C47/1997 LESS THAN $1.00 VARIATIONS IN INCOME SUPPORT PENSIONS

Purpose of Instruction

This departmental Instruction (DI) provides policy guidelines relating to the non processing of changed circumstances where the result would be a less than $1.00 variation in pension, commencing only with changes to income from financial institution assets subject to deeming.

R J HAY

BRANCH HEAD

INCOME SUPPORT

Introduction

On 4 February 1997, the Repatriation Commission endorsed a strategy for introducing the new Budget legislative provision of not processing some income support pension variations of less than $1.00.  Commission agreed to a gradual implementation of the initiative, commencing with changes to assets in financial institutions subject to deeming, unless this would result in the pensioner being denied an additional benefit.

Financial institutions

Section 5Q(1) of the VEA defines a financial institution as a bank, building society, credit union or other institution that receives money on deposit.

Date of effect

The initiative will take effect from 3 April 1997.

Aim

This initiative extends the principle of simplification of the rules relating to the assessment of financial assets and complements other measures announced in the 1995/96 Budget.

It will further reduce the number of PIRs and reduce the processing work involved in those PIRs of little or no consequence.

Links with other initiatives

• $1.00 minimum variation is linked to other business improvement projects under the Income Support Breakthrough Project (ISBP), including a revised obligations strategy, improvements to advice letters and development of an Information Kit for pensioners.
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• It is also linked to other initiatives aimed at simplifying and rationalising processing, such as the $2000/$4000 extended deeming and the data collection review exercise.

Legislation

The legislative provisions applying to this initiative, Section 56DA, allow for Commission to declare to which classes of changed circumstances the $1.00 minimum variation will and will not apply.

Gazettal Notice

The legislative provisions applying to this initiative (Section 56DA) require a Repatriation Commission declaration outlining the changes of circumstances to which the provision does not apply be included in the Government Gazette.  This notice was gazetted on 26 March 1997.

Classes of changed circumstances

Initially the initiative will apply only to changes to assets in financial institutions subject to deeming, ie bank accounts, credit union accounts, building society accounts or other institutions that receive money on deposit.

Pensioners to which the initiative does not apply

The $1.00 minimum variation does not apply to the group of disability pensioners transferring from DSS who will have their age pension paid by DVA from 1 July 1997.  This is because those pensioners are covered by the DSS Act and the initiative applies only to the VEA.

The initiative should not be applied if it would result in the pensioner being denied an additional benefit, ie fringe benefits, local concessions or treatment benefits, that depend upon the pensioner receiving a prescribed rate.

Right of review

A pensioner has no right of review against the application of this provision as no determination has been made.

Current procedure for processing a variation in circumstances

When advice is received of a variation in circumstances, the case is investigated, the client data base updated via PIPS/PC and the pension rate automatically reassessed.  An advice letter outlining details of the new assessment is then generated and sent to the pensioner.

Change

From 3 April 1997, there will be no requirement to process changes to assets in financial institutions subject to deeming where the result would be a less than $1.00 variation in pension.

Advice to pensioner

When a case is not processed under the $1.00 minimum variation rules, the pensioner is to be advised accordingly.  (This may prevent a further PIR/phone call/visit).

Standard Letter

Four Standard Letters have been created, single maximum and less than maximum rate and married maximum and less than maximum rate pensioners, to cover cases to which the initiative applies.  The letters contain open variables for the minimum financial asset variation that must occur for the pension rate to change.  The text of the letters is at Attachment A.

Procedure

The table below outlines the steps to follow each time advice of a change in circumstances to income from financial institution assets subject to deeming is received.

Step

Action

1

Check whether the PIR is solely about a change to a financial institution account.

2

If no, process as normal.

3

If yes, check if the pension is income tested by opening the IQ.IA and/or the trial screen.

Note:   The trial screen or the SP7 ready reckoner will assist.

4

If no, process as normal.

5

If yes, check whether a reduced rate is payable.

6

If maximum rate is payable, refer to the income test ready reckoner and check if advised changes would reduce pension rate by $1.00 or more.

7

If no, prepare appropriate Standard Letter and send to pensioner.

8

If yes, process PIR as normal.

9

If reduced rate is payable, check which deeming rate applies.

Note:   Use the total financial assets on IQ,IA screen as a guide.

10

Refer to applicable deeming amount on income test ready reckoner and check if advised changes would result in less than $1.00 variation.

11

If no, process as normal.

12

If yes, prepare appropriate Standard Letter and send to pensioner.

Integrated advice letters

The integrated advice letters will be updated to reflect this initiative.

Ready Reckoner

An income test ready reckoner to assist in determining the pension rate variation and appropriate variables for inclusion in the Standard Letters is at Attachment B.

Questions and Answers

A list of common questions and answers relating to the application of this initiative is at Attachment C.

Procedure flowchart

A flowchart outlining the steps in processing an advice of changes to income from financial institution assets subject to deeming is at Attachment D.

Automatic runs

Variations of less than $1 will continue to be processed in the automatic runs for the time being.

Future extension of provisions of Section 56DA

The provisions of Section 56DA will be gradually extended to other classes of income and assets, subject to procedural, workflow and system changes that would be necessary to successfully implement the initiative.  This will be done in conjunction with work that is being done on the data collection review exercise.  State Offices will be contacted for further comments.

Screen deficiencies

There are some deficiencies in the IQ.IA screen which may make processing of a small number of these cases more difficult.  This has been addressed and the problems are being fixed with changes for the “bring em backs” and should be implemented by the end of June.

Registering less than $1 variation cases on CMS

There is no National instruction on registering the cases where $1 minimum variation applies.  This initiative is aimed at reducing work and registering these cases is considered to be counter-productive.  However, in view of comments received from the States, this issue will be further considered.

Cumulative effect issue

This is not expected to be a significant issue, but will also be further considered.

Amount

Assessed Income

Pension Variation

(rounded)

Comments

4%

6%

4%

6%

$850

$1.31

$1.96

70c

$1.00*

*Minimum pension variation for single or ISS pensioner

900

1.38

2.08

70c

1.00

1000

1.54

2.31

77c

1.20

1100

1.69

2.54

80c

1.30

1200

1.85

2.77

90c

1.40

1300

2.00

3.00

1.00*

1.50

*Minimum pension variation for single or ISS pensioner

1400

2.15

3.23

1.10

1.60

1500

2.31

3.46

1.20

1.70

1600

2.46

3.69

1.20

1.80

1700

2.62

3.92

1.30

2.00*

*Minimum combined pension variation for a married couple

2000

3.08

4.62

1.50

2.30

2250

3.46

5.19

1.70

2.60

2500

3.85

5.77

1.90

2.90

2600

4.00

6.00

*2.00

3.00

*Minimum combined pension variation for a married couple

2750

4.23

6.35

2.10

3.20

3000

4.62

6.92

2.30

3.50

3500

5.38

8.08

2.70

4.00

4000

6.15

9.23

3.10

4.60

4500

6.92

10.38

3.50

5.20

5000

7.69

11.54

3.80

5.80

6000

9.23

13.85

4.60

6.90

7000

10.77

16.15

5.40

8.10

8000

12.31

18.46

6.20

9.20

9000

13.85

20.77

6.90

10.38

10000

15.38

23.07

7.69

11.50