Purpose

The purpose of this departmental instruction (DI) is to advise of the procedures for receiving claims for pension bonus, calculation of the amount of bonus and making payments of the bonus.

Background

DI C34/98 covers all elements of registration for the pension bonus scheme.  That DI covers issues regarding gainful work, types of membership and evidentiary certificates.

This instruction deals with issues surrounding:

• the claim for pension bonus;
• determination of the claim;
• calculation of the amount of bonus; and
• payment of the bonus.

The pension bonus scheme

The pension bonus scheme (PBS) is a voluntary scheme, which provides a tax-free lump sum payment to people who defer claiming pension and continue to work.  Phase I of the scheme was introduced in July 1998.  From July 1998, eligible people could register to participate in the scheme.

Phase II

Phase II of the scheme was implemented on 1 July 1999.

From 1 July 1999 eligible participants, who fulfil the scheme criteria, may claim their pension and pension bonus after completing a minimum full twelve-month deferment.  Phase II of the scheme includes the ability to pay the bonus to eligible claimants.

Phase II will also introduce the ability to issue certificates to participants, to certify passing the work test necessary for scheme participation.

Pension bonus

The pension bonus is calculated using a specified formula.  This takes into account the annual pension rate at grant, the number of qualifying periods and marital status.  The formula is contained in section 45UG.

A full explanation of pension bonus calculation is contained in this DI.

Interim arrangements

From 1 July 1999 bonus calculations and payments are manual.  This instruction details the manual arrangements.  These arrangements are temporary, pending the development of a full pension bonus system.

When a fully operational pension bonus system becomes available, a revised DI will be issued.

Contacts

Any queries should be directed to the Pension Bonus contact person in your state.  Contacts are:

NSW

Lyn Firth

Vic

Kerry Jay, Liz Scott

Qld

Geraldine Howard

SA

Beverly Tregloan

WA

Derrick Jaquet, Sandy Vidot

Tas

Tammy Kennedy

The National Office contact for Pension Bonus is Oona O'Beirne

on 02 9213 7771.

Claiming pension bonus

A person wishing to be paid a pension bonus must make a proper claim.  The claim must be in a form approved by the Commission (section 45UK refers).  The approved form is “Claim for Pension Bonus - D559”.

Lodgement period

Section 45UL sets out rules for determining the lodgement period for pension bonus claims.  The lodgement period is generally 13 weeks from the end of the final bonus period.

Claiming pension

As the PBS claim must be lodged before pension is granted (section 45TC refers), it is preferable that people claim for pension and pension bonus at the same time.

Pension claim forms

Pension claim forms have been modified and contain questions about registration for pension bonus.  Pension claim forms ask the person to identify whether they have registered for pension bonus / pension deferral.  Those who have registered are asked to identify their file number and whether they registered with DVA, Centrelink or both.

If an old pension claim form has been used, it will not contain the necessary PBS questions.  It is recommended that examiners should:

• use VIEW inquiry to determine whether the person has previously registered for the pension bonus scheme
• check with the claimant whether he/she is a registered member of the Pension Bonus Scheme at Centrelink.

Receiving a claim

The pension bonus is calculated based on the annual pension rate at the time of grant.  Therefore, a claim for bonus cannot be made without a claim for pension (section 45TC refers).  A person has 13 weeks from the date of claim for pension to submit a claim for bonus (section 45UL refers).

Where a person indicates that their registration is with Centrelink, the examiner needs to obtain the relevant information from Centrelink before proceeding with the bonus claim.

Pension and bonus claims not submitted together

If the PBS claim is lodged prior to a pension claim, the appropriate pension claim should be issued to the claimant immediately.  If the pension claim is lodged prior to the PBS claim, a PBS claim must be issued immediately.

Processing the pension claim

Section 45TC details qualification for pension bonus.  Subsection (1)(b) states that a person is qualified for a pension bonus if:

• the person has not received an age service pension, partner service pension or income support supplement at any time before making a claim for the pension bonus.

