the Income Tax Assessment Act 1997 and Child Care Payments Act 1997.  The amendments contained in Act No. 132, 1998 are incorporated into the VEA from July 1999.

Hyperlinks:

Access Act No. 132, 1998 via

Access the current internet version of the VEA via

Access the current internet version of the Social Security Act via

Transitional provisions

This chapter does not deal with the transitional provisions contained in Schedule 6 or Schedule 7 of Act No. 132, 1998.  For information about transitional provisions, see  chapter 1.5 Transitional Arrangements.

Pension period

A new definition of pension period is contained in subsection 5Q(1) VEA.  Paragraph (b) relates to income support.  This defines pension period as a period of 2 weeks that starts 2 days before a pension payday (i.e. Tuesday) and ends 2 days before the next payday (i.e. close of business Monday).

SSA ref: subsection 23(1) SSA.

Effective date of new grant

In conjunction with section 36M VEA, amendments to subsection 5S(2) ensure that Service Pension (SP) and Income Support Supplement (ISS) may be granted effective from a day other than a payday.

SSA ref: section 54 SSA (age pension) or section 158 SSA (wife pension).

Half instalment

The SP and ISS half instalment provisions (Division 7 of Part III and subsections 45S(3) and (4)), that were necessary for pensioners transferring from Centrelink to DVA have been repealed.  They are no longer necessary, as pension is paid based on daily entitlements under DoE.

SSA ref: repealed section 59A SSA (age pension) or repealed section 163A SSA (wife pension).

Bereavement period

There are two main changes to section 53H VEA.  The bereavement period is no longer referred to as a period of 14 weeks. It has been changed to a period of 98 days.  The commencement of the bereavement period is changed to commence on the day of death, rather than on the day after death.

SSA ref: subsection 21(2) SSA. The bereavement period is specified as a period of 14 weeks that starts on the day of death.

Bereavement: re-assessed rate for survivor

The main change to section 53K VEA is that on the death of a member of a couple, the survivor's new reassessed rate of pension is effective on the day of death, rather than on the day after death.  For cases assessed under section 53L VEA, the new reassessed rate continues to be effective from the day after the end of the bereavement period.

SSA ref:  no equivalent reference.

Bereavement: payment on death of single pensioner

Subsection 53Q(1) has been repealed, and substituted with a new subsection based on daily rates.  The effect of this new subsection is that on the death of a single pensioner, pension is paid for another 14 days commencing on the day after death, as if the pensioner had not died.  This is instead of the old rules where one pension instalment was released on the payday after death.

SSA ref: section 91 S — S — A has not changed.  However, the payments are now calculated differently. Please refer to Part 2.2 for further information on these policy changes.

Notification period

Amendments to subsection 54(5) VEA change the period within which the pensioner is obliged to notify of changes to their circumstances.  The period is changed from at least 14 days, to not later than 14 days.

SSA ref: subsection 68(4) SSA (age pension) and subsection 172(4) SSA (wife pension).

Notification period: extension

New subsection 54(5A) VEA provides for the 14 day notification period to be extended to a maximum of 28 days, in special circumstances.

SSA ref: subsection 68(4AA) SSA (age pension) and subsection 172(4AA) SSA (wife pension).

Notification period: bereavement

New subsection 54(5AA) VEA allows for a section 54(5) notice to be considered to have been complied with, if notification of the death is received within the bereavement period.

SSA ref: subsection 68(4AB) SSA (age pension) and subsection 172(4AB) SSA (wife pension).  The bereavement notification period under the SSA is 28 days.

Date of effect for reductions (compliance with s54)

New subsection 56(3) VEA allows for pension to be reduced from the day after the end of the notification period, where a pensioner has complied with their obligations under section 54.  The impact of this change is that it is possible to incur a retrospective reduction (and thus overpayment) even where notification has been made within the required period.

SSA ref: SSA sections 72, 73B and 81 (age pension), and 176, 177A and 185 (wife pension).  SSA rules for reductions/cancellations where notification period complied with, are not the same as the VEA. Refer to part 1.4, 'DVA and FaCS – policy comparison' (page 27).

Date of effect for reductions & cancellations (non compliance with s54)

Subsection 56A(1) and section 56B VEA are amended to allow a reduction or cancellation to take effect from the day of event, where a pensioner has not complied with their obligations under section 54.

SSA ref: section 73 and 74 SSA (age pension) and section 177 and 178 SSA (wife pension). Refer to part 1.4, 'DVA and FaCS – policy comparison' (page 27).

Date of effect for increases

Subsection 56G(2) VEA is repealed and substituted with a new subsection that allows a pension increase to take effect from the day of notification.

SSA ref: section 80 SSA (age pension) and section 184 SSA (wife pension).

Pension instalments

Sections 58AA, 58A and 58B VEA have been repealed and substituted with one new section 58A.  The main provisions of section 58A are:

• fortnightly pension instalments are paid in arrears;
• the fortnightly pension instalment reflects the number of days that a pensioner is payable in a pension period;
• the fortnightly pension instalment relates to the pension period that ends 2 days before the payday;
• the daily rate of pension is calculated by dividing the annual rate by 364;
• the fortnightly instalment of pension is rounded to multiples of 10¢.

SSA ref: sections 57, 59 (age pension), sections 161, 163 (wife pension) and points 1064-A1 and 1065-A1 SSA, contain similar provisions.

Introduction – changes to pension payments

Currently, income support pensions are paid neither in advance nor arrears.  This means that if a pensioner is eligible, and the pension is payable on a payday, they will receive a full instalment of pension.  In other words, a person is paid either a full 14 day instalment or nothing.  Under DoE, the method of paying pensions will change to a method that:

• makes payments fortnightly in arrears;
• relates to a 14 day pension period; and
• is based on a calculation of daily entitlement.

DVA will retain the existing pension payday.

Pension period – a definition

A pension period is a period of 2 weeks that starts 2 days before a pension payday (i.e. Tuesday) and ends 2 days before the next payday (i.e. close of business Monday).

How is the pension period applied?

Under the new method of calculating pensions, an instalment of pension will be payable in respect of the number of days during each 'pension period' for which the person is eligible, and the pension is payable.  In other words, on a payday, pensioners will receive only what they were eligible for on each day in the pension period that relates to that payday.

The cut off for pension processing will be the close of business on the Monday before the Thursday payday.

A pension period is illustrated in the diagram below.

Events not actioned in same pension period

Any events notified but not actioned within a pension period, for any reason, will be carried over to the following pension period.  This may create an amount of positive or negative arrears.

Daily entitlement – a definition

'Daily entitlement' is the amount of pension that is payable on a given day.  This method of calculating pension payments means that the pension paid each fortnight will be made up of an amount for each day of the 14 day pension period.

How is daily entitlement applied?

From 13 July, an instalment of pension will be calculated using daily entitlement.  A pensioner will receive an amount of pension for each of the 14 days in a pension period that the pensioner is eligible and the pension is payable.

The rate of pension payable will continue to be calculated subject to the current income and assets tests and their corresponding free areas – these income and assets tests have not changed.  The rate payable will then be converted to a daily rate.

The rate of pension payable to a person for a day is calculated by dividing the annual rate of pension by 364.  This figure represents 26 fortnights multiplied by 14 days.

A system of daily entitlement will mean:

• an instalment of pension can be made up of one or more pension rates; and,
• that pension variations will be effective from a particular day rather than a payday.

How will daily entitlement be applied to SP allowances?

According to the SP and ISS rate calculator in Schedule 6 of the VEA, rent assistance, pharmaceutical allowance, and remote area allowance are added into the pension rate calculation before it is converted into daily entitlement.  This means that these allowances are treated as a component of the rate of SP/ISS and are thus paid at a daily rate.

For example, if an SP only pensioner is eligible and payable for only 4 days out of a pension period, they will receive 4 days worth of pharmaceutical allowance as part of their SP daily rates.

In the case of pharmaceutical allowance, if a person's full 14 day instalment of pension is less than the amount of pharmaceutical allowance they are entitled to, their instalment of pension will be rounded up to be equal to the full amount of pharmaceutical allowance.  For example, if the sum of daily rates for an entire pension period for a single pensioner is $2.50, this would be rounded up to $5.40.  In other words, the minimum amount of pension an SP only pensioner can receive as a full 14 day instalment of pension is the amount of pharmaceutical allowance to which they are entitled.

