B71/1995 BUDGET INITIATIVES: BEREAVEMENT PAYMENT CHANGES FOR INCOME SUPPORT PENSIONERS

DATE OF ISSUE:  22 DECEMBER 1995

BUDGET INITIATIVES: BEREAVEMENT PAYMENT CHANGES FOR INCOME SUPPORT PENSIONERS

INTRODUCTION

The purpose of this Departmental Instruction is to provide policy and procedural guidelines on the 1995 Budget changes to Bereavement Payments payable when the deceased partner of a couple was a war widow/er receiving a Veterans' Affairs income support pension (effective from 1 January 1996).

BACKGROUND

2.Bereavement payments provide financial assistance to pensioners, their families and carers immediately after a person dies.  When a partnered service pensioner or recipient of Income Support Supplement (ISS) dies, the surviving partner receives a bereavement payment.  This bereavement payment is usually equivalent to seven times the difference between the pension rate paid to the couple and the new rate of pension payable to the survivor.

CHANGES

3.As part of the 1995/96 Budget, the Government introduced two changes to Income Support Bereavement Payments to operate from 1 January 1996.  These involved amendments to the VEA that remove the effect war widow/er pension (WWP) has on the rate of service pension (SP) or ISS when calculating Bereavement Payments for the surviving war widow/er's partner who also received income support.

4.The changes are as follows:

• Initiative 1, provides that the ceiling rate rules applicable to service pension or ISS payable to a war widow/er, will be ignored in the calculation of service pension or ISS bereavement payment to the war widow/er's surviving partner.  When the war widow/er is the surviving partner, the ceiling rates will continue to apply during the bereavement period.  In cases involving two war widow/ers, only the ceiling rate rules that apply to the deceased partner's income support pension are ignored in the calculation of bereavement payments.

• Under Initiative 2, war widow/ers' pension will be excluded from the definition of adjusted income for the calculation of bereavement payments, to the surviving partner of a deceased war widow/er receiving ISS.  When the war widow/er is the surviving partner, war widow/er pension continues to be regarded as adjusted income during the bereavement period.  In cases involving two war widow/ers, only the war widow/er pension paid to the deceased partner is ignored in the calculation of bereavement payments.

INITIATIVE 1 - IGNORE CEILING RATE RULES DURING BEREAVEMENT PERIOD FOR SURVIVING SERVICE PENSIONER PARTNERS

DESCRIPTION

5.This provision will increase the amount of bereavement payment, paid to the surviving service pensioner or income support supplement recipient partner, when the deceased member of the couple was a war widow/er receiving service pension or income support supplement.  It does this by ignoring the ceiling rate rules.  Rates paid during the bereavement period are determined by the assets and income test.

RATIONALE

6.Under the provisions that applied before 1 January 1996, the surviving partner of a service pensioner or ISS war widow/er had to take a large drop in income when their partner died.  The reason the drop was far more significant than for other pensioner groups was that the war widow/er pension ceased and bereavement payment did not include the war widow/er pension.  Unlike SP, ISS and DP, there is no bereavement payment made in respect of war widow/er pension.

ELIGIBILITY

7.A surviving partner of a couple is eligible for bereavement payment under these rules, in the following circumstances:

• one member of the couple received WWP and ceiling rate Service Pension (SP) or ISS; and

• the other partner received SP; and

• the SP war widow/er partner died on or after 1 January 1996.

TARGET POPULATION

8.This change benefits approximately 92 current war widow/ers or their surviving partners.  There would be approximately 5 deaths per year in this group.

INITIATIVE 2 - EXCLUDE WAR WIDOW/ER PENSION FROM DEFINITION OF ISS ADJUSTED INCOME DURING BEREAVEMENT PERIOD

DESCRIPTION

9.This change aligns the bereavement payment to the surviving partner of a war widow/er receiving ISS, with that paid when the war widow/er was getting a service pension. In order to achieve this, war widow/er pension is excluded from the definition of adjusted income for bereavement payment calculation purposes.

RATIONALE

10.Under ISS provisions, WWP is regarded as adjusted income which affects the rate of ISS used in the bereavement payment calculation.  As a result, under the previous provisions that applied before 1 January 1996, the surviving partner of a war widow/er receiving ISS suffered a sudden large drop in available income because bereavement payment is not made in respect of WWP.

ELIGIBILITY

11.A surviving partner of a couple is eligible for bereavement payment under these rules, in the following circumstances:

• one partner of a couple receives WWP and ISS; and

• the other partner receives SP or ISS; and

• the War Widow/er receiving ISS dies on or after 1 January 1996.

