DATE OF ISSUE:   9 FEBRUARY 1996

RETENTION OF ELIGIBILITY WHEN VETEAN CEASES TO BE PAID

INTRODUCTION

The purpose of this Departmental Instruction is to provide procedural guidelines and background information on the 1995/96 Budget initiative which allows existing partner service pensioners to retain eligibility for service pension in some circumstances even when the veteran service pensioner ceases to be paid.

2.This initiative applies only where the veteran loses payability (ie the rate of pension is reduced to nil).  Where the veteran loses eligibility or is cancelled under section 56EC of the VEA (Cancellation determination where pension not payable), eligibility for partner service pension (PSP) is also lost.  Advice about the use of section 56EC will be sent in due course.

BACKGROUND

3.At present, when a veteran service pensioner loses payability (ie the rate of pension is reduced to nil) the partner loses eligibility and must apply to DSS for a pension.  Subsequently, when the veteran regains payability the partner can transfer back.

CURRENT EXEMPTIONS

4.Legislation was introduced in January 1995 to allow partners and non-illness separated spouses of compensation affected veterans to retain PSP eligibility if the veteran's service pension is reduced to nil (DI B05/95 refers).

5.Where service pension is reduced to nil because of an advance payment of Pharmaceutical Allowance eligibility for partner service pension is retained.

RATIONALE

6.This change is designed in part to ensure that DVA continues to meet its obligations to provide care and compensation to veterans and their dependants by including the veteran's family in DVA services where possible.

7.This is achieved by allowing existing partner service pensioners to retain eligibility for PSP even if the veteran ceases to be paid.  This will obviate the need for these partners to transfer to DSS and then transfer back to DVA if the veteran regains payability.

LEGISLATION

8.The amendments to the VEA were introduced in the Veterans' Affairs (1995/96 Budget Measures) Legislation Amendment Act 1995.  Royal Assent was received on 14 November 1995.  See Attachment A for a summary of the legislative amendments relating to this initiative.

EFFECT OF DELAY IN ROYAL ASSENT

9.A memorandum detailing instructions for processing impacted cases between the commencement date of the amendments and the date of Royal Assent was forwarded to State Offices.  (Included in 'On-Line' 34/COMP3; 20/10/95.)  See Attachment B.

RELATED LEGISLATION

10.Three related amendments were introduced as part of the same amending Act:

• extension of eligibility to certain partners of veterans and deceased veterans (DI C02/96 refers);

• a minimum age requirement of 50 years for PSP eligibility (DI C05/96 refers);

• limiting members of a couple to the partnered rate where only one partner is receiving pension (DI C04/96 refers).

POLICY CHANGES

11.With effect from 1 October 1995, a partner or non-illness separated spouse can retain payment of PSP if the veteran's service pension rate is reduced to nil.  For example:

• the partner can continue to receive PSP even if the veteran's service pension is suspended due to the veteran failing to return a form, failing to supply a TFN, or through his or her whereabouts being unknown;

• the separated spouse of a non illness separated couple can continue to receive PSP even if the veteran's service pension is reduced to nil because income or assets are in excess of the relevant limits.

12.From 1 October 1995, if a veteran dies during a period when his or her service pension is reduced to nil, the widow(er) will retain eligibility for PSP.

13.The rate of partner service pension is assessed in line with the partner service pensioner's circumstances (ie as a member of a couple, as a member of a non-illness separated couple or as a widow(er)).

14.Eligibility for PSP is lost if:

• the veteran loses eligibility for service pension and the pension is cancelled.  For example, if the veteran ceases to be eligible for Invalidity Service Pension (ISP) and pension is cancelled; or

• the veteran is reduced to nil payment and pension is subsequently cancelled under section 56EC; or

• the widow/widower remarries or commences to live in a marriage like relationship with someone other than the veteran; or

• the partner commences to live in a marriage like relationship with someone other than the veteran; or

• the partner (not legally married) ceases living in a marriage like relationship with the veteran; or

• the non-illness separated spouse commences to live in a marriage like relationship with someone other than the veteran; or

• the relationship between the veteran and the partner, or the non-illness separated spouse, is ended by divorce; or

• the partner, non-illness separated spouse or widow(er)'s pension is cancelled for any reason.

RATE OF PENSION

15.If the pensioner is a member of a couple, the rate of pension is calculated at the “partnered” rate.  Departmental Instruction C04/96 titled "Limit Members Of A Couple To The Partnered Rate" refers.