This rule applies to income support pensions.  If a pensioner receives pharmaceutical allowance in respect of their disability pension, the minimum amount of SP the pensioner can receive for a full 14 day instalment is $1 of SP.

Rounding for daily rates of pension

Daily rates of pension will be rounded to 4 decimal places.  The result will be a more accurate calculation of the pensioner's instalment.  The fortnightly instalment will be rounded to the nearest 10 cents, in accordance with s58A of the VEA.

Change to the notification period

The notification period for pensioners to advise the Department of changes in their circumstances has changed from 'at least 14 days' (in practice 21 days) to 'not more than 14 days' [ss54(5)].

The 14 day notification period can be extended to a maximum of 28 days in 'special circumstances' [ss 54(5A)].

In cases of bereavement, the period allowed to notify of the death is the entire bereavement period of 98 days [ss54(5AA)].  For more information on Bereavement rules, see chapter 2.2  Bereavement.

How will the new notification period be applied?

In practice, the legislative term 'not more than 14 days' means that DVA must receive the notification within 14 days of the date of event. The 14 day notification period is exclusive of the day of event.

If the information is received up to COB by conventional mail, telephone contact or personal visit, or up to 12 midnight by fax, on the 14th day after the event, then the person has complied.

The shorter notification period should allow changes in pensioners' circumstances to be reflected in their pension instalments earlier.

Special circumstances

New ss54(5A) of the VEA allows for the period of 14 days that a person is given under s54 to be extended to a maximum of 28 days in 'special circumstances'.

This means that for certain groups determined by the Secretary to have 'special circumstances' under ss54(5A), the notification period may be specified as a period up to a maximum of 28 days.  The groups entitled to a 28 day notification period are:

• people living overseas; and
• people receiving remote area allowance.

Note: FaCS policy allows the 28 day notification period to apply to people living overseas only.  This applies to age pensioners paid by DVA.

Pensioner unable to comply with notification period -

ss54(6)

If a person does not comply with the notification period specified in a section 54 notice (i.e. 14 days, or up to 28 days if subsection 54(5A) applies), because they were unable to comply, it may be necessary for the decision maker to examine the reasons for non compliance in accordance with subsection 54(6), in order to determine the effective date for the variation.

If the person is found to have reasonable excuse for not complying with the notice, the decision maker may determine the date of effect of the change in circumstances, based on an assessment of the facts of the case.  This date of effect determination could be made under either sections 56C or 56F, or sections 56D, 56E, 56EA, 56EB or 56EC VEA, in accordance with sections 56G or 56H VEA.

Such a decision would effectively result in the notification period specified in the notice not being applied when determining the date of effect.  Consequently, the person would not be unduly penalised for failing to comply with the notice.

For example, a reasonable excuse for failing to comply with a section 54 notice would include:

• person experiences a sudden and incapacitating illness rendering them incapable of complying;
• a natural disaster or state of emergency exists or is declared in the person's locality, or if not in the person's locality, to the extent that such disaster or emergency in another locality affects person's ability to comply; and
• person is reliant on 3 — rd party for advice of happening of an event, and advice not received from 3 — rd party in time to allow compliance;
• or other circumstances that the decision maker considers appropriate.

Note 1:  Reasons for any decisions should be fully documented by the decision maker.  The National Office, Income Support Branch, Policy Section is available to provide advice if required.

Note 2:  In cases of bereavement, subsection 54(5AA) VEA provides for notification to be taken as being received within the notification period, if the Department is informed of a death within the bereavement period.

Note 3:  A section 54 notice applies to a trustee or agent of a person, as it would to the person.  Being a trustee or agent is not a reasonable excuse in itself for not complying with the notification provisions.

Public holidays and weekends

A special rule applies where the last day of the notification period falls on a Saturday, Sunday or public holiday.  Where this occurs, the pensioner has until the next working day to notify.

This rule only applies if the holiday is in the region where the DVA processing office is located (State Office or agent office).  That is, it has to be a holiday where the notification is received, rather than where the pensioner resides [Acts Interpretation Act 1901, ss36(2)].

Data-Matching

The Data-Matching Program is not impacted by the DoE 14 day notification period.

Under the Data-Matching Program, pensioner details stored on DVA files are compared to those of other agencies such as the Australian Taxation Office, Centrelink, etc.  If a discrepancy is identified, DVA may send a notice to the pensioner concerned to query the discrepancy.

The Data-Matching Program (Assistance and Tax Act) 1990, specifies that a Notice of Proposed Action must allow 28 days from the day the notice is given. This 28 day notification period will continue to apply.

S54 Request for information from the client

Under s54A, the Secretary may request particular information from the pensioner.  The legislation stipulates that this information must be provided within a specified period which 'must end at least 14 days after the day on which the notice is given'.

This section has not changed under DoE amendments, however to achieve consistency with the 14 day notification period under s54, pensioners will be informed in a s54A notice that they have 14 days from receipt of the notice to provide the information. The time allowed for delivery should be five working days (section 163 of the Evidence Act 1995).

If the person lives overseas, or receives remote area allowance, this period may be extended to 28 days (plus 5 working days).

S 128 – Request for information from a third party

Under s128, the Secretary may request particular information from a third party. The legislation stipulates that this information must be provided within a specified period 'not being less than 14 days after the notice is given'.

This section has not been changed under DoE amendments.  However, this will be treated in the same manner as s54A (above).  The period specified in the s128 notice for provision of the requested information is 14 days from the day they are given the notice.  A period of 5 working days will be allowed for delivery of a notice to a person under the Evidence Act 1995.

The date of event – a definition

An event is an incident that may cause a change in income support entitlement, for example, the sale of a property or commencing work.

The date of event is the day on which this incident occurs.

For guidelines on determining the date of event, see Attachment A.

The date of effect – a definition

The date of effect is the day on which a certain incident or 'event' begins affecting a pension assessment.

How is the date of effect determined?

In income support cases, the date of effect for a change in circumstances is determined by:

•     the interaction between the date of event of the change, and the date the pensioner notifies the Department of the change; and
•     whether the change results in an increase, reduction or cancellation of pension.

Non-compliance with a section 54 notice means that a reduction, suspension or cancellation in pension will take effect sooner.  The rules determining dates of effect are illustrated in the table below.

If notification is received...

an increase in pension will take effect....

a reduction in pension will take effect....

within 14 (or 28) days of the change occurring

on the day of notification

on the day immediately following the end of the 14 (or 28) day notification period

after the 14 (or 28) day notification period has passed

on the day of notification

on the day the change in circumstances occurred

Thus, changes to pension no longer have to take effect on a payday, but can take effect on any given day in the pension period.

A service pensioner ceases work on 12 August.  He notifies the Department on 1 September.  His increase takes effect on 1 September (the day of notification).

Note: events that impact on assessment take effect in chronological order, according to their dates of effect.

Advance notification

Events that are notified in advance (ie before the event occurs) will take effect on:

• the date of event for increases; and
• the 15 — th (or 29 — th) day for reductions (ie pensioners are still given the benefit of the notification period for reductions).

Date of effect for grants

Under DoE rules, the effective date for commencement of a new grant will change from the payday following the date of grant, to  the date of grant.

The table below illustrates which rules and payment system will apply when pension is granted either pre or post 13 July 1999:

Date of grant

Payment System

on or before 12 July 1999

Pre-DoE – full fortnightly instalment on payday after grant.

on or after 13 July 1999

DoE – paid for number of days entitled during the pension period on payday after grant.

Rent assistance

If a rent assistance (RA) variation is due to a variation in Disability Pension (DP), the effective date for the RA change will be the same as the effective date for the DP variation (ie on a payday).

Any negative arrears of RA that result from a retrospective grant of DP, would need to be recovered from positive arrears of DP owing, prior to the release of the positive DP arrears to the veteran.

Other situations that affect RA, such as ceasing renting, can take effect from the date determined by the DoE rules (ie, on any day, not necessarily a payday).