TARGET POPULATION

12.This change may benefit up to 600 current pensioner partners of war widow/ers receiving ISS. There would be an expected maximum of 27 deaths per year in this group.

LEGISLATION

13.Veterans' Affairs (1995 - 96 Budget Measures) Legislation Amendment Act (No2), 1995 makes a number of changes to the bereavement provisions of the VEA.  These operate from 1 January 1996 and can be found at new Part IIIB sections 53H to 53W of the Veterans' Entitlements Act 1986.  This Departmental Instruction must be read in conjunction with the general DI relating to the BP legislative rationalisation.

14.New sections of the Act that affect the calculation of bereavement payments where the deceased income support recipient was a war widow/er are:

• S53K which states that, if the rate received by the survivor after the death is higher than the combined rate received prior to death, that part of the new pension that was payable to the deceased partner on the last payday before death is regarded as bereavement payment for 7 fortnights; and

• S53L, which states that the rate payable to the survivor after the death is less than the combined couple rate received prior to death, the married rate pension will continue during the bereavement period. The bereavement payment payable is the amount the deceased was receiving on the payday immediately prior to death.

15.When a war widow/er dies, S53K and S53L must take into account the impact of:

• SS53M(3) in cases where the deceased war widow/er was a service pensioner; and

• SS53M(4) in cases where the deceased war widow/er received ISS.

16.SS53M(3) provides that the rate of service pension determined to be payable to the deceased war widow/er immediately prior to death was payable under section 41, 42 or 43 (whichever is appropriate) and as if S45 had not applied.  That is, the rate payable if the ceiling rate rules had not applied.

17.Normally a war widow/er service pensioner is not paid pharmaceutical allowance in respect of service pension.  In cases where the war widow/er partner of a couple dies, the bereavement payment calculation should include an amount of $2.60 pharmaceutical allowance unless the surviving partner is already entitled to pharmaceutical allowance of $5.20 per fortnight through a non income support pension entitlement.  This will ensure that the surviving partner receives a total of $5.20 per fortnight in pharmaceutical allowance during the bereavement period.*  Once the bereavement period has ended pension must be reassessed to the standard rate including standard rate pharmaceutical allowance, if applicable to income support payments to the surviving partner.

Note: It should be noted that a similar rule does not apply to the surviving partner of an ISS recipient.  Aciton is being taken to address this legislative oversight and further advice will be provided as soon as the matter has been addressed.

18.SS53M(4) provides that the rate of ISS determined to be payable to the deceased war widow/er immediately prior to death, ignores the ceiling rate and ignores war widow/er pension as adjusted income in the calculation.

19.It should be noted that in ISS cases involving a lump sum payment that is regarded as being similar to a war widow/er pension, the rate regarded as payable immediately prior to the war widow/ers death, is the higher of the maximum basic rate or the adjusted ceiling rate (paragraphs 53M(4)(a) and (b) refer).  This special rule ensures that the surviving partner's combined amount of pension and BP during the bereavement period is not less than that paid to the couple prior to death.  For further information on the adjusted ceiling rate rules, please refer to paragraphs 104-106 of DI B40/95 dated 19/06/95 that provide general information relating to ISS.

SYSTEM CHANGES

20.System changes have been deferred pending implementation of PIPS/PC in July 1996.  Until then, income support bereavement payments involving remarried war widow/ers will be calculated manually.  The Death Processing System (DPS) already identifies cases involving remarried war widow/ers for manual processing.  The rates of pension and bereavement payment must be manually calculated in accordance with this DI.  In addition, it is important to note that the advices produced from the bereavement advices system must be suppressed.  Proformas for calculating bereavement payments where the deceased was a war widow/er are at Attachments B and D.  Examples of the manual calculation processes are shown in Attachments C and E.  A sample bereavement advice is at Attachment F.  It must be noted that this sample will not suit every individual circumstance but should be modified as appropriate.

GOSP AMENDMENTS

21.Amendments to the relevant sections of the General Orders Service Pension will be included in the next available release of the General.

ENQUIRIES

22.If you have any further enquiries about this Instruction, please contact your local State Office contact officer (refer to Attachment A) or, if you require further information or assistance, contact Oona O'Beirne, Project Manager on (02) 213 7771.