PHARMACEUTICAL ALLOWANCE (PA)

16.Part III of the VEA specifies the rate of PA to be paid to a service pensioner depending on their circumstances. Part VIIA of the VEA specifies the rate of PA payable to a non-service pensioner.  In combination, the legislation requires that:

• when the partner of a veteran with an accepted disability (who is not receiving SP) claims PSP, the partner should receive $2.70 and the veteran should continue to receive $5.40.

17.Currently the system will not pay PA according to the legislation in the above cases.  For members of a couple where only the partner is in receipt of service pension, the partner service pensioner will be paid PA at the rate of $5.40 pf.  Also if, prior to the grant of PSP, the veteran was in receipt of PA with a Disability Pension, the system will remove the PA from the veteran's payment and pay the $5.40 pf with the PSP.  Similarly, if the veteran is granted DP when the partner is in receipt of PSP, the $5.40 pf will be paid with the PSP.

18.This system problem has been discovered as a result of the partner budget initiatives.  A policy decision has been made that these pensioner couples will not be underpaid the legislated amount of PA.  There are no cases currently on the system.  We will be monitoring the situation regularly until there is a system solution.  As cases become apparent, please advise the Policy Implementation Team in South Australia.

SYSTEM CHANGES

19.There are no system changes necessary to accommodate this initiative.

ADVICES

20.There should be no impact on advices from this initiative.

21.Attachment C offers some questions & answers to assist in answering enquiries and correspondence.

DELEGATIONS

22.No new delegations will be required.

ATTACHMENTS

23.The following attachments are provided:

• Attachment A — Legislative amendments.

• Attachment B — On-Line 34/Comp 3; 20/10/95: "Impact re Delay in Royal Assent for Partner Initiatives"

• Attachment C — Questions and answers.

ENQUIRIES

24.Any questions regarding this DI should be directed to the Policy Implementation Unit, South Australia:

Robyn Del Casale — Assistant Director(08) 213 2321(LAN S-B-PI-1)

Sue Burne — Project Officer(08) 213 2656(LAN S-B-PI-2)

Kathi Ashman — Project Officer(08) 213 2409(LAN S-B-PI-3)

W R MAXWELL

DIVISION HEAD

COMPENSATION

JANUARY 1996

ATTACHMENT A

PARTNER INITIATIVES: LEGISLATIVE AMENDMENTS SUMMARY

ITEM	VALAA	Commencement Date
	2.(3)	Veterans' Affairs (1995-96 Budget Measures) Legislative Amendment Act 1995: Effective commencement date on 1/10/95
	VEA	Definitions
10	38(1A)	Defines a disqualifying provision as used in subsection 38(1)
		Application
1	35B(2)	Amends s35B to require people to make a claim if they wish to establish that their veteran partner or their deceased veteran partner had rendered qualifying service.
2	35C(1)(c), 35C(1)(d)	Amends s35C to allow claims by people, or others acting on their behalf,  who want to establish that their veteran partner or deceased veteran partner had rendered qualifying service
		Eligibility
3	38(1)	Amendment makes this subsection subject to new subsection 38(1B)
4	38(1)(a)(ii)	Amended to protect PSP eligibility from the effects of all disqualifying provisions on the payability of the veteran's service pension.
5	38(1)(aa)	Extends eligibility for PSP to include people who would qualify for an age pension from DSS and who are members of a couple with a veteran who has rendered qualifying service.
6	38(1)(b)(ii)	Amended to protect PSP eligibility for a non-illness separated spouse from the effects of all disqualifying provisions on the payability of the veteran's service pension.
7	38(1)(c)(i)	Amended to delete requirement for the deceased veteran to have been in receipt of a service pension immediately prior to his or her death.
8	38(1)(c)(ia)	Extended to protect PSP eligibility for a widow or widower from the effects of all disqualifying provisions on the payability of the deceased veteran's service pension prior to his or her death.
9	38(1)(e)	Extends eligibility for PSP to include widow/ers who would qualify for an age pension from DSS and who were the partner or spouse of a deceased veteran who had rendered qualifying service.
10	38(1B)	Introduces the 50 year minimum age requirement for PSP where there are no dependent children.
10	38(1C)	Qualifies the application of new subsection 38(1B) to exclude from its operation those people under 50 years with no dependent children who, before the date of commencement (1/10/95) were eligible and had submitted a claim which had not yet been determined, or had already been determined to be eligible and their pension has not been cancelled.
10	38(1D)	Qualifies the application of new subsection 38(1B) to exclude from its operation those people whose partner is a veteran to whom section 24 ("Special Rate of Pension") applies.
11	38(3), 38(3A)	Subsequent to item 9, to include its provisons.
		Payability
12 to 59	41(5) 41-B1, 41-C12, 41-D4, 41-D5, 41-F3, 41-F4, 42(4), 42-B1, 42-D12, 42-D16, 42-E4, & E11 42-G3, & G4 43(3), 43-B1	Amendments to these sections change the rate calculators in sections 41, 42, and 43 by deleting all reference to “partnered-partner receiving neither pension nor benefit”, to ensure that all members of a couple are paid at the married rate
		Savings Provisions
62	197A	Refers to a set of 'savings and transitional provisions' at Schedule 5 designed to protect existing service pensioners who are members of a couple and are paid at the standard rate.
		Schedules
63	Schedule 5	Details how the savings and transitional provisions operate to protect service pensioners in receipt of the higher rate of pension under the category “partnered-partner receiving neither pension nor benefit” from the effect of the above amendments (items 12 to 59) until the cumulative effect of any changes in their circumstances reduces their 'saved' rate of service pension to the partnered rate.