Casual earnings

The treatment of casual earnings will not change under DoE - income will still be assessed using an average fortnightly amount, derived from earnings (estimated or actual) over a three month period.  Pensioners will still be required to provide updated statements of their earnings for each 3 month period.  However the dates of effect for these cases will be slightly different.  All the relevant dates are set out below:

• Date of event will be the day work commenced;
• The date of effect of a resulting reduction in pension will be:

➢ the date of event if not notified within the notification period; or

➢ the day after the end of the notification period if notified within the notification period (ie, this would be the 15 — th day after commencing               work in most cases);

• The first 3 month period, commences from the date of event (ie, day employment commenced).  After this time, the pensioner must provide updated statement of income.

Note: The revised DI 45/95 Calculation of Income contains more detailed information on this topic.

Changes in marital status - unresolved

Adjusted date of effect rules apply in cases where people end or commence relationships, and the result is that one partner has an increase in pension, and the other partner has a decrease in pension. This is to avoid the problem of each partner having different effective dates for the change to their pension.  The example below outlines this problem:

For example, if a couple separates on 1 November and notify on 5 November, they have notified within the notification period.  The pensioner receiving a reduction would have the change take effect on 16 November (the day after the end of the notification period), and the pensioner receiving the increase in pension would have the change take effect from 5 November (the day of notification). Between the effective dates of 5 November and 16 November, their assessments would remain linked, even though they had separated on 1 November.

DVA does not yet have the system capability for individual assessment of pensioners with joint income and assets.  To overcome this problem, the date of effect to be used where one partner has an increase in pension and the other a decrease, is the date of effect for the reduction.  The partner who receives the increase in pension will then have their pension adjusted manually, to achieve the payment they would have received if the correct date of effect had been used (ie the date of notification).

DIAs – a definition

A Department Initiated Action (DIA) is a reassessment action undertaken by the department.  Global or 'batch' runs are DIAs, undertaken by the department for a number of clients with income/assets that fall into a specific category, eg, British Retirement Income revaluations, Managed Investment (MI) updates, etc.

DIRs – a definition

A Department Initiated Review (DIR) is a review or investigation action initiated by the department. It can include targeted reviews.

Treatment of DIAs

Changes to pension assessments, where the pensioner is not under obligation to notify, such as DIAs, DIRs and new claims, are not subject to general DoE rules in specifying effective dates. This means that effective dates will be specified by the determination, the legislation or the date of a batch run.

This distinguishes Effective Date cases (where there is no obligation on the pensioner to notify of an event) from Date of Effect cases (PIRs, where there is a specific event that the pensioner is required to notify within a stipulated period).

Effective dates for DIAS

Currently, the effective dates for most DIAs, are either:

• the day of the determination; or
• the day specified in the determination.

This will continue to be the case under DoE, however:

• any changes that currently take effect from a payday, will be effective from the day the pension is varied;

• any reviews that are specified in the legislation will take effect on the date specified in the legislation, including:

      ➢ Income Streams

      ➢ Managed Investments and Shares

      ➢ Statutory increases;

Effective dates for DIAS - cntd

• the effective date of property valuations will be the day the Assets Value Limit changes, or a date determined by a delegate;

• the effective date for changes that currently relate to an anniversary will be the day of the anniversary; and

• the effective date for changes that depend on the pensioner attaining pension age (eg, superannuation products) will be the pensioner's birthday.

Superannua-tion

Super runs should be effective from the 15 — th day from the day of the increase in super.  The rationale behind this is that pensioners' obligations to notify of increases to Commonwealth/State super have been removed, therefore they should not be penalised in the application of the resulting reduction in pension.  Pensioners who notify of a change in private super values which results in a reduction in pension within the 14 day notification period have the reduction take effect from the day after the end of the notification period (ie the 15 — th day).  Having the super runs effective from the 15 — th day after the super increase extends this benefit equally to all pensioners.

Review requested by a pensioner

If the pensioner requests a review of established holdings of managed investments and shares, the DoE will be:

• for a reduction, the day the determination is made;
• for an increase, the day the request was made.

Note: If, during the course of conducting a DIA, information is found about changes to income or assets that were notifiable events, but not notified by the pensioner, the date of effect rules should be applied to events highlighted by this information.  If appropriate, an investigation into a possible overpayment would commence.  If something has occurred that would result in a reduction in pension, it should be backdated to the date of the event.  If something has occurred which would result in an increase, it should take effect from the day the determination is made.

MIs and shares- fortnightly processing

The practice of revaluing Managed Investments (MIs) and shares at the time of an unrelated PIR will be discontinued from 13 July 1999.  Therefore, revaluations will occur:

• 20 March and 20 September each year;
• if a pensioner requests a revaluation (and if a PIR relates to the relevant investments);
• if a pensioner requests only one MI, or some of their shares to be updated, but not all in their portfolio, all MIs/shares held in their assessment are to be updated; and
• fortnightly (the practice of fortnightly updates will continue – the purpose of this being to maintain the integrity of client records, so that the bulk refreshes are as accurate as possible).

If a PIR makes no reference to MI/share changes, there will be no refresh of MI/share data.

Introduction

As discussed above, the dates of effect for certain DIAs are specified in the legislation.  Similarly, with the change of payment methods for income support payments to daily entitlements, the Date of Effect legislation specifies certain dates of effect for commencement and end dates for particular schemes and benefits.  These specified dates of effect are for:

• new grants;
• decisions relating to the pension loans scheme; and
• loss of treatment where there is a period of grace.

New grants

The date of effect for a new grant will be the date of grant.

Pension loans scheme

The following changes will occur for decisions relating to the pension loans scheme:

• pension loans scheme may now be payable on and from the day the request is lodged, rather than the first pension payday after the request is lodged [ss52ZB(2)];
• in the case of a person's death, the debt cannot be recovered until the end of the bereavement period [ss52ZG(2)];
• if a person's debt exceeds the maximum loan available, the scheme will cease to operate on the day on which the person's debt exceeded that limit rather than the first pension payday after [s52ZJ]; and
• if a person withdraws from the scheme, the scheme will cease to operate on the day on which the request is lodged rather than the payday following the request [s52ZK].

Treatment

For cases where the 13 week period of grace applies following a loss of treatment entitlement, the veteran will continue to be eligible for treatment benefits for 13 weeks from the day on which the veteran's pension is reduced.  This amends the current procedure in which treatment continues for 13 weeks from the first pension payday after the event [para 53E(3)(c)].

Bereavement-reassessed rate for survivor

Section 53K states that the survivor's new reassessed rate of pension is effective on the day of death, rather than on the day after death.

For cases assessed under 53L, the new reassessed rate becomes effective from the day after the end of the bereavement period.

Purpose

The purpose of this part is to outline the differences in the date of effect provisions under the Veterans' Entitlements Act 1986 (VEA) and the Social Security Act 1991 (SSA).

Multiple paydays for Centrelink

As part of this initiative, Centrelink will be adopting multiple paydays.  This means that there will be ten possible paydays within a fortnight.  Pensioners paid income support payments by Centrelink will be able to select any weekday as their pension payday.

DVA will be retaining the existing Thursday pension payday.  People paid age pension by DVA will not have a choice of payday, but will be paid on the DVA payday.

Transfer from Centrelink to DVA

Currently, pensioners transferring from Centrelink to DVA for payment of their age pension are paid a one-off half instalment of pension to cover the transition to DVA's alternate payday.

As Centrelink pensioners will be paid on various paydays, this will no longer be a half instalment in every case.  The change in calculation of pensions to daily entitlement will enable the Centrelink payment to be paid up to the day the person ceases to be eligible for that payment.  Payment under the VEA may then commence the day after the day the person ceased to receive the Centrelink payment.

Introduction

There is a fundamental difference between the VEA and the SSA in the operation of date of effect provisions for a reduction or cancellation of an income support payment.

The difference arises in determining effective dates for reductions or cancellations where the pensioner complies with their obligations.  The rules under the VEA and SSA in these cases are illustrated below.

VEA/SSA reductions/cancellations- obligations not met

In cases where the pensioner does not comply with their obligations, both the VEA and the SSA specify the date of effect to be the date of event.

VEA –reductions/

Cancellations –obligations met

VEA provisions: Under section 56 of the VEA.

