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Determining Severe Financial Hardship - Unavoidable or Reasonable Expenditure
Delegate to consider unavoidable or reasonable expenditure
A delegate should exercise their discretion in determining whether a person is in severe financial hardship by having reasonable regard to the unavoidable or reasonable expenditure of the person in comparison to the maximum annual rate of pension. The capacity for non-dependent household members to contribute to the day to day costs of living should also be considered.
Unavoidable or reasonable expenditure
Unavoidable or reasonable expenditure of a pensioner suffering severe financial hardship includes the day to day cost of living (referred to as the reasonable cost of living) plus other unavoidable or reasonable expenditure. Costs must be considered to be reasonable, example: family type accommodation as compared to a luxury hotel.
Examples – reasonable costs of living
The following are examples of expenses that would be considered as reasonable costs of living:
- rent or mortgage payments,
- regular medical expenses,
- rates, water and sewerage costs,
- gas, electricity and telephone bills,
- public transport costs, and
- any other cost the Commission determines is a reasonable cost of living for the pensioner.
Other examples of unavoidable or reasonable expenditure
- repairs to or replacement of, essential whitegoods in the pensioner's home,
- replacements for essential household goods stolen or lost through natural disaster when cost is not the subject of an insurance policy,
- funeral expenses,
- essential repairs to the pensioner's car or home,
- essential medical expenses,
- school expenses,
- motor vehicle registration,
- essential expenses associated with the birth or adoption of a child by the pensioner,
- premiums for vehicle or home insurance, and
- any other cost the Commission determines is unavoidable or reasonable expenditure.
Examples of expenditure which is not unavoidable or reasonable
The following are examples of expenses that would not be considered as unavoidable or reasonable expenditure:
- a family holiday,
- purchasing inessential furniture,
- entertainment costs,
- purchase/installation of a recreational swimming pool,
- paving a driveway, and
- any other cost the Commission determines is not an unavoidable or reasonable expenditure.