*Note: Item numbers in first column refer to Schedule 4 of the Veterans' Affairs (1995-96 Budget Measures) Legislative Amendment Act 1995, pp27-33.

ATTACHMENT B

O N   L I N E

20/10/95 Item 34/COMP3

TO: DEPUTY COMMISSIONERS ALL STATES

FROM: R J HAY INCOME SUPPORT COMPENSATION

ISSUE: Impact Re delay in Royal Assent for partner initiatives

ACTION:DATE DUE: AS PER MINUTE

NATIONAL OFFICE DIVISION: COMPENSATION DIVISION, INCOME SUPPORT BRANCH

SUBJECT:IMPACT RE DELAY IN ROYAL ASSENT FOR PARTNER INITIATIVES.

Background

As advised in my earlier LAN messages, the Veterans' Affairs (1995-96 Budget Measures) Legislation Amendment Bill 1995 is yet to be introduced into the Senate.  This memo concerns those parts of the Bill which relate to income support initiatives:

①⇩ Minimum age set for certain partner service pension applicants

②⇩ Limit members of a couple to the partnered rate

③⇧ Extension of eligibility to certain partners of veterans and deceased veterans

④⇧ Retention of eligibility when veteran ceases to be paid

⑤⇧ Extension of Commonwealth Seniors Health Card eligibility

⑥⇩ Clarification of qualifying service in regard to Korea for troops based in Japan

⑦⇧ Extension of eligibility for income support supplement to war widow/er spouses of pensioners or supplement recipients

⑧⇧ Recovery of a spouse's overpaid pension from arrears of a veteran's

disability pension

Note: ⇧ means the initiative is beneficial.  ⇩ Means not a beneficial initiative.

Action to be taken

2.The delay in passing the Bill has implications for the date of effect of these changes.  Different processes will need to be followed for individual initiatives.

①Current legislation will apply.  That is, claims can be granted for partner service pension even if the partner is under 50 and has no dependent children.

②Current legislation will apply.  The standard rate is payable where only one member of a couple is a pensioner or is claiming pension.  Given that the system changes have already been implemented, staff will need to manually assess any new cases and record them as 'saved' once the legislation takes effect.  Current '04' cases already transferred to manual assessment will continue to be assessed under the pre 1/10/95 rules (ie their rate of pension can be increased or reduced depending on changes in circumstances).

③ & ④Claims can be processed or pension continued under the new rules in anticipation of having the necessary legislative authority in due course.

⑤Claims can be processed (or the card granted automatically when pension is cancelled) under the new rules in anticipation of having the necessary legislative authority in due course.

⑥ & ⑦Current policy will continue to apply.

⑧Current processes continue to apply.

Recording of claims for partner service pension (PSP)

3.From the date the Bill receives Royal Assent, all new measures will apply.  Appropriate action will be initiated to protect any grant of entitlements made between  1 October 1995 and the date the Bill receives Royal Assent.  Further details of this action will be advised when available.

4.Some idea of the number of clients involved will be necessary.  Therefore, any action taken on a case involving a claim for partner service pension or the current '04' assessment type, where there is a

"1 October" impact, should be recorded with the file number, for consideration when a decision is being made on what the appropriate action will be.