If a DVA income support pensioner:

•     complies with section 54 notification obligations (ie notifies of an event within 14 days, or 28 days if living overseas or receiving remote area allowance); and
•     the result is that the pension will be cancelled, reduced or cease to be payable, then
•     the date of effect is the day after the end of the notification period.

SSA - reductions/

Cancellations – obligations met

SSA provisions: For cases of reduction or cancellation for age pensioners, under sub section 72(f) of the SSA, the pension would only continue to be payable until the end of the notification period if it was not possible to reduce/cancel before the end of the notification period.

Under the SSA, there are three possible effective dates for reductions/cancellations where the pensioner has complied with their obligations;

• the date of event;
• the day after the end of the notification period; or
• the day after the end of the pension period that is current when the event or change in circumstances occurs.

The effective date is dependent on when processing takes place.  This is illustrated in the table below:

IF the reduction/cancellation is processed in...

THEN the effective date is the day...

the pension period in which the change occurs

of event

the pension period immediately following the pension period in which the change occurs

after the end of the pension period in which the change occurs

a later pension period

after the end of the notification period

Pension Period

Pension Period

Pension Period

Notification period

change

If change processed this PP, effective date is date of change.

    If change processed this PP,

    Effective date is day after end of

    Last PP

If change processed this PP or later, effective date is day after end of notification period

Purpose

The purpose of the transitional arrangements is to change income support recipients from a payday-based payment system to period-based payments with minimum disruption and disadvantage to pensioners.

Timeframe for transitional arrangements

The transitional period will be from 1 July 1999 to 12 July 1999.  As of 13 July 1999, pensions will be calculated on a daily basis and paid fortnightly in arrears.

Methods of payment for transitional period paydays

The last normal payday–based payment under current rules (ie neither in advance nor arrears) will be 1 July 1999.

A transitional payday-based payment will be made on the payday of 15 July 1999. This payment will be an entire instalment of pension, calculated based on the rate of income support pension payable on 12 July 1999.

The first proper daily entitlement-based payment will be made on the payday of 29 July 1999.  This payment will be made in respect of the first pension period, which will be from 13 to 26 July.  Each pensioner will receive the number of days at the daily rate of pension to which they were entitled in that period.

The transitional period is illustrated on the calendar below:

Sun

Mon

Tue

Wed

Thur

Fri

Sat

27

28

29

30

01 July PAYDAY

02

03

04

05

06

07

08

09

10

11

12

13

14

15 PAYDAY

16

17

18

19

20

21

22

23

24

25

26

27

28

29 PAYDAY

30

31

01 August

02

03

04

05

06

07

08

09

10

11

12 PAYDAY

13

14

Introduction

When determining the date of event for a change in circumstances (PIR) during the transitional period, the following questions need to be considered:

1. What notification period was the person entitled to?
2. What rules determine the date of effect for the change?

The following tables will assist in answering these questions.

Notification period

The date of event determines what notification period applies, the new (14 days, or 28 days if living overseas or receiving remote area allowance) or the old (21 days).  A pensioner who has an event occur on or before 12 July 1999 will be entitled to the old 21 day notification period.

Event date

Notification Period

On or before 12 July 1999

21 days

On or after 13 July

14 days

Date of effect rules

The date of notification, in turn, determines whether the new or old rules determine the date of effect:

Notification Date

How to determine DoE

On or before 12 July

Old rules determine DoE.

Increases: Payday after notification.

Reductions: Next available payday (depends on cut-off).

On or after 13 July

New DoE rules determine DoE

ie

• date of notification for an increase;
• date of event for a reduction notified outside relevant notification period; or
• day following the last day of the relevant notification period for a reduction notified within relevant notification period.

For some examples of dates of effect for variations during the transitional period, see Attachment B.

No change in circumstances

A person who is receiving pension and has no change of circumstances during July 1999 will continue to receive his or her full (and regular) amount of instalment for each of the paydays on 1, 15, and 29 July.

Grants

The commencement date for new grants during the transitional period will not change. The effective date will be the date of grant.  The table below illustrates the date of effect and the basis of payment for new grants during the transitional period:

Commencement date

Date of effect

Payment

Pension becomes payable on or before 12 July 1999

Date of grant

Payday-based – fortnightly instalment of pension on the first payday after claim received (up to and including the payday of 15 July).

Pension becomes payable on or after 13 July 1999

Date of grant

Daily entitlement-based – person paid for the actual number of days entitled during the pension period on the next payday.

Introduction

The DoE rules determining when reductions and cancellations to SP and ISS take effect, have an impact on the calculation and incidence of overpayments.

Retrospective reductions/

cancellations- obligations met

Changes to section 56 VEA mean that it is possible for a reduction/cancellation to be retrospective, even where a pensioner has complied with their obligations under section 54 VEA.  The new provision, at subsection 56(3) VEA, specifies that where a pensioner has complied with their obligation to notify within a certain period, the reduction/cancellation takes effect from the day after the end of the notification period.  This means that even if DVA delays processing the reduction/cancellation, the effective date is still the day after the end of the notification period.  The concept of effecting the reduction/cancellation from the current reduction date (i.e. a date in the future) does not apply.

Retrospective reductions/

cancellations- obligations not met

Changes to section 56A VEA (cancellations) and section 56B VEA (reductions) allow for them to take effect retrospectively from the day of the event.  These provisions apply where a pensioner has not complied with their obligations under section 54 VEA.

Introduction

From 13 July 1999 changes to the rules that determine the effective date for pension variations also affect age pensions paid under the SSA.  The new rules governing variations that result in a reduction or cancellation in age pension differ in part to the rules that apply to SP and ISS.

Retrospective reductions/cancellations- obligations met

Changes to sections 72 (cancellation), 73B (reduction) and 81 SSA mean that it is possible for a reduction/cancellation to be retrospective, even where an age pensioner has complied with their obligations under section 68 SSA.  The new provisions specify that where a pensioner has complied with their obligation to notify within a certain period, the reduction/cancellation takes effect from either:

• the day of the event;
• the day after the end of the pension period in which the event occurs; or
• the day after the end of the notification period.

This means that even if DVA delays processing the reduction/cancellation, the effective date is still the day specified.  The concept of effecting the reduction/cancellation from the current reduction date (i.e. a date in the future) does not apply.

An explanation of the SSA rules for reductions and cancellations is at chapter 1.4  DVA and FaCS – policy comparison.

Retrospective reductions/cancellations- obligations not met

Changes to section 73 SSA (cancellations) and section 74 SSA (reductions) allow for reductions/cancellations to take effect retrospectively from the day of the event.  These provisions apply where a pensioner has not complied with their obligations under section 68 SSA.  These rules are the same under both the SSA and VEA.

Implications

The implications of effecting retrospective reductions/cancellations means that it is possible to incur an overpayment, even where a pensioner has complied with their obligations.

Impacts

The impact of this is that there will probably be an increase in the incidence of this type of overpayment.

Contributing factors

Factors determining the incidence and size of these overpayments include our ability to respond to changes in circumstances quickly, which depends to a large degree on the system automation available.

Delay of system automation

It was originally proposed that the automated debt calculation and recovery system would be available from about August 1999.  This system is known as the Recovery Plan component of the Integrated Payments System, Receivables sub-system.  However, due to the lack of suitably experienced IT professionals the entire Income Support Information Systems suite of systems has slipped from their original implementation dates, consequently affecting the implementation time frame for the Recovery Plan component.

Impact of system delays

These delays leave us uncertain as to when the automated Recovery Plan system will be implemented.  Thus, interim guidelines have been developed to assist us to cope with the increased incidence of overpayments that have to be handled manually.

Introduction

The following sections set out how to handle DoE related overpayments while the Receiveables component of the Integrated Payment System is not available.

Action to be taken will depend on whether or not obligations have been met.

The basic premise is that where obligations are met, and the overpayment has arisen due to processing delays, the overpayment will be waived.

If obligations are not met, the overpayment will generally be recovered by following standard recovery procedures, currently in place.  This premise is shown in the table below.

IF obligations are...

THEN overpayment is...

Met

Waived, no recovery advice sent

Not met

Recovered, recovery advice sent

Obligations met

If a pensioner meets their obligations (i.e. we are notified of an event within 14 days, or 28 days if the pensioner lives overseas or receives remote area allowance), the overpayment is waived, regardless of the amount.

