C31/2008 November 2008 Deeming Rate Change Letter Production and Mailout

Purpose of Instruction

This Departmental Instruction is to provide you with information about the processing arrangements for the November 2008 Deeming Rate change advice letter production and mailout.

Introduction

In recognition of the general downturn in the global investment market and recent interest rate reductions announced by the Reserve