Therefore, for a registered participant of the scheme, a claim for pension should not be processed prior to receipt of a claim for pension bonus.  If the pension is put into payment prior to receipt of the bonus claim, the person becomes ineligible to receive the bonus.  This detail is included on the pension claim forms and on the pension bonus claim forms.

Withdrawal of a claim

Section 45UM sets out detail of claim withdrawals.  A pension bonus claim that has not been determined may be withdrawn.  A withdrawn claim is taken not to have been made.  The withdrawal may be made orally or in writing.

The bonus claim is taken to have been withdrawn where;

• a person claims pension and pension bonus; and
• then withdraws the claim for pension.

Where a person claims pension and pension bonus, and the pension is rejected on the grounds of disposal of assets, the bonus claim is taken to have been withdrawn.

Transfer of information between DVA and Centrelink

Currently, DVA and Centrelink undertake pension clearance procedures to ensure that dual income support payments do not arise.  In the event that a pension bonus is claimed at either agency, it will be necessary to ascertain the following:

• whether a pension, bonus or allowance has been paid;
• if so, the type of payment received;
• whether the person is a registered member of the pension bonus scheme at the other agency;
• whether the person has claimed pension bonus at the other agency; and
• whether the person has previously received a pension bonus.

A proforma has been developed between DVA and Centrelink.  The proforma is available on the standard letters system, under the Pension Bonus tab.  A copy of the form is at attachment A.

Registration at other agency

It is possible to accrue bonus periods with one agency, then claim bonus with the other.  In such a case, the accrued periods are recognised at the other agency.  Any evidentiary certificates provided by Centrelink are to be recognised by the DVA scheme, and vice versa.  It is important to ensure that the person does not receive bonus payment from both agencies.

Special dates of eligibility

Section 45TB outlines the special date of eligibility for a designated person.  A person's special date of eligibility is as follows:-

Age service pension: the first day on which the person becomes eligible for an age service pension.

Partner service pension: the first day on or after the day on which the person reaches pension age and is eligible for a partner service pension.

Income support supplement (ISS): the threshold day is the day the person reached qualifying age or the day war widow/er pension commenced if that pension was granted after qualifying age.  The special date of eligibility is the first day occurring on or after the threshold day on which the person is eligible for ISS.

Residency assumption

A person's special date of eligibility is worked out on the assumption that being an Australian resident and being in Australia are additional requirements for the designated person.

Section 45TC

Section 45TC outlines the qualification for pension bonus for each type of pension deferral.  These criteria are outlined below.

Deferral of age service pension

A person is qualified for pension bonus if:

• the person starts to receive age service pension at or after the time of claiming pension bonus;
• the person has not received age service pension at any time before making a claim for pension bonus;
• the person is a registered member of the pension bonus scheme;
• the person has accrued at least one full-year bonus period as a registered member of the scheme;
• the person has not received a social security pension or benefit (other than carer payment), a service pension (other than carer payment) or income support supplement at any time after the person's special date of eligibility for age service pension; and
• the person has not already received a bonus from either DVA or Centrelink.

Deferral of partner service pension

A person is qualified for pension bonus if:

• the person starts to receive partner service pension at or after the time of claiming pension bonus;
• the person has not received partner service pension at any time between the special date of eligibility and making a claim for pension bonus;
• the person is a registered member of the pension bonus scheme;
• the person has accrued at least one full-year bonus period as a registered member of the scheme;
• the person has not received a social security pension or benefit (other than carer payment), a service pension (other than carer payment) or income support supplement at any time after the person's special date of eligibility for partner service pension; and
• the person has not already received a bonus from either DVA or Centrelink.

Deferral of income support supplement (ISS)

A person is qualified for pension bonus if:

• the person starts to receive ISS at or after the time of claiming pension bonus;

• the person has not received ISS at any time between the special date of eligibility and making a claim for pension bonus;
• the person is a registered member of the pension bonus scheme;
• the person has accrued at least one full-year bonus period as a registered member of the scheme;
• the person has not received a social security pension or benefit (other than carer payment), a service pension (other than carer payment) or income support supplement at any time after the person's special date of eligibility for income support supplement; and

• the person has not already received a bonus from either DVA or Centrelink.

