B10/1995 MODIFICATION OF THE ANNUAL ASSETS TEST EXERCISE

DATE OF ISSUE:  13 FEBRUARY 1995

MODIFICATION OF THE ANNUAL ASSETS TEST EXERCISE

INTRODUCTION

The purpose of this Instruction is to advise of changes to the Annual Assets Test exercise.

BACKGROUND

2.In the past all asset tested cases have been reviewed on an annual basis during the period February to early July.

3.The cases selected for review were:

• those assessed under the assets test

• those assessed under the income test, with assets within $10000 of the prescribed asset limit.

4.Those cases selected for review would be issued with an Income and Asset Statement (form SP3).  Following review, changed asset values were applied to the assessment of service pension prior to the indexation of the assets threshold in July.

5.An analysis of the Assets Test Exercise has shown that it has become less cost effective over a number of years.  The analysis also indicated that a large majority of
Asset tested cases were undergoing regular reviews in addition to the SP3 review.  These reviews were both pensioner and Departmentally initiated, and in many cases, both.  The introduction of automatic monitoring of Managed Investments and Shares has also had a marked effect.

6.This review activity has reduced the need for a separate annual review.

OUTLINE OF CHANGES

7.A proposal to restrict the formal annual review action to the updating of property values only has been approved.

8.This means that, commencing in 1995, the bulk issue of Income & Asset Statements (SP3s) will cease.

9.There will however, continue to be an annual Property Valuation exercise conducted by AVO.  Details of this have been advised separately (see DI B49/94).

10.An information letter will be sent to pensioners who would previously have received an SP3 form, to advise them of the changed approach (see paragraph 16 for details).

ACTION TO BE TAKEN BY BRANCH OFFICES

11.Valuations will be despatched to State Offices soon after 15 April 1995.  Property screens should be updated.  If the value of the property does not change, the new valuation date should still be entered on PIPS.  Any cases where the system is to be updated should be registered as DIA on CMS.  Creation of a new attribute for use with these cases is currently under investigation.  Advice regarding this will be sent later.

12.In some cases the property value will be affected by plant and equipment, mortgage etc.  Examiners will need to obtain up to date information from the pensioner regarding the current value of these additions/deductions if this is not already available.

USE OF FORM SP3

13.The SP3 form can still be used on an ad-hoc basis.  However, as the forms will be issued manually, these reviews should be registered under the DIA classification on CMS.

CURRENT REVIEWS

14.Certain obligatory annual reviews were undertaken as part of the assets exercise.  These are:

• cases assessed under the Hardship Provisions

• cases assessed under the Pensioner Loans Scheme.

15.Reviews of these cases should begin in conjunction with processing of the March Statutory Increase.  This should allow sufficient time for the reviews to be finalised in time for changed asset values to be applied at the time of the Asset Threshold indexation in July.

ADVICE TO PENSIONERS

16.Pensioners who would otherwise have been reviewed under the assets test in 1995 will be sent an advice outlining the changes.  Those pensioners with property in the pension assessment will also be advised that the Department will continue to value the property on an annual basis.

16.We expect to issue these advices during February.

17.A draft of the advice is attached for your information.

18.The contact officer is Kaye Frigo.  She can be contacted on (08) 213 2409 or LAN S-B-PROJ6.

DAVID MACKRELL

ASSISTANT SECRETARY

INCOME SUPPORT

ATTACHMENT A

Dear !SALUTATION!

In the past we have sent out forms every year to those pensioners who may be affected by the service pension assets test.  You may have received a blue form, called the 'INCOME AND ASSETS STATEMENT', about this time last year.

I am writing to let you know that the Department will not be sending you one of these forms this year.  Instead, we have chosen to remind you of some important information about your pension assessment.

Your Obligations to the Department

Your obligations have been explained to you in previous letters about your service pension.  These obligations still apply.  We will write to you from time to time and tell you about your income and assets and your obligations to let us know if those income or assets change.

For owners of Managed Investments and Shares

The Department will continue to monitor the value of certain managed investments and shares.  However, if you own any managed investments which are not unit based and do not produce income (for example, Friendly Society Bonds or Cash Management Trusts), then you will need to let the Department know if the value of the investment changes.  You will also need to let the Department know if you dispose of the investment.

Important information for Property Owners

If you currently own any property (for example, real estate or farm) that is considered to be an asset, the Department values this through the Australian Valuation Office (AVO).  We will continue to have your property valued each year, so you will only need to advise us if you no longer own that property, or if you acquire further property.

If your pension rate changes as a result of a change in the value of your property following an AVO valuation, you will be advised in writing when this occurs.

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,

Deputy Commissioner as

Delegate of the Secretary