This applies to SP, ISS and age pension overpayments.

Obligations not met

If a pensioner does not meet their obligations (i.e. we are not notified of an event within 14 days, or 28 days if the pensioner lives overseas or receives remote area allowance), the overpayment is not waived if greater than or equal to $200 ($50 for age pensioners).  Overpayments which, in the opinion of the delegate, appear to be less than these amounts would generally be waived.

Advices

A standard letter recovery advice will not be sent if an overpayment is waived.  A standard letter recovery advice will be sent if an overpayment is to be recovered.

Note: this standard letter advice of an overpayment recovery would be sent after the pensioner has received their initial advice telling them that their pension payment has varied due to a change in circumstances.

Waiver of overpayments

Overpayments waived under the waiver provisions will need to be recorded in order to maintain statistics, as is currently the case.

Overpayments equal to or greater than $200 can be waived under sub para 206(1)(b)(i).  Although the pensioner has complied with their notification obligations, these overpayments have arisen due to administrative or processing delays.

Overpayments of less than $200 can be waived under sub para 206(1)(b)(ii).

In all cases of overpayments, the correct date of effect for the reduction or cancellation in pension should be recorded.

Management Information

In relation to overpayments the following information should be recorded:

• the number of waived overpayments of less than $200.
• the number and $ amounts of waived overpayments equal to or greater than $200.

Recovery approach

To minimise disruption, the recovery methods normally used by Overpayment Management Units should be used to recover overpayments arising out of the DoE initiative.

Obligations met

Use this table where an SP or ISS pensioner has notified of an event within the notification period, but DVA delay in effecting the change has resulted in a recoverable overpayment.

Step

Action

1

Identify the date of event

2

Did the pensioner notify of the event within the notification period?

Yes

Go to Step 3

No

Go to 'obligations not met' table- SP & ISS,  start at Step 3

3

How much is the overpayment?

< $200

Waive under sub paragraph 206(1)(b)(ii) VEA

Go to Step 4

≥ $200

Waive under sub paragraph 206(1)(b)(i) VEA

Go to Step 4

Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.

4

Do not send a recovery advice

Obligations not met

Use this table where an SP or ISS pensioner has not notified of an event within the notification period.

Step

Action

1

Identify the date of event

2

Did the pensioner notify of the event within the notification period?

Yes

Go to 'obligations met' table- SP & ISS, start at Step 3

No

Go to Step 3

3

In accordance with ss54(6) does the pensioner have reasonable excuse for not complying with the notification period to the extent that they were capable of complying?

Yes

Go to Step 4

No

Go to Step 5

4

In accordance with s56H, the decision maker may determine the effective date, under s56D, 56E, 56EA, 56EB or 56EC, as appropriate.  Stop here.

5

How much is the overpayment?

< $200

Discretionary:

EITHER

Waive under sub paragraph 206(1)(b)(ii) VEA;

Do not send a recovery advice; and

Stop here.

OR

Go to Step 6

≥ $200

Go to Step 6

Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.

Step

Action

6

Was the overpayment compounded by admin delay?

Yes

Go to Step 7

No

Recover the overpayment.  Use traditional recovery methods, including the usual standard letters.  Stop here.

7

Recover the portion of the overpayment caused by the pensioner's failure to comply with their obligations.  Use traditional recovery methods, including the usual standard letters

8

Waive the portion of the overpayment caused by admin delay using sub paragraph 206(1)(b)(ii) VEA

Obligations met

Use this table where an age pensioner has notified of an event within the notification period, but DVA delay in effecting the change has resulted in a recoverable overpayment.

Step

Action

1

Identify the date of event

2

Did the pensioner notify of the event within the notification period?

Yes

Go to Step 3

No

Go to 'obligations not met' table – age pension, start at Step 3

3

How much is the overpayment?

< $50 (if still in payment)

< $200 (if not in payment)

Waive under sub section:

1237AAA(2) SSA

1237AAA(1) SSA

Go to Step 4

≥ $50 (if still in payment)

≥ $200 (if not in payment)

Waive under section:

1237AAD SSA

1237AAD SSA

Go to Step 4

Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.

4

Do not send a recovery advice

Obligations not met

Use this table where an age pensioner has not notified of an event within the notification period.

Step

Action

1

Identify the date of event

2

Did the pensioner notify of the event within the notification period?

Yes

Go to 'obligations met' table- age pension, start at Step 3

No

Go to Step 3

3

In accordance with ss68(4AA) (age) or 172(4AA) (wife), does the pensioner have reasonable excuse for not complying with the notification period, to the extent that they were capable of complying?

Yes

Go to Step 4

No

Go to Step 5

4

In accordance with s81 (age) or s185(wife), the decision maker may determine the effective date under s77, 78, 78A or 78AA (s181, 182, 182A or 182AA (wife)), as appropriate.  Stop here.

5

How much is the overpayment?

<$50 (if still in payment)

< $200 (if not in payment)

Waive under subsection:

1237AAA(2) SSA

1237AAA(1) SSA

Do not send an advice; and

Stop here.

≥ $50 (if still in payment)

≥ $200 (if not in payment)

Go to Step 6

Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.

6

Recover the overpayment using traditional recovery methods, including the usual standard letters.

Introduction

During the time that the Recovery Plan system is not operational, we will generally recover overpayments that have arisen as a result of the pensioner's failure to notify within the required time frame (usually 14 days, or 28 days if pensioner lives overseas or receives remote area allowance).

This means we will have to send a standard letter notifying the pensioner of the overpayment and specifying recovery information.

A recovery letter will not be sent to pensioners whose overpayment has been waived.

Letter to use – SP and ISS

The initial letter suggested for use is under Microsoft Word, IS Standard Letters, Overpay, “1 — st recov- No pre OP adv.dot”.  This is an existing standard letter that has been amended to take into account DoE related changes.

A sample of this letter is at Attachment C

Letter to use – age pensioners

The initial letter suggested for use is under Microsoft Word, IS Standard Letters, Overpay, “1 — st recov- No pre adv (age).dot”.  This is an existing standard letter that has been amended to take into account DoE related changes.

A sample of this letter is at Attachment C

Purpose

• The purpose of this part is to present guidelines for the calculation of payments during the bereavement period, and especially:
• single pensioners;
• partnered pensioners;
• carers; and
• children.

Intention of payments on death of a pensioner

Payments made on the death of a single pensioner, a partnered pensioner, child or pensioner in care are known as bereavement payments.

The intention of the bereavement payment is to maintain payments that were payable to the deceased and where relevant, to allow a surviving pensioner time to make financial adjustments if necessary before any changes are made to the ongoing rate of pension.

Tax exemption

Bereavement payments are tax exempt.

Definition

A single pensioner is one who either does not have a partner, or does not have a partner receiving an income support payment under the VEA or the SSA.

Legislative References

Sections 53P and 53Q VEAapply to the death of a single pensioner.

Entitlement

Any (one) person whom the Commission thinks appropriate,. is entitled to payment of an amount equal to the pension that would have been payable to the pensioner for the period of 14 days after the day on which the pensioner died. This is calculated at the rate at which the pension would have been payable on those days, if the pensioner had not died.

Definition

A partnered pensioner is one whose partner immediately prior to death, was in receipt of an income support pension from DVA or a social security pension from Centrelink.

Legislative References

Sections 53H, 53J, 53K, 53L and 53M VEA apply to the death of a partnered pensioner.

Entitlement

The surviving pensioner is entitled to receive a bereavement payment on the death of their partner.

The bereavement payment is the amount that would have been paid to the deceased for the period of 98 days commencing on the day of death.  The rate of that payment is based on the amount that was payable on the last day of the last pension period prior to the death.

Although the bereavement payment is calculated on a daily basis, it may be paid as a lump sum.

Section 53K

If the pensioner's reassessed rate is equal to or greater than the combined pensioner couple rate that was payable to the pensioner and the partner before the partner died, then section 53K applies.

As the survivor's pension entitlement is reassessed at an equal or higher rate than the pre-death rate, a lump sum is not normally paid.  The amount of pension that would have been payable to the deceased is taken to represent the bereavement payment.  This amount is a tax exempt component of the ongoing payment to the survivor for the duration of the bereavement period.