Follow up

5.I appreciate your assistance and recognise the inconvenience caused by this unavoidable delay.  As soon as any new information is available, you will be advised.  In the interim, if you have any queries please contact:

Robyn Del Casale — Assistant Director(08) 213-2321(LAN   S-B-PI-1)

Sue Burne — Project Officer(08) 213-2656(LAN   S-B-PI-2)

Kathi Ashman — Project Officer(08) 213-2409(LAN   S-B-PI-3)

RJ HAY

BRANCH HEAD

INCOME SUPPORT

ATTACHMENT C

Q1A veteran had rendered qualifying service and had been granted service pension.  When the veteran separated from his partner he was not in receipt of pension because the couple's combined income and assets had reduced his pension to nil.  There are no dependent children and the non-illness separated spouse is 45 years of age.  Is the non-illness separated spouse eligible to retain partner service pension?

Answers:

(1)The non-illness separated spouse retains eligibility under this initiative if;

• the veteran's pension was granted and payable prior to 1 October 1995; and

• the non-illness separated spouse had been in receipt of, or had lodged a claim and been eligible for, PSP prior to 1 October 1995; and

• the veteran's pension was reduced to nil after 1 October 1995 and was not cancelled under 56EC.

When they separate, if her income or assets are not in excess, the non-illness separated spouse will be eligible to receive PSP.

(2)The non-illness separated spouse will not retain eligibility for PSP under this initiative if;

• the veteran's pension was granted and payable prior to 1 October 1995; and

• his pension was reduced to nil before 1 October 1995.

Her basic eligibility for PSP was lost prior to 1 October 1995 when the veteran's service pension was reduced to nil.  Under the new rules introduced on 1 October, unless there are dependent children, or the veteran is T&PI, the non-illness separated spouse must meet the new minimum age requirement of 50 years to be eligible for PSP.

(3)The non-illness separated spouse will not retain eligibility for PSP under this initiative if;

• the veteran's pension was granted and payable prior to 1 October 1995; and

• his pension was reduced to nil and subsequently cancelled under 56EC.

There is no change to the rules concerning cancellation; basic eligibility for PSP and SP are both lost when the veteran's service pension is cancelled).  If the veteran regains eligibility for service pension, the non-illness separated spouse will not be eligible for PSP until she reaches 50 years.  If the veteran dies without regaining eligibility for SP, the veteran's widow(er) will be eligible for PSP when she reaches DSS Age Pension age.

(4)The non-illness separated spouse will not be eligible for PSP until she reaches 50 years of age if the veteran's pension was granted after 1 October 1995.

Under the rules introduced on 1 October, unless there are dependent children or the veteran is T&PI, the non-illness separated spouse must meet the new minimum age requirement of 50 years to be eligible for PSP, (DI C05/96 refers).  Similar rules apply as above if the veteran's service pension is cancelled under 56EC

Q2A married couple permanently separate.  The veteran commences to live in a marriage like relationship with another person who refuses to supply their income and asset details to the Department.  If the veteran's pension is suspended for failing to supply required information, will the non-illness separated spouse retain eligibility for PSP?

A — Yes.  The non-illness separated spouse retains eligibility for PSP even though the veteran is receiving nil payment due to his/her pension being suspended.  Eligibility for PSP is retained until such time as the veteran's service pension is cancelled under section 56A or 56EA VEA.  Where the veteran's eligibility for SP is lost through cancellation, the non-illness separated spouse also loses eligibility for PSP.

Q3If the veteran member of a couple embarks on a world tour and subsequently ceases all contact with either the Department or his/her partner, will that partner retain eligibility for PSP if the veteran receives nil payment because the Department suspends the veteran's SP?

A — Yes, the partner retains eligibility for PSP even though the veteran is suspended through whereabouts unknown and receives nil payment.

Q4Will a person living in a marriage-like relationship (not legally married) with a veteran retain eligibility for PSP if they separate from a veteran whose SP has been reduced to nil?

A — No.  A person living in a marriage-like relationship with a veteran retains eligibility for PSP when the veteran's SP is reduced to nil only while they continue to be in the marriage-like relationship.  If they separate, eligibility for PSP is lost.  Only the legally married partner of a veteran retains eligibility for PSP if they separate from the veteran.

Q5If a partner and a TPI veteran separate permanently, does the partner retain eligibility?

AYes the partner retains eligibility for partner service pension until such time as pension is cancelled.  If either persons income or asset are in excess for more than 6months and pension is subsequently cancelled under section 56EC, eligibility for PSP is lost.