Recognised work record

A recognised work record is a written statement signed by the person.  The work record sets out details in relation to gainful work carried on by the person during a particular period.  (Subsection 45UA (3) refers)

The following details are required:

• the nature of gainful work;
• the dates on which the gainful work was carried on;
• the total number of hours gainfully worked;
• the total number of hours gainfully worked in Australia;
• the name(s) of employer(s) where applicable; and
• any other particulars requested by the Secretary.

Record-keeping for person

In addition to a recognised work record, a person must supply a copy of a group certificate or income tax return.  (Subsection 45UA (1) refers.)

Record-keeping for partner of person

To accrue bonus periods on the basis of a partner's work, the person and the partner of the person must both be accruing or post 70/75 members of the pension bonus scheme, either at DVA or Centrelink.  The person must supply a copy of a group certificate or income tax return, in addition to a recognised work record, relating to gainful work carried on by the partner.

Definitions

The following pages contain definitions of terms used for the Pension Bonus Scheme.

Pension bonus calculation - standard

Section 45UB deals with the calculation of the amount of pension bonus.  The bonus calculation takes into account the annual pension rate at grant, the number of qualifying periods and the person's marital status.

An example of a standard bonus calculation is contained at Attachment B.  The same formula is then also the basis for non-standard bonus calculations.

The calculation

The basic calculation of bonus is found in section 45UG:

{Annual pension rate} x {pension multiple} x {no. of years in overall qualifying period}

Pension multiple

The pension multiple is used in the calculation of the amount of pension bonus (section 45UE refers).  A person's pension multiple is calculated by using the following formula:

0.094  x  {no. of years in overall qualifying period}

Overall qualifying period

Where a person has only one qualifying period, this is considered to be the person's overall qualifying period.

Where a person has more than one qualifying period, the person's overall qualifying period is the period beginning at the start of the first qualifying period and ending at the end of the last qualifying period.

Non-accruing membership

Non-accruing membership occurs when:

• a disposal preclusion period has been triggered;
• the member is in receipt of carer's payment; or
• the member has a continuous period of sick leave, lasting between 4 and 26 weeks, then continues to be a member of the scheme after this period.

Note: Any period of non-accruing membership of the scheme does not form part of the person's overall qualifying period.

Qualifying period - example

Mr Harvey works for 2 years as an accruing member of the scheme.  He is then unable to work for 4 months due to illness, after which he continues to work another 6 months before claiming pension bonus.

The 4 months of sick leave are a non-accruing period and do not count toward Mr Harvey's overall qualifying period.  However, because Mr Harvey returned to work and continued to meet the work test after the non-accruing period, his further 6 months of work do count toward his overall qualifying period.

Therefore, his overall qualifying period is 2 years and 6 months.

Work test – full-year period

Work test – full-year period is defined in section 45TS.  To satisfy the work test for a full year period certain conditions must be met.  The person must prove to the satisfaction of the Secretary that either:

• they have worked for at least 960 hours in that year;
• their partner worked for at least 960 hours in that year; or
• where there is more than one partner, the total number of hours worked was at least 960 in that year.

Of the 960 hours worked in one year, 640 must be worked in Australia.

Also, the person must either:

• satisfy the Secretary that applicable record-keeping requirements have been met; or
• the Secretary must decide to waive compliance with those requirements.

Work test – part-year period

Work test – part-year period is defined in section 45TT.  The work test for a part-year period is worked out on a pro-rata basis.  The pro-rata number of hours is worked out using the following formula:

960 x number of days in the period

365

Gainful work outside Australia

The Commission has discretion to treat gainful work outside Australia as gainful work in Australia (section 45TU refers).  If a person satisfies the Commission that because of special circumstances gainful work carried on outside Australia should be treated as work in Australia, the Commission may determine that the work be treated as being in Australia.

Such a determination would affect the bonus claim accordingly.

