DATE OF ISSUE: 19 April 1990
MANAGED INVESTMENTS - AUTOMATIC PROCESSING
PURPOSE OF THIS INSTRUCTION
The purpose of this instruction is to outline the operational arrangements related to automated reassessment processing for managed investments.
INTRODUCTION - PRIMARY OBJECTIVE
2.As you are aware, the primary objective of Phase 2 of the managed investments project is to provide the capability to automatically reassess service pensions where managed investments are held in the veterans' financial record and data relating to those managed investments alters.
PROCESSING CATEGORIES AND ELEMENTS
3.The broad objective has been sub-divided in order to describe the categories and elements associated with managed investments because different arrangements apply to each.
4.The sub-divisions are:
4.1. reassessment of individual Market Linked Investment
(MLI) products;
4.2. reassessment of cases where management fees are involved;
4.3. reassessment of SELECTED individual Accruing Return Investment (ARI) and other products;
4.4. periodic bulk reassessment of service pension for every veteran who holds a managed investment of any type.
HOW THE ADP PROGRAMS WILL OPERATE
5.The assessment programs to process MLI rate of return variations and fee changes will be run fortnightly as a routine arrangement. The fortnightly routine can be interrupted so as not to conflict with major exercises such as CPI adjustments etc.
MLI's
6.Where the product rate of return is varied on the DVA managed investment data base following a decision by DSS to alter the MLI rate, the selection program will search on the CDB to check whether that particular MLI is recorded in any veteran's assessment.
7.Where a match is found, the program will compare the MLI rate of return recorded on the managed investment data base with that recorded on the veteran's financial record. Where a difference is identified, a reassessment will take place.
MLI's - Date of Effect
8.The decision made by DSS in relation to the MLI rate of return usually has a retrospective date of effect. Whilst the date of effect for an MLI rate change is the date advised by DSS i.e. the effective date of the DSS decision, service pension would be varied from the payday following that date. Should reassessment result in a reduction of service pension, the effective date for the reduction will be the "convenient reduction date".
MLI Arrears
9.Where appropriate, and if it is possible to do so, the reassessment program will automatically calculate MLI arrears.
*PLEASE NOTE: The fortnightly selection/comparison process will apply to MLI products which have been data collected since the implementation of Phase 1 in August 1989.
*That means that there may be cases which were data collected in the early days of Phase 1, but which have not had the rate of return refreshed. That may have occurred because those cases have not come up for review, the veteran has not notified a varied rate of performance, the MI screen has not been accessed, or a refresh of all managed investments recorded for a case has not been carried out although processing for that case has occurred.
*In those circumstances, the rate of return on the pensioner's financial record will not match with that recorded on the managed investment data base. Moreover, the rate will almost certainly have an effective date prior to the most recent SI. Where such cases arise, they will be listed for manual processing in line with PIPS constraints whereby effective dates which precede a SI cannot be handled automatically.
Fees
10.Each fortnight the program will search for cases where fees are involved with a managed investment, and a fee amount is being disregarded as income in the service pension assessment. That procedure is in line with the provision that allows the reasonable cost of management fees to be deducted from income over the first year of ownership of a managed investment.
11.Where the program detects that the twelve month anniversary of the date of acquisition of the managed investment is approaching, it will reinstate in the assessment, income equal to the cost of the fees which were being allowed as a deduction. A reassessment will then occur.
Fees - Date of Effect
12.The date of effect for the cessation of a fee amount as an income deduction will be the payday following the anniversary of the date of acquisition of the managed investment.
NOTE 1: The date of effect is in line with recent Budget changes which brought DVA into line with the DSS principle of effecting variations to service pension and associated allowances.
NOTE 2: For some veterans, a change in both fee details and a rate of return may apply in the one reassessment for the same payday. The two elements of the reassessment will be separately identified for advice purposes.
SELECTED ARI's
13.The capability has also been developed to allow for the selection ("flagging") and reassessment of Accruing Return Investments (ARI"s) where special or extraordinary circumstances apply e.g. receivership, extreme fluctuations in performance.