MURRAY HARRISON

DIVISION HEAD

COMPENSATION

ATTACHMENTS

Attachment A	State Office Contact Officers
Attachment B	Ignore Ceiling Rate Bereavement Payment Proforma
Attachment C	Ignore Ceiling Rate Bereavement Payment Examples
Attachment D	Exclude WWP Bereavement Payment Proforma
Attachment E	Exclude WWP Bereavement Payment Examples
Attachment F	Sample Bereavement Advice

ATTACHMENT A

BEREAVEMENT PAYMENTS STATE OFFICE CONTACT OFFICERS

State	Title	Name	Phone/Fax/E-mail
NSW	Budget Implementation Officer	Lyn Firth	(02) 213 7172 (02) 213 7885 N-B-BUDGET
Vic	Budget Implementation Officer	Diane Gilbert	(03) 9284 6213 (03) 9284 6797 V-B-BIO
Qld	Budget Implementation Officer	Roslyn Scarcella	(07) 223 8442 (07) 223 8533 Q-B-P2
SA	Budget Implementation Officer	Barbara Wozniak	(08) 213 2405 (08) 213 2412 S-B-IS2
WA	Assistant Director Benefit Services	Sukey Angeloni	(09) 366 8505 (09) 366 8239 W-B-ADBS
Tas	Delegate/IPO	Judith Makedos	(002) 216 684 (002) 216 601 T-B-IS9

ATTACHMENT B

ATTACHMENT C

ATTACHMENT D

ATTACHMENT E

ATTACHMENT F

SAMPLE BEREAVEMENT ADVICE

The following sample bereavement advice is to be used as a guide only.  The wording for the most part is consistent with the content of existing letters produced off the bereavement advice system.  Paragraphs etc. will be determined by the individual's circumstances, including income and assets of the surviving partner and whether they receive service pension or income support supplement.  Paragraphs should be selected and if necessary amended accordingly.

If it is necessary for the surviving partner to access their deceased partners account, please ensure the access authorisation letter is also included.

11 December 1995

YOUR FILE NUMBER IS NPX98765

Dear Mr Smith

BEREAVEMENT VARIATION

Please accept my condolences on the sad occasion of the death of your partner.

I am writing to let you know what benefits are now available to you from the Department of Veterans' Affairs.

Ex-Service Organisations

There are a number of ex-service groups in the community.  Their main role is to provide help to ex-service personnel or their families.  Please telephone this Department, or the above number, to obtain a list of ex-service organisations that may be able to help.

&PENSIONTYPE

You will continue to receive a &PENSIONTYPE at the rate now payable to you until &DDMMYY (enter  bereavement period end date).

At the end of this period your &PENSIONTYPE will be reviewed.

Bereavement Payment

In addition, to your &PENSIONTYPE you will be paid a bereavement payment of &$XXX.XX per fortnight for 7 paydays commencing on &DDMMYY (enter pay day after partners death here).

The additional payment of pension is to help your financial readjustment and to help defray costs caused by bereavement.

This bereavement payment is not taxable.

You will be able to access part of your bereavement payment from the account where your partner's pension was paid.  These moneys represent payments which were released after the death of your partner and total &$XXXX.XX.

If you have difficulty accessing this amount, please present the enclosed Letter of Authority to the teller at the &FININSTNAME. This letter states the amount that you are able to withdraw directly from this account.

The balance of your bereavement payment will be paid directly to you.

Payment Details.

The amount of pension you receive will be varied from &DDMMYY.  Until then, you will be paid at the following rate.

This amount will be credited each fortnight to account number &ADDACCOUNTNO in the name of &ADDA/CHOLDERSNAME at &ADDINSTITUTIONNAME.

Your next trading bank payment will be adjusted by &$XXX.XX.  Therefore your payment on payday &DDMMYY only, will be &$XXX.XX.

Fringe Benefits

As a &PENSIONERTYPE you are eligible for &PENSIONTYPE fringe benefits.

Your Income and Assets

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

The income and assets previously held jointly in your assessment will be halved for at least

7 fortnights, or until the estate is finalised.  The only exception are Immediate Annuity products.  The full value of these products will be transferred to your name.  Please contact this office if this is not correct.

The financial obligations listed later in this letter under the heading 'Your Obligations to the Department' apply in general pension variation cases.  However, because your pension will be reassessed as a result of the death of your partner, special circumstances apply.  You must advise this Department of changes to your income and asset situation within 21 days of the estate being finalised.

Financial Institutions and Cash

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

The interest rate used for financial institution accounts is either the actual interest rate payable or a deemed rate.  An interest rate of 5% will be deemed on money which has an actual interest rate of less than 5%.  Significant amounts of cash will also have interest deemed at 5%.

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

Deposit Accounts

Account Name and Reference Number	Account Balance	Interest Rate	Actual Income PF

Note that the interest rate on all of the above accounts will be updated automatically each quarter.

Term Deposits, Overseas accounts, Cash and Other accounts

Account Name and Reference Number	Account Balance	Interest Rate	Actual Income PF

Note that the update of the interest rate on all the accounts in the above table will only occur if you advise of a change to the rate.  There is no automatic update of interest rates on these accounts.

Managed Investments

Managed Investment	Units	Asset Value	Rate of Return/ Cents Per Unit	Fee Deduction Per Fortnight	Income Per Fortnight (Less Fee Deduction)
TOTAL MANAGED INVESTMENT INCOME FOR PENSION PURPOSES

Note that for pension purposes all Rates of Return will not exceed 50%.

GUIDE TO TABLE

Fee Deduction Only - Assessed fees paid in acquiring or disposing of managed investments.

Place of Residence

The asset values and/or income values shown below are the amounts used for pension purposes:

• Market value of household contents - &$XX,XXX

Miscellaneous Assets

• Car with a value of &$X,XXX.

Miscellaneous Income

• Other income - &$XXX.XX per fortnight.

The total of your fortnightly income as listed above is &$XXX.XX.  The total of all your assets listed above is &$XXX,XXX.XX.

Your Right of Review

If you do not agree with a decision affecting your rate of pension, you may apply to have it reviewed.  The cases will be reviewed by a senior delegate of the Repatriation Commission who was not involved in the original decision.  The senior 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 from the day you receive this letter.  Your letter should state the specific grounds for your request for review.

Your Obligations to the Department

This advice is issued under Section 54 of the Veterans' Entitlement Act.  Please read the following obligations carefully.  You must tell us within 21 days if any of the events listed below occur.  If you do not tell us of any of these changes you may be overpaid.  We are entitled under the above Act, to recover this overpayment and an administrative charge may also be applied.

When you are telling us of changes to your circumstances you should do this by telephoning or visiting any Department of Veterans' Affairs Office, or by writing to the Deputy Commissioner.  The address and telephone number is noted at the beginning of this letter.  If you telephone, we may ask you to confirm information in writing or to send us certain documents which are related to the matter.

Obligations - General

You must tell us if:

• You change your postal and/or residential address

• You leave Australia permanently

• You are granted any pension or benefit from the Department of Social Security

• You are granted any pension or benefit from an overseas authority

• You are imprisoned after conviction for an offence.

Obligations - Domestic Situation

You must tell us if:

• You marry or remarry

• You start to live in a marriage like relationship

• You receive maintenance income for your children.

Obligations - Homeowner

As a homeowner, you must tell us if:

• You sell your home

• You leave your home because of age or ill-health

• You rent or sublet your home

• You leave your home for any period in excess of twelve months

• You enter a Home Equity Conversion (HEC) or loan arrangement, where you convert the equity in your home into cash without you having to vacate the house.  This may be done either as a lump sum or a series of payments.  You should tell us each time you receive a payment.

Obligations - Financial

You presently receive &RATE of pension.  You will continue to receive this rate as long as your income is less than &$XX.XX per fortnight and your assets are less than &$XXX,XXX.XX.  You are obliged by law to tell us if this is not correct.  You must tell us by writing to the Deputy Commissioner at the address shown at the beginning of this letter.  If in the future your income or assets increase above either of these limits, you must tell us in writing, within 21 days of the change.

Obligations - Employment

You must tell us if:

• You enter into a contract of employment; or

• You commence employment;

either as an employee or as an independent contractor.  You must tell us even if you are not paid for the work until some time after commencing that employment.

Employment

Should you wish to undertake any period of employment, you may be eligible for an earnings credit.  Details on eligibility and how to apply for this credit can be obtained by contacting this office.

Release and Use of Information

The income and assets information you give to this Department is used to work out your eligibility for pension and other benefits.  Some information that you have supplied may be released to other agencies or bodies such as the Department of Social Security; the Australian Taxation Office; the Health Insurance Commission; various State and local government authorities; and superannuation funds.

The reason for supplying information to such agencies is to verify income/assets details; matching of information; payment of accounts for treatment; and to verify eligibility for rebates and concessions.

If you have any questions about any of the above matters please contact this office at the address or telephone number shown at the top of this letter.

Yours sincerely

&DCNAME

Deputy Commissioner

as Delegate of the Secretary