Section 53K example

The combined pension rate for the couple prior to death is $20.00 ($10.00 each) per day, and on the death of the pensioner, the surviving pension is reassessed at $30.00 per day.

The bereavement payment is $10.00 per day and will be paid as a part of the survivor's ongoing pension entitlement of $30.00 per day for the duration of the bereavement period.  The $10.00 per day bereavement component is tax exempt.

Section 53L

If the pensioner's reassessed rate is less than the combined pensioner couple rate then section 53L applies.

The bereavement payment payable under this section is the amount of pension payable on the last day of the last pension period prior to death of the deceased.  This amount is payable to the survivor for the duration of the 98 day bereavement period, commencing on the day of death, as either a lump sum or as ongoing fortnightly payments.

Section 53L example

If the combined rate of pension prior to death is $40 per day (each pensioner receiving $20 per day) and the surviving pensioner is reassessed at $25 per day, the bereavement payment rate is $20 per day.  This amount is then multiplied by the 98 day bereavement period ($20 x 98) and totals $1,960.  The ongoing rate is paid at $20 per day until the end of the bereavement period, and then increases to $25 per day.

Definition

Where a person is receiving a carer service pension or carer ISS (saved carers) because they are caring for a severely handicapped person, and that person dies, the carer is entitled to a bereavement payment.  (N.B. The carer provisions have not been altered for the provision relating to bereavement payments payable to carers, Schedule 5, clause 8).

Legislative References

Sections 53U, 53V, 53W and 53X VEA apply to the death of a non-partner who is being cared for by a person in receipt of a pension.

Entitlement

A carer bereavement  payment can only be made to the carer of a deceased person if the person was:

• single; or
• partnered and the partner was not receiving an income support pension.

The bereavement payment consists of 98 days of the carer's rate of pension. This payment may be paid as a lump-sum. Carer pensioner bereavement payments are based on the payment rate of the carer, not the deceased caree.

In addition to the bereavement payment, the carer may also be entitled to receive the rate of carer pension which he or she was receiving on the last day of the last pension period before the person died for the 98 days of the bereavement period.  This payment is also considered to be a bereavement payment and may be paid as a lump-sum.

If the veteran was partnered and the partner was in payment of income support pension, then the partner is entitled to a partnered bereavement payment.  No carer bereavement payment is made to the carer in this case.  However, the carer may be entitled to receive the rate of carer pension which he or she was receiving on the last day of the last pension period before the person died, for the 98 days of the bereavement period.  This payment is considered to be a bereavement payment for tax purposes and may be paid as a lump-sum.

Definition

Pensioners eligible for a dependent child bereavement payment are those who were receiving:

(a)a service pension; or

(b)income support supplement

and

(a)              pension, including an additional amount of pension payable to               the pensioner as a result of applying the additional income free area in               respect of the deceased child; or

(b)              additional components of that pension for a dependent child when that child died.

Legislative References

Sections 53R, 53S and 53T VEA apply to the death of a dependent child.

Entitlement

The pension continues to be payable to the pensioner for the 98 day bereavement period as if the child had not died.

The bereavement payment payable under these sections is based on the amount of pension relating to the child and payable on the last day of the last pension period prior to death of the child.  This amount is payable to the parent for the duration of the 98 day bereavement period, commencing on the day of death, as either a lump sum or as an ongoing payment.

Although the bereavement payment is now calculated on a daily basis, it may  be paid as a lump sum.

Determining daily rate for bereavement payment

Where a war widow or war widower who is a member of a couple dies and he or she was receiving ISS at the time of death, a bereavement payment is payable for a period of 98 days commencing on the day of death.  The amount payable is calculated in accordance with the rate calculator (SCH6-A1(6) VEA) without applying the ceiling rate or counting the war widow's or widower's pension as adjusted income.  Divide the fortnightly amount achieved using the rate calculator by 14 to achieve a daily rate.

Introduction

Although DoE will have no direct impact on the tax-exempt aspect of bereavement payments, it has highlighted an existing system flaw, which is unable to be rectified at this point in time.

Work practice

All bereavement payments are tax exempt.

Currently the Death Processing System (DPS) calculates a lump sum amount payable to the surviving partner or to a person the Commission identifies, or the estate of a single pensioner.  DPS calculates this amount incorrectly so that it does not accurately reflect the tax-exempt component of the payment.

The tax exempt amount is 98 times the daily rate of entitlement that was payable to the deceased on the last day of the last pension period before death.

Recording the tax exempt amount on the Tax Database is a manual calculation.

Single Pensioners

Single pensioners should continue to have any outstanding PIRs processed, as if they had not died.

Partnered pensioners - rules

The following rules apply to PIR processing during the bereavement period for partnered pensioners:

• The “date of event” for all events occurring within the bereavement period is taken to be the day after the bereavement period ends (day 99).

• The notification period for events occurring within the bereavement period will be 14 days (28 days if the pensioner lives overseas or receives remote area allowance), commencing the day immediately following the end of the bereavement period. That is, 14 (or 28) days beginning on the 99 — th day after the day of death.

Note: This decision provides consistency in the treatment of pensioners under the VEA provisions 53K and 53L during the bereavement period.  Most importantly for the bereaved pensioner it provides the benefit of an extended obligation period to notify of the death of their partner and any changes in circumstances that may have occurred during the bereavement period.

Partnered pensioners - effective dates

For events occurring in the bereavement period the effective date for:

• positive PIRs notified within the bereavement period, is the day after the end of the bereavement period (day 99);
• positive PIRs notified after the bereavement period, is the date of notification;
• negative PIRs notified within the notification period or during the bereavement period is the day after the end of the notification period – ie day 114 (day 128 if the pensioner lives overseas or receives remote area allowance);
• negative PIRs notified outside of the notification period is the date of event (day 99).

Partnered pensioners -advance PIRs

PIRs notified in advance before the death of a pensioner with the date of effect occurring in a pension period prior to the pension period in which the pensioner dies, should be actioned as normal.

PIRs notified in advance before the death of a pensioner with the date of effect occurring either:

• before the pensioner's death and in the pension period in which the pensioner dies; or,
• after the pensioner's death,

should be not be actioned until day 99 for increases and day 114 (day 128 if the pensioner lives overseas or receives remote area allowance) for reductions.

Partnered pensioners - retrospective reductions

Negative PIRs with a date of effect on or before the last day of the last pension period immediately prior to the death and notified after the death may affect either the bereavement payment or the ongoing rate of the surviving pensioner.

If the bereavement payment has already been paid, then the bereavement payment itself cannot be altered, however the ongoing rate of the surviving pensioner should be reassessed and necessary adjustments made.

Negative PIRs with a date of effect after the last day of the last pension period immediately prior to the death and before the day of death, should have an effective date of day 99 if notified within the bereavement period.

Introduction

The information provided in this section outlines the bereavement rules and effective dates relating to automatic grants of ISS (i.e. where a veteran dies and the surviving partner is eligible for automatic grant of ISS (and WWP).

Effective date for ISS grant

The effective date for the grant of ISS depends on whether s53K or s53L VEA applies to the survivor after the partner's death, and is shown in the table below.

Note: s53L VEA will apply to the great majority of cases.

IF assessed under section...

THEN effective date for ISS grant is...

53L

the day after the end of the 98 day bereavement period

53K

day 2 of the bereavement period (i.e. same day as grant of WWP)

Payments made after bereavement: DoE

Under DoE rules, assuming the survivor was receiving partner service pension (PSP) prior to the death of the veteran, the tax exempt bereavement payment and the taxable ongoing payment, made to the survivor during the 98 day bereavement period are shown in the table below.  These examples represent the daily rates applicable.

Payment type

Section 53L

Section 53K

Bereavement payment

Vet's married SP × 98 days

Vet's married SP × 98 days

Taxable payment

Survivor's married PSP × 98 days

• (Survivor's re-assessed single SP minus vet's married SP) × 1 day; plus
• (ISS minus vet's married SP) × 97 days.

Payments made after bereavement: DPS

Using the DPS approach, the tax exempt bereavement payment and the taxable ongoing payment, made to the survivor during the 98 day bereavement period are shown in the table below.  These examples represent the daily rates applicable.