An example of where the discretion may be applied may be where the person is outside Australia and unable to return, due to circumstances either unforseen or beyond the person's control.

Contact National Office Policy Section if further guidance is required on this issue.

Annual pension rates

Annual pension rate is a term defined by section 45UF and used specifically for the pension bonus scheme. It is the provisional pension rate, annualised, that the person would be eligible to receive at date of grant if rent assistance, pharmaceutical allowance and remote area allowance were not included in the overall rate calculation.

The annual pension rate is used to determine the pension bonus amount.  The annual pension rate does not include rent assistance and pharmaceutical allowance.  The pension rate is determined using details as at the date of grant.

Service pension, not blind

The person's provisional payment rate under method statement 1 of Schedule 6-A1 (2), omitting steps 2 and 3.

Income support supplement, not blind

The person's provisional payment rate under method statement 5 of Schedule 6-A1 (6), omitting steps 2 and 3 and not adding pharmaceutical allowance at step 9.

Annual pension rate – blind pensioners

The annual pension rate for a blind person is calculated as follows:

Service pension, blind

The person's maximum basic rate under Schedule 6 – B1.

Income support supplement, blind

The person's ceiling rate under Schedule 6-A4.

Manual calculation

Pending availability of the claim processing system, the pension bonus amount has to be calculated manually by the examiner.  The amount is then paid to the pensioner via a one-time amount.  Payment of the bonus amount is covered later in this DI.

Pension bonus calculation - standard

Section 45UB deals with the calculation of the amount of pension bonus.  The bonus calculation takes into account the annual pension rate at grant, the number of qualifying periods and the person's marital status.

An example of a standard bonus calculation is contained at Attachment B.  The same formula is then also the basis for non-standard bonus calculations.

The calculation

The basic calculation of bonus is found in section 45UG:

{Annual pension rate} x {pension multiple} x {no. of years in overall qualifying period}

Pension bonus calculation –non-standard

The above formula for calculating the amount of pension bonus is the basis for non-standard calculations.  The method of calculation will differ depending on circumstances.  The main areas of difference are:

• whether there has been a change in marital status during the overall qualifying period (example at Attachment C); and
• whether or not the final bonus period is a full-year period (example at Attachment D).

Rounding

All percentages should be calculated to 3 decimal places.  All amounts should be rounded to the nearest 10 cents.

In all pension bonus calculations the number 5 should be rounded up (in the calculation of cents, part years and percentages).

Part-years

All part-year calculations should be made using the number of days.  This figure should then be divided by 365 to give a percentage.  This percentage is then rounded to 3 decimal places.

Payment of bonus after death

Section 45UR sets out the only circumstances in which a pension bonus will be payable after the death of the person concerned.

Claim granted before death

If a person claims pension bonus and dies after the claim had been granted, but before the bonus had been paid, the bonus is payable to the person's legal representative.

Claim not granted before death

If a person claims pension bonus and dies before the claim had been determined, the claim must be determined as though the person had not died.  If the claim is then granted, the bonus is payable to the person's legal representative.

To determine the claim for bonus as though the person had not died, all aspects of the calculation are done as though the person would have started to receive pension, had they not died.  In this circumstance, the subsections are to be disregarded:

• 45UK (2), that the bonus claim depends on the person receiving the pension for which they have applied; and
• 45UO (2), that the claim for bonus must not be determined until the claim for pension has been granted.

Death before claiming

If a person dies prior to claiming pension bonus, there is no amount of bonus payable.

Accrual of bonus periods

The term bonus period is defined in section 45TR.  The first bonus period that accrues to a person must be a full-year period.

Full-year bonus period

The first bonus period that accrues to a person is the full-year period of accruing membership for which the person passes the work test.  This period begins on either the date the person first became an accruing member of the scheme, or the date the person's registration as a member took effect.

Each succeeding full-year period of accruing membership, specified on the person's claim for pension bonus and for which the person has passed the work test becomes a bonus period accruing to that person.

