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C26/2004 Administration of pension payments


DATE OF ISSUE:  10 September 2004

Administration of pension payments


The purpose of this Departmental Instruction (DI) is to provide information about administration of pension payments to any person or organisation other than the pensioner.  This includes payments to:

  • agents,
  • trustees,
  • persons holding Power of Attorney (PoA),
  • persons appointed as guardians, and
  • group destinations.

This DI is intended to ensure that all DVA State Offices make pension payments in a legal and appropriate manner, in accordance with the Veterans' Entitlements Act 1986 (VEA).

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There are some types of payment arrangements currently being made that are of concern, because they are not authorised by the VEA.  Advice from the Australian Government Solicitors' (AGS) Office is that some common practices in the payment of pensions are unauthorised by the VEA and are therefore illegal.

At the Income Support Managers' Conference (ISMC) in December 2003, there was discussion about the problems associated with payments to agents, trustees and people holding PoA and payments to group destinations.

This DI seeks to resolve some of these issues, and allow for a more cohesive and integrated approach to pension payment in DVA.

Authorised pension payments

The VEA gives Commission the authority to direct all or part of a person's pension instalments to the account nominated and maintained by the person, or jointly or in common with another person.

Pension instalments may also be redirected in the following ways:

  • to persons appointed as agents or trustees of a pensioner;
  • to certain third parties approved by Commission under s122B as pension deductions requested by the pensioner;
  • to the partner or child of a pensioner, or another approved person under s55A where the pensioner is in gaol; or
  • for recovery of overpayment by pension deduction in accordance with s205AA of the VEA.

Delegates are precluded from redirecting payments in any other way.  The Commission does not have power to redirect payments to a person holding a valid power of attorney (PoA) or appointed under a guardianship order, who is not also an agent or trustee for the pensioner.


A pensioner may nominate an agent to receive payment of the pension on their behalf.  This is provided for in sections 58D and 122 of the VEA.

For an agent to be nominated, the pensioner must request in writing that their pension is to be paid to the other person.  Once a delegate of the Commission is satisfied that the agent has agreed to receive payment on behalf of the pensioner, then the payments may be redirected as requested.

The period of appointment is at the discretion of the pensioner and the VEA does not impose restrictions on the duration.  As such, it may be declared as 'indefinite' which means that the arrangement will remain in place until the Department is advised to the contrary.

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Pursuant to section 202 of the VEA, the Commission may appoint a trustee for a pensioner if it is desirable to do so, due to the age or ill health of the pensioner.  The request may also come from the pensioner or another party but it must include evidence to support the need to appoint a trustee.

The proposed trustee will need to sign a statement accepting the trusteeship and acknowledging the responsibilities thereof, before the Commission redirects the pension to them.  The appointment is indefinite until an event occurs that brings about the end of the arrangement.

Trustees are also expected to fulfil the pensioner's obligations on behalf of the pensioner, as outlined in the CLIK Policy Library (P11/C3/S3).

Power of Attorney

A power of attorney (PoA) is a legal document made by one person, which allows another person to act in relation to financial matters. PoA is a State based arrangement, which can vary dramatically in the intent and how far the power extends.

Privacy Principle 11 allows the Department to disclose personal information to a person holding a PoA over a pensioner's affairs as long as the terms of the relevant PoA are broad enough to authorise that disclosure.  However, a PoA is not a recognised arrangement for redirection of pension payments as confirmed by the AGS advice received in March 2004.

As the VEA contains specific provisions for redirection of pension payments to third parties, the person must be appointed as the pensioner's agent or trustee to receive the payments.

Guardianship Orders

A Guardianship Tribunal may make guardianship orders to meet the needs of a person with a disability.  The appointee may be a relative or friend of the pensioner, or a state government officer as a public guardian.

Similar to the PoA arrangements, pension payments redirected to a person holding a guardianship order is unauthorised under the VEA, unless the person is appointed as an agent or trustee for the pensioner.