14.Where a change in any data i.e. rate of return, CPU or buyback, for a product has been recorded on the managed investment data base, and such a product has been selected and `flagged' by the IPO in Sydney for inclusion in a fortnightly reassessment run, the selection program will search on the CDB to check for veterans whose financial records contain these products.
15.Where one or more `flagged' products are found in a veteran's record, the program will compare the product data in the record with that recorded on the managed investment data base. Where a difference is identified, a reassessment will occur.
Date of Effect
16.Where a data change for ARI's is "flagged" on the managed investment data base for the purposes of an automatic reassessment run, the date of effect will be the payday for which the automatic run is processed. In other words the variation would be effective from a convenient reduction date and no arrears will be payable.
GLOBAL RUNS
17.`Global' reassessment runs may also be undertaken when considered necessary. Such `runs' would carry out a bulk reassessment of every case where a veteran has a managed investment of any type. The "global" runs will be limited to once or twice a year.
How the Program Will Operate
18.The selection program will search on the CDB for all veterans whose financial records contain any managed investments for which a change in product data has been recorded on the managed investment data base.
19.Where a match is found, the program will compare the product data recorded on the managed investment data base with that on the veteran's assessment. Where a difference is identified, a reassessment will occur.
Date of Effect
20.The effective date for reassessment of service pensions due to a "global" run for managed investments will be the date of a convenient reduction date with no arrears processing. These runs follow the same arrangements as those set in place for runs for ARI's.
PROCESSING AND REPORTING
21.Where a variation to the pension rate occurs as a result of an automatic reassessment, an advice will be generated automatically. In addition, reports, in schedule form, will be produced.
22.The reports will generally be similar to those currently generated for other automatic processing `runs'.
23.Where no variation to the service pension rate occurs, no reporting takes place. The case will be updated with the latest product data but no further action occurs.
POLICY AND ADMINISTRATIVE RULES FOR INITIATING THE SELECTIVE REASSESSMENT OF INVESTMENTS AND `GLOBAL' REASSESSMENT RUNS
24.Policy and administrative rules need to be set for deciding in which circumstances and when both the global `runs' should occur, and the inclusion of certain products for reassessment in a fortnightly `run' should take place. Further contact will be made with the IPO in each Branch Office in regard to these arrangements, so that the policy and procedures can be agreed to at both Branch and Central Office level, and documented for distribution.
TIMING OF REASSESSMENT RUNS
25.Timings related to managed investment reassessment runs will need to be coordinated so that they are undertaken in accordance with the usual lead time to enable any manual cases to be actioned in line with the cut-off for the relevant payday.
THE FIRST AUTOMATIC REASSESSMENT RUN
Timetable
26.The first automatic MLI and fee change reassessment run is scheduled for payday 17 May 1990.
27.Case selection and actual reassessment of `automatic' cases is scheduled for weekend 28/29 April. Appropriate reports should be in your Branch office on Monday 30 April 1990.
PLEASE NOTE: The plan is to run the reassessment for payday 17 May as a "one-off" exercise. The purpose of that is to ensure that thesystem operates correctly in the production environment, as well as to provide the Branch Offices with an opportunity to tidy up the sizable number of manual cases which will flow from this run. Following that, the reassessment will be reinstated at a later payday as a routine fortnightly reassessment run.
Outputs From the Program - Manual Cases
PLEASE NOTE: All cases listed for manual examination will have an action record recorded on PIPS. Initially it will have the classification of `Over 70'. If the case is not processed by the cut-off, the case will again appear on the next list of manuals, but the action record will show one outstanding action only, generated as a result of the latest run. The case could be left outstanding indefinitely, and the action record would always show only as a result of the latest run.
28. Cases which cannot be processed automatically will be reported on schedules for manual action. The majority of manual cases are those which are routinely generated as a result of standard PIPS constraints e.g.:
28.1 — frozen actions (i.e. cases in `SB' or `PY' status),
28.2 — manual methods of assessment,
28.3 — cases suspended on the CDB,
28.4 — the effective date of the current action precedes the effective date of the most recent Statutory Increase (SI).