Part-year bonus period

A part-year period of accruing membership of the scheme can only be considered a bonus period if:

• the person passes the work test for that period;
• the period is specified in the claim for pension bonus;
• the period begins immediately after a full-year bonus period;
• the period is the last bonus period that accrues to the person; and
• the person claims within the required lodgement period, as specified by subsection 45UL (4).

Where a person does not lodge a claim for pension bonus within the lodgement period, the bonus calculation is made as though the part-year period was not accrued , as specified by subsection 45UL (4).

Bonus periods must be consecutive

A person can only accrue more than one bonus period if the bonus periods are consecutive or if they are only separated by a period of non-accruing membership.

Bonus periods accrued by partner

It is possible for a person to claim bonus on the basis of their partner's work.  It is essential that the examiner ensure that the current partner is the same person who registered to accrue the bonus periods.

Two or more partners

Where a person had 2 or more partners during any accrual period, the total number of hours gainfully worked by those partners must total 960 (with 640 being in Australia).  Refer subsections 45TS(c) and 45TT(c).

Each partner must be an accruing member of the scheme at either DVA or Centrelink and must satisfy the appropriate record keeping requirements.

While it is possible to have a change in partners during the deferral period, only a registered member of the scheme can accrue bonus periods on behalf of a non-working partner.  Similarly, as the partner of a working member, the non-working partner must be a registered member of the scheme.  Where more than one person in an assessment is registered for the scheme, it is important to ensure that the current partner is the registered partner.

Tax-free payment

The pension bonus is exempt from income tax under the Income Tax Assessment 1997.

Deductions from bonus

Section 45US states that the pension bonus is absolutely inalienable, except in the following circumstances:

1. The Commission may make a deduction from a pension bonus payable if the person asks to have the deduction made to the Commissioner of Taxation.

2. The Commission may make a deduction from a pension bonus payable if the person consents to making the deduction under paragraph 205(2)(e).  Paragraph 205(2)(e) enables the Commission to recover a debt from a person other than the debtor if the person is receiving a benefit under the VEA.

3. The Commission must make deductions from a person's pension or pension bonus if requested by the Commissioner of Taxation (section 58J refers).

Delegations

Instruments of delegation have been arranged to allow State Office personnel to determine the necessary pension bonus sections of the VEA.  These are:

Section

Title

45TF

Relevant information

45TH

Timing of application and registration

45TI

Registration

45TK

Cancellation of membership

45TO

Non-accruing membership – Commission's discretion

45TS

Work test – full year period

45TT

Work test – part-year period

45TU

Commission's discretion to treat gainful work outside Australia as gainful work in Australia

45TW

Commission's discretion to treat activity as gainful work

45TY

Management of family financial investments does not count as gainful work

45TZ

Domestic duties in relation to a person's place of residence do not count as gainful work

45U

Evidentiary certificate

45UK

Proper claim

45UL

Lodgement period for claim

45UN

Secretary to investigate claim and submit it to Commission

45UO

Commission to determine claim

45UP

Grant of claim

45UQ

Payment of pension bonus

45UR

Payment of bonus after death

Pension bonus payday

If a claim for pension bonus is granted, the bonus is payable on the first pension payday after the grant or, if not practicable, the next practicable payday.

Interim procedures

The following instructions for payment of pension bonus will continue, pending the availability of a fully automated pension bonus system.  When the automated system become available, a new DI will be issued to update this information.

VIEW – pension bonus indicator

It is not yet known when the new Pension Bonus indicator will be available within VIEW.  Until States are notified that the new indicator is available, to check if a person is a registered member of the scheme, the examiner will need to check the Pension Bonus System record.

At a date yet to be determined, a new pension bonus field will be included on the Summary tab within VIEW.  The tab will indicate whether a pension bonus record exists for a file number.  If no pension bonus record exists the field will display “No Pension Bonus record”.  If a record exists, the field will display “Pension Bonus record exists for this file number”.

Note: this indicator is set for a file number, not for an individual.  Where a record exists it will be necessary to identify the correct person within the assessment.

Where more than one person in an assessment is registered for the scheme, it is important to ensure that the current partner is the registered partner.