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Group destinations

Organisations that care for aged and infirm pensioners such as nursing homes or other institutions may be created in the DVA payment system as a group destination.  A Group Destination is an individual or organisation receiving payment on behalf of a number of DVA clients.

There are no provisions in the VEA that authorises payments to aged care organisations without first appointing them as agents or trustees.  Generally for these cases the most appropriate arrangement would be an agency arrangement, where each individual pensioner has an agency arrangement with the facility.

Direct deduction provisions

Apart from agency and trustee arrangements, there are also direct deduction provisions in the VEA that allow pension payments to be sent to a person other than the pensioner.

The specific payment destinations that have been approved by Commission under sections 58J and 122B are:

  • Commissioner of Taxation;
  • State Housing Authorities (SHAs) [1] – for payments of rent, payments of principal or interest of loans and payments of debts;
  • Westpac Banking Corporation – for payments of principal or interest of loans and payments of insurance premiums.

While government rent paid to SHAs are approved deductions, it does not extend to private rent, or payments of fees to nursing homes.  The mechanism for direct deduction must not be applied to bypass the requirement to appoint an agent.

Update of reference material

CLIK Policy Library and the fact sheet PAT 02 Agents, Trustees and Power of Attorney have been updated to reflected the above information.

The form D2693 Application for Appointment of an Agent is being reviewed to make it more suitable for the appointment of a representative from an organisation as a pensioner's agent.  IS standard letters relating to appointment of an agent will also be amended as required.

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Summary of payment options

The table below provides a summary of payment arrangement examples and the relevant authority under the VEA.

Pension payments to ...

Relevant provision of the VEA

Account  in pensioner's name

Authorised under s122

Joint account - pensioner & another party

Authorised under s122

State Housing Authority - for rent payment

As pensioner request under s122B

Westpac – payment for Defence Home Loan

As pensioner request under s122B

Australian Tax Office (ATO)

As pensioner request under s122B or as requested by Commissioner of the ATO under s58J

3rd party – eg. pensioner's brother who has been appointed as his agent

Authorised under sections 58D,  122

3rd party – eg. Protective Commissioner

Authorised under s202 once the trusteeship is accepted by both DVA and the Protective Commissioner

3rd party – eg. pensioner's niece who holds PoA

Not authorised unless the niece is appointed as the pensioner's agent or trustee

3rd party – eg. nursing home

Not authorised unless the nursing home is appointed as an agent of the pensioner

3rd party – eg. private rental agreement

Not authorised

Corrective action

Approach to corrective action

In order to ensure the payments are delivered in a manner authorised under the VEA without causing great inconvenience to the pensioner, the approach outlined below should be adopted.

Where the payment is correctly redirected to a third party, the information should be recorded in VIEW under “Important Information”.

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Pensioners with POAs or guardians

Where in the general course of business, DVA has contact with a pensioner, or their PoA/guardian and unauthorised payments are being made:

  • Advise the parties that the pensioner needs to make a request for the redirection of payment to continue, by nominating the PoA/guardian as their agent.
  • If the pensioner no longer has the capacity to manage their affairs, it may be necessary to appoint a trustee for the pensioner in accordance with s202 of the VEA.

If a new request is received for redirection of pension payments to the PoA or the guardian, the pensioner should be advised that pension payments may only be directed to a third party who has been appointed as their agent, or trustee.

Unauthorised group destination payments

For group payments without an agency appointment in place, it is advised that the SOs continue payments for the present, but encourage the pensioners to take up agency arrangements where possible.

When a new request is received for redirection of pension payments to a facility as a group payment, the agent arrangement should be explained.  If a pensioner is more suited to a trustee arrangement, SOs are advised to appoint the group destination as trustee, if this suits both parties.


For further information in relation to the changes on Income Support matters, please contact Elaine Tse on 6289 6011 or Kirrily Williams on 6289 6525.

Authorised by

Jeanette Ricketts

Branch Head


10 September 2004

The facility to provide such deductions is not fully operational yet.  There are a number of administrative and system issues both within the department and with the individual housing authorities that will require finalisation before full implementation can occur.

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