Note: DPS does not appear to make a distinction between s53K and s53L VEA when calculating payments after bereavement.

Payment type

DPS

Bereavement payment

• ((Vet's married SP + married PSP) minus (survivor's reassessed single SP)) × 1 day; plus
• ((Vet's married SP + married PSP) minus ISS) × 97 days

Taxable payment

• Survivor's reassessed single SP × 1 day; plus
• ISS × 97 days

Payment of WWP

In all cases (i.e. where ISS and WWP grant are automatic), WWP is granted from the day after death (ss13A(2) VEA refers).  The DoE daily entitlement rules have not affected WWP.  Thus, in real terms, this means that WWP is paid effective from the payday after death.

Calculations compared

On calculating the bereavement payment under DPS, and then in accordance with the DoE legislation (s53L), the total amount received by the surviving partner over the 98 day period is exactly the same.  The only difference, is that the tax exempt component (i.e. the actual bereavement payment) is less under the DPS method.  The impact of this is a possible disadvantage to the pensioner, if they pay tax, unless the taxable and tax exempt amounts are amended on the tax data base (or equivalent new system).

Note: it is unlikely that s53K VEA would apply to a survivor in this situation.  Hence, no s53K example calculation is given.

Example calculation (53L)

The table below provides an example calculation of the payments made after bereavement using the DoE rules, and then the DPS calculation method.

• Prior to death, vet & sps were on a daily rates of $21 each ($294 per fortnight each);
• After death, survivor's re-assessed single daily rate of SP is $22 ($308 per fortnight);
• After death, survivor's daily rate of ISS is $8.57 ($120.10 per fortnight);
• The survivor is assessed under s53L VEA.

Method

Bereavement Payment

Taxable payment

Total

DPS

(($21 + $21) - ($22)) × 1

(($21 + $21) – ($8.57)) × 97

$22 × 1

$8.57 × 97

$4116

DoE (53L)

$21 × 98

$21 × 98

$4116

Background references

• Under 13A(2) grant of WWP is not effective until the day AFTER death.
• Under 45A, as ISS eligibility depends on being a WW, then ISS is not payable until the day after death either.
• Under 53H, the bereavement period starts ON the day of death.

Introduction

These Age Pensioner rules should be read in conjunction with both the Service Pensioner bereavement rules and the Age Pensioner processing rules.

Legislative Reference

Section 91 of the SSA applies to the death of a single age pensioner.

Entitlement

If a single pensioner dies, their estate is entitled to payment from the beginning of the death entitlement period, to the day prior to the customer's date of death.  This is an ongoing entitlement rather than a bereavement payment.

Bereavement provisions generally then allow for payment of entitlement from the day of death to the end of the entitlement period in which the death occurs.  Date of effect rules decide what the bereavement payments are.  The diagram below sets out the possible scenarios.  The table that follows details the period for which bereavement payments are made.

Receipt of Notification of Death

Actioning of Death Notification

Bereavement Payment

Period 1

Period 1

From date of death to end of period 1

Period 1

Before the end of period 3

From date of death to end of period 2

Period 1

After period 3

From date of death to the notification period end date

Period 2

Before the end of period 3

From date of death to end of period 2

Period 2

After period 3

From date of death to the notification period end date

Period 3, prior to end of notification period

Period 3

From date of death to end of period 2

Period 3, prior to end of notification period

After period 3

From date of death to the end of the notification period

After notification period end date

(Any time)

The bereavement payment is payable from the date of death to the end of the entitlement period in which the death occurs.

Definition

A partnered pensioner is one whose partner immediately prior to death, was in receipt of a pension paid by DVA or a social security pension or benefit administered by Centrelink.

Legislative References

Sections 21, 82, 83, 84, 85, 86 and 87 of the SSA apply to the death of a partnered age pensioner.

Entitlement

The surviving pensioner is entitled to receive a bereavement payment on the death of their partner.

The bereavement period is a period of 98 days (14 weeks) commencing on the day of death.

The notification period for the death is 28 days.

The surviving partner is entitled to the equivalent number of days remaining in the deceased partner's entitlement period in which the death occurred plus six more entitlement periods (84 days) of the deceased person's entitlement.

Notification within notification period

If the death is notified within the 28 day notification period, and the resulting determination on the survivor's assessment is:

• An increase – then the effective date for the increase is the date of notification.
• A reduction – then the effective date for the reduction is either:
• The day of the event; or
• The day after the end of the pension period in which the change occurs; or
• The day after the 28 day notification period has passed.

(This is the same as the age pension reduction/cancellation rules).

Notification outside notification period

If the death is notified outside of the 28 day notification period, and the resulting determination on the survivor's assessment is:

• An increase – then the effective date of the increase is the date of notification.
• A reduction– then the effective date of the decrease is the date of event (day of death).

Single pensioners -rules

Single pensioners should continue to have any outstanding PIRs processed, as if they had not died.

Partnered pensioners - rules

All events (excluding death) occurring within the bereavement period, should be processed according to the Date of Effect rules for age pensioners.  The notification period for all events (excluding the death) during this period is 14 days (28 days if the person lives overseas).

Introduction

The DoE initiative will require some additional data collection on the part of the State Office staff at the time of a PIR.  The purpose of this chapter is to:

• outline the new information that must be collected; and
• explain how we are helping income support pensioners understand what information needs to be supplied to the Department, and when it needs to be supplied.

Introduction

There are certain data items the pensioner will be required to provide at the time of a PIR to allow the examiner to determine the date of event.  The date of event and the date of notification are essential data items, as the interaction of these two dates determines the date of effect for the variation.

Data items for DoE – impact on SOs

Under the DoE initiative, all information currently sought by Income Support officers will continue to be relevant and will need to be collected.

In addition, it will be required that the following data items be collected from the pensioner when they contact the Department to report a change of circumstances:

Date of event

The date/s of the change/s in circumstances being notified will need to be provided.  As explained above, the dates of event and notification determine the date of effect.

Data items for DoE – impact on SOs - ctd

Date of notification

The date of notification is the day the Department receives information about a change in a pensioner's circumstances, in whatever form this information takes:

Letter/fax– if the pensioner notifies by letter or fax, the date of notification will be the day the letter or fax is received by the Department, rather than the day the letter or fax was sent.

Phone call – The day of the initial phone call notifying of a change in circumstances, or the day a phone message was left.

In person – if the person notifies by a personal visit, the notification date is the date of the visit.

Note: The date of notification for all of these forms of notification is the date of the initial contact, regardless of whether the pensioner may have to ring or write back to the Department with further information.

At present the Department cannot accept e-mail notification.

Notification period

Which notification period applies, 14 days or 28 days? (the 28 day notification period only applies to those pensioners living overseas or receiving remote area allowance).

Note: A 98 day notification period applies for partnered income support pension bereavement cases.

Data items for DoE – impact on pensioners

Pensioners are currently required to provide the date that a change in their circumstances affecting their pension occurs.  However, under DoE, this will become even more important.  Pensioners will need to be aware of this requirement.  The methods of informing pensioners of the need to provide the date of event, and the need to notify of changes in circumstances within 14 days are outlined in the next part, 'Communication with pensioners'.

Changes to forms

Forms have been updated to reflect:

• the new 14 day notification period; and
• the need to provide the date of event.

All updated forms are the current electronic versions.  It is essential that State Offices use the electronic version of all forms after the implementation date of 13 July 1999.  Old versions of forms may contain incorrect information.  Electronic forms can be found on the intranet, within the DVA Facts system.

National Office does not have the capacity to locate and change pre-printed or state-specific forms.  It is the responsibility of each State Office to ensure that such forms are made compliant with the DoE legislative requirements.

Introduction

As the DoE initiative involves a change to pensioners' obligations, there has been substantial publicity material, as well as changes to advices, standard letters and forms, to ensure that pensioners are aware of the changes associated with the DoE initiative.

Vetaffairs Articles

The March edition of Vetaffairs included an article explaining the DoE initiative.  This article was followed up with a second article in the Budget edition of Vetaffairs.  These articles outlined the new rules for when variations to pensions are applied, in addition to explaining the need for pensioners to provide the date of event of a change in circumstances within 14 days.