CMS

From 1 July 1999 all claim processing and recording is to be done on file.

States will be advised when a new CMS case will be available for registration and finalisation of the Pension Bonus Claim.  Until the final version of the Pension Bonus system is introduced all stages of this case will have to be manually progressed.  The following classifications will be available:

• Registration
• Investigation
• Finalisation.

Processing the one-time payment

There are currently 165 registrations recorded in the Pension Bonus system, and from 1 July 1999 some claims may be received by states.

If claims for bonus are received prior to payment systems becoming available, state contact officers should contact National Office Policy Section for payment procedures.

As systems become available, State Offices will be notified.

Automatic grant advice

There is no facility for including pension bonus information in the automatic grant advice.  When an automated system for pension bonus becomes available new advice possibilities will exist.  These will be included in a replacement DI when the new system becomes available.

Registration at Centrelink

Where a person claims for pension and indicates he is registered at Centrelink, the examiner will have to follow up to get the necessary information.

If the Centrelink information is obtained in time for the processing of the pension claim, the information should be entered into the pension bonus system prior to processing the pension claim.

Standard letters

Standard letters will be required for all pension bonus claims.  The calculation of the bonus will be manual.  The relevant eligibility and payment information will need to be entered into the available fields.

There will be several standard letters available for pension bonus claims, including:

• claim unsuccessful – income and/or assets in excess for pension;
• claim unsuccessful –failed work test (self/partner);
• claim successful – self/partner accumulated work test;
• claim successful – part-year accrual disallowed;
• letter to estate – bonus paid; and
• letter to estate – bonus not paid.

0

Request for Centrelink Clearance

PENSION BONUS SCHEME

         SECTION A – to be completed by the Department of Veterans' Affairs

SECTION B – to be completed by Centrelink

YES

NO

YES

NO

Manual calculation

Pending availability of the claim processing system, the pension bonus amount has to be calculated manually by the examiner.  The amount is then paid to the pensioner via a one-time amount.

Legislative basis for the calculation

Section 45UB details how to calculate the bonus.  There are several components to the calculation:

• qualifying bonus periods (section 45UC);
• overall qualifying period (section 45UD);
• the person's pension multiple (section 45UE); and
• the annual pension rate (section 45UF).

The calculation

The basic calculation of bonus is found in section 45UG:

{Annual pension rate} x {pension multiple} x {no. of years in overall qualifying period}

Pension multiple

The pension multiple is used to determine the amount of pension bonus (section 45UE refers).  A person's pension multiple is calculated by using the following formula:

0.094  x  {no. of years in overall qualifying period}

Example

Mr Ford has deferred his pension for 4 years and is now claiming for service pension and pension bonus.  He is single.  At grant his calculated annual pension rate is $9,390.

Pension multiple is 0.094 x 4 = 0.376

Pension bonus is 9390 x 0.376 x 4 = $14,122.56

Change in marital status

The bonus calculation needs to take into account any changes in marital status during a pensioner's overall qualifying period.  Where there has been a change in marital status during the qualifying period, it is necessary to ascertain the annual notional pension rates in order to calculate the bonus.

Single – partnered

The examiner needs to determine the number of single years and the number of partnered years within the overall qualifying period.  The number of years should be calculated to 3 decimal points, using (number of days/365) for the part-years.

The calculation

The formula adds two amounts, one calculated on the number of single years, the other calculated on the number of partnered years.  The calculation of each component is based on the formula for standard pension bonus claims.

{Annual notional single pension rate} x {pension multiple} x {no. of single years in overall qualifying period}

{Annual notional partnered pension rate} x {pension multiple} x {no. of partnered years in overall qualifying period}

Maximum basic rate

The maximum basic rate (MBR) of pension is the maximum annual pension rate payable, single or partnered, at the date of grant.  As at 30 April 1999, the maximum basic rate is $361.40pf single and $301.60pf partnered.  Multiply this fortnightly figure by 26 to give an annualised maximum pension rate.  (Refer Schedule 6-B1.)