29.For the initial run, cases listed which are to be processed for manual action for payday 17 May will need to be through PIPS prior to the cut-off for that payday.
30.The method for processing the routine manual cases from PIPS is well documented in the SI Departmental Instructions which are published regularly, and it is, therefore, considered unnecessary to include those steps in this instruction.
31.Notwithstanding that, there may be some additional manual examination and processing of cases as a direct result of circumstances related to managed investments. These are:
31.1 — a product recorded for a veteran is `closed' and proceeds distibuted. Such a product should no longer be recorded in an assessment, and it may be necessary to contact the veteran to ascertain what has become of the investment and the proceeds.
31.2 — a product recorded for a veteran is `closed' due to being `cross referenced'. The product recorded must be deleted from the assessment and the investment data collected under the new name
31.3 — a product type of `U' (unknown) is converted to a product type of `S' (special). The product data entered would need to be checked, and may require alteration.
31.4 — a product type code of A,B,C,M, or S is changed. The implication of the type code change on the assessment of the product would need to be considered; an alteration to data may be required
32.The above situations are complex and therefore difficult to automate. Whilst there will be a number of manual cases generated due to circumstances related to managed investments, the workload relating to manual processing will stem mainly from routine manual PIPS cases.
33.The following schedules are currently routinely produced following every type of automatic bulk processing and will also be generated for managed investment exercises:
.suspension report.processing report
.fringe benefit change.manual moa cases
.cancellation report.last A/L report
.veterans deceased.arrears report
.frozen report.summary reports
34.A further report titled `alterations affecting amounts' will be helpful to you in establishing the applicable service pension rate at the time of automatic reassessment should a subsequent action apply and the effective date of the subsequent action is prior to the effective date of the automatic reassessment. Steps to follow when processing a subsequent action, where use of these schedules is involved, are outlined on the last page of your Managed Investments Operator Guide.
SAVINGS/COSTS
35.Included in the reports produced are two entitled "Summary Sheet Special Process Run" and "Pension Payments Summary of Update". These show the variation totals for each run. They will be the means by which the cost or savings generated by each run can be measured.
36.Those reports should be retained by the Investment Policy Officer following each run, so that information can be collated for, say, quarterly or six-monthly reporting in relation to the effect of the reassessments.
37.The "Fringe Benefit Change Report" should also be retained for information purposes.
38.The "Summary Sheet Special Process" report maintains the effect of the reassessments until the next run takes place. The details then change with effect from the later run.
39.The "Pension Payments Summary of Update" report includes one-time arrears amounts. The arrears amounts should not be included when reporting on savings.
40.It will also be necessary to keep a record of pension rate and fringe benefit eligibility changes in respect of the manual reassessments so that they can be added to the automatic results in order to complete the full outcome in relation to the particular run.
ADVICES
For The Initial Run For Payday 17 May.
*PLEASE NOTE: For the initial run for payday 17 May, the CURRENT PENSION PAYMENT ADVICES will be generated for both automatically reassessed and manually processed cases and the usual supplementary advices e.g. obligation letters, Treatment entitlement, health card letters are to be sent.
*The reason contained in the CURRENT ADVICES notifying of variation to service pension will be expressed as ..... "Your service pension has been varied due to managed investment(s) changes.....".
For Runs Undertaken After 17 May Where Cases Are Reassessed Automatically
41.For cases reassessed automatically, an automatic advice will be generated in line with advices developed under the `Benefits Letters Production System" project.
42.The automatic advice will list the latest managed investment information held on the pensioner's record. Where there is more than one reason for a reassessment e.g. an MLI rate change and a fee deduction ceasing to apply, the advice will include a separate paragraph for each reason.
For Runs Undertaken After 17 May Where Cases Are Processed Manually.
43.For cases processed manually, a manual advice, as developed in line with the `Benefits Letters Production System" project, will need to be prepared and despatched.
CONTACT OFFICER
44.The contact officer at Central Office for further inquiries is Chris Lee, Income Support, telephone 06 2825194.
PETER HAWKER
NATIONAL PROGRAM DIRECTOR (BENEFITS)