Fact sheets

The following fact sheets are available on DoE:

• IS140   Date of effect for pension variations
• IS141   Date of effect for pension variations – age pensioners
• IS142   Date of effect for pension variations: reductions and cancellations
• IS143   Date of effect for pension variations: reductions and cancellations – age pensioners.

June SI

The June SI mailout will contain some information on the DoE initiative, so pensioners are aware of the changes being implemented on 13 July 1999.  DoE information in the June SI will include:

• A paragraph in the body of the letter explaining that the notification period is changing as of 13 July;
• A loose insert for the You and Your Pension booklet to alert pensioners to the fact that as of July 13, the obligations in the booklet are incorrect.  This will be included for service pensioners and ISS recipients who have previously received a copy of the booklet.

You and Your Pension booklet

update

As indicated above, it is necessary to amend the obligations in the You and Your Pension booklet.  Those pensioners who already have a copy of the booklet will receive an amending notice in the June SI mailout.

Those pensioners being sent a booklet at the time of a new grant will also need a copy of the amending notice with their booklet.  This notice should be mailed along with the booklet.  The notice has been provided in pre-printed bulk stock, stored in the State Office, and will also be available in a desk top printable version via the DVA Facts System, through the Online Forms, number D560.

Enough bulk stock has been pre-printed to match the number of remaining booklets (approximately 20,000). Numbers of bulk stock distributed to each State was calculated on a pro rata basis, based on an assessment of expected claim volumes.

The internet version of You and Your Pension has been revised to reflect the changes resulting from DoE.

Existing advices paragraphs that refer to You and Your Pension have been amended to warn pensioners that the obligations in the booklet are no longer current.

Changes to Advices

Advices have been amended to reflect the new DoE obligations.  From and including the June SI, there will be an obligations paragraph warning pensioners that the notification period is changing to 14 days on 13 July 1999.

There will be additional paragraphs from 13 July to explain that a change in circumstances may result in an 'adjusted' payday before the ongoing pension rate is reached, due to daily calculations.

Changes to Standard letters

Standard letters have been amended to reflect the new DoE obligations and legislative changes.

There are approximately 100 letters with amendments, affecting most categories of the standard letters.

Most of the changes relate to the reduction of the 21 day notification period to 14 days (28 days if living overseas or receiving a remote area allowance).

Event

Determining Event Date

If in receipt of Invalidity Service Pension, and commence work

Date work commenced

Other pension grant

Effective date of grant not date of first payday

Imprisonment for more then 14 days

Either:

• The day after the day they go to gaol; or
• The day they are released from gaol.

Health treatment

• Loss of treatment where there is no period of grace – the day the pensioner is notified or the effective date of the reduction, whichever is later.
• Loss of treatment where there is a period of grace – 13 week period of grace begins from the day income is reduced.

Event

Determining Event Date

Marriage

Date of marriage

Enter or leave marriage like relationship

The date of event, as notified

Divorce

Date of divorce

Separation

The date of event, as notified

Ill health separation

Date partner entered separate residence, e.g nursing home/hostel/hospital/hospice

Death

Date of death

Child not dependent

Date child:

• Marries
• turns sixteen
• ceases full time education;
• their income exceeds $252.50 per week($6919.00 per year) OR

for saved children, their income exceeds $6565.00 per year if living at home or $7025.20 if living away from home.

Child/student receives other payment

Date other payment becomes payable

Event

Determining Event Date

Change of address

Date address changed

Home contents change

Date of purchase or disposal of significant assets (only where pensioner is assets tested)

Home sale

Date of settlement

Home being sub let to boarders or lodgers

Date commence to have boarders/lodgers

Home title transferred to another person

Date of transfer

Left home for more then 12 months

Date left home plus 12 months

Moved into a nursing home, retirement village, granny flat

Date entered the nursing home, retirement village, granny flat

Retirement village service fees change

Date new fees apply

Start renting

Commencement date of lease/rental agreement

Cease renting

Date left premises or ceased to rent

Rent amount changes

Date new rental amount applies

Sublet from a government tenant

Date commenced to sublet or date moved in

Receiving rent assistance and enters respite care

Date entered respite care

Leave Australia temporarily or permanently

Date left for overseas

Receiving Remote Area Allowance and away from home for more then 8 weeks

Date left remote area plus 8 weeks

Event

Determining Event Date

Commence work

Date work commenced

Cease work

Date work ceased

Salary change

Date new salary commenced

Commence receiving superannuation income

Date superannuation becomes payable

Superannuation income change

Date superannuation rate changed or date client became aware of the change

Commence receiving overseas income – eg British Retirement Pension

Date overseas income becomes payable

Overseas income change

Date income changed or date client became aware of the change

Receipt of lump sum compensation payment

Date lump sum compensation payment received

Commence receiving periodic compensation payments

Date periodic compensation becomes payable

Periodic compensation payments change

Date compensation payments changed or date client became aware of the change

Receipt of inheritance – income or asset

Date inheritance received

New investment –eg bank account, managed investment, shares etc

Date new investment purchased

Investment sold

Date investment sold

Bank account asset value change

Date asset value changed

Managed investment asset value change

Date :

• units sold or bought
• of switch from one investment product to another
• money is withdrawn or added to an account based investment
• value of account based investment changes by more then $1,000

Cash asset value change

Date cash value changed

Bullion asset value change

Date bullion value changed

Event

Determining event date

New loan

Date money loaned

Existing loan's asset value change

Date loan value changed

Number of shares gained or lost

Date of change, or date the pensioner became aware of the change

Real Estate sale/purchase

Date of settlement

Real Estate investment income

• Commenced
• change

• Commencement date on rental agreement

•         Date new rental amount changed

Private company; partnership; or family trust formed

Date on trust deed

Private company; partnership; or family trust sold/dissolved

Date of dissolution

Trust income change

Date value changes or date pensioner becomes aware of change

Gifts more then $10,000 per year

Date income/assets gifted

Car, boat, caravan, trailer asset value change

Date value changed (purchased, sold, depreciated)

Life insurance policy

•    purchased
•    value change

• Date of purchase
• Date of surrender
• Date value changed, or pensioner became aware of change

If the date of event is:

the notification period is:

Determining effective date

Payment system

on/before 12 July 1999

21 days

notify on/before

12 July – old

rules determine date

of effect (ie date of

effect always a

payday)

payday-based – full payment/instalment varied next payday (15 July 1999 last payment based payday)

notify on/after

13 July (or fail to

notify) – new DoE

rules determine date

of effect

if DoE before 13 July, payday-based instalment adjustment for payments up to and including pay day 15 July, and daily entitlement for first pension period beginning 13 July

on/after 13 July 1999

14 days  ★

new DoE rules determine date of effect

new payment system - daily entitlements

Date of event:

Notification date:

Notification period complied with?

Effective date

will be:

Payment is made up of:

5/7

Increase

9/7

✓(within 21 days)

15/7

Full instalment 15/7.

5/7 Reduction

9/7

✓(within 21 days)

15/7

Instalment at reduced rate 15/7. ★★

5/7

Increase

30/7

N/A

30/7

(day of notification)

Daily entitlement from 30/7.

5/7 Reduction

25/7

✓( within 21 days)

27/7

(day after end of 21 day notification period)

Reduction in daily entitlement from 27/7.

30/7

✗ (outside 21 days)

5/7

Automatic recovery of overpayment from instalment of paydays 15/7 and 29/7.

Daily entitlement paid at reduced rate from 27/7 (ie, beginning of pension period).

14/7

Increase

16/7

N/A

16/7

Increase in daily entitlement from 16/7.

14/7 Reduction

20/7

✓ (within 14 days)

29/7

(day following end of 14 day notification period)

Reduction in daily entitlement from 29/7.

15/8

✗ (outside 14 days)

14/7

Automatic recovery of overpayment from instalment of paydays 29/7 and 12/8.

Daily entitlement paid at reduced rate from 10/8.

National Office

Marion Springer

(ph) 02 6289 6703

State Offices

Fiona Thompson (Qld)

(ph) 07 3223 8766

Joanne Doman (Qld)

(ph) 07 3223 8886

Freda Widawski (NSW)

(ph) 02 9213 7487

Tim Adams (VIC)

(ph) 03 9284 6306

Robyn Del Casale (SA)

(ph) 08 8290 0321