Adjusted percentage

The person's adjusted percentage is calculated using the following formulae: Adjusted single %

(Annual pension rate – calculated as if single

Maximum basic single rate)                         X 100

Adjusted partnered %.

(Annual pension rate – calculated as if partnered

Maximum basic partnered rate)                   X 100

Annual notional pension rates

The annual notional pension rates are calculated using the following formulae:

• (adjusted single %) x (MBR single)
• (adjusted partnered %) x (MBR partnered)

Pension multiple

The pension multiple is calculated using the same formula as the standard bonus claim; 0.094  x  {no. of years in overall qualifying period}

The total number of years in the overall qualifying period should be used.  There is only one pension multiple, to be used in both parts of the bonus calculation.

Example

Mr Jones has deferred his pension for 5 full years.  He is now claiming single service pension and pension bonus.  During his overall qualifying period, Mr Jones was partnered for 2 years and 7 months (245 days) and has been single for the last 2 years and 5 months (151 days).

At grant, Mr Jones has in his assessment $50,000 assets and $250 income per fortnight.

The following information is required to calculate the pension bonus:

1. His annual pension rate (single) at grant is $7446.40 ($286.40 per fortnight)
2. If partnered at grant, his annual pension rate would be $6879.60 ($264.60 per fortnight)
3. Number of single years is 2+151/365 = 2.414 years
4. Number of partnered years is 2+245/365 = 2.671 years
5. Annualised maximum basic rate is $9,396.40 (single) and $7,841.60 (partnered)
6. Adjusted single % is (7446.40/9396.40) x 100 = 79.247%
7. Adjusted partnered % is (6879.60/7841.60) x 100 = 87.398%
8. Annual notional pension rate single is (79.247% x 9396.40) = $7,446.37
9. Annual notional pension rate partnered is (87.398% x 7841.60) = $6,853.40
10. Pension multiple is 0.094 x 5 (total years) = 0.47

Example calculation

Pension bonus is:

(annual notional single rate) x (pension multiple) x (no. of single years)

+

(annual notional partnered rate) x (pension multiple) x (no.of partnered years)

(7446.37 x 0.47 x 2.414)

+

(6853.40 x 0.47 x 2.671)

= 8448.50 + 8603.55

= $17,052.05

Part-year bonus period

A part-year period can only accrue to the person's scheme membership if:

• the person passes the work test for the period;
• the period is specified in the claim for pension bonus;
• the period follows a full-year accruing period;

• the period is the final period to accrue to that person; and

• the person claims within the required lodgement period, as specified by subsection 45UL (4).

Therefore, a part-year period cannot be the person's first accruing period, and must be the person's last accruing period for pension bonus.  Where a person does not lodge a claim for pension bonus within the lodgement period, the bonus calculation is made as though the part-year period was not accrued.

Part-year work test

For a part-year period, the work test is assessed on a pro-rata basis.  A person is considered to have passed the work test for a part-year period if:

• they have worked at least the number of pro-rata hours for that period;
• they can substantiate the number of hours worked; and
• at least two thirds of this work was completed within Australia.

Pension multiple

The pension multiple is calculated using the same formula as a standard bonus payment: 0.094 x {no. of years in overall qualifying period}.

The overall qualifying period must include the part-year period, to three decimal places.

The calculation

The bonus calculation uses the same formula as the basic calculation.  Again, the qualifying period must include the part-year period to three decimal places.

{Annual pension rate} x {pension multiple} x {no. of years in overall qualifying period}

Example

Mr Hird has deferred his pension for 3 years and 8 months (January – August).  He is now claiming service pension and pension bonus.  He has satisfied the work test for the first three full years of his qualifying period and is now claiming pension.  He will therefore be assessed on a pro-rata basis for his final period of 8 months (243 days).  His annual pension rate at grant is $8750.

243 days represented to 3 decimal places is 243/365 = 0.666

Pension multiple is 0.094 x 3.666 = 0.345

Pension bonus is 8750 x 0.345 x 3.667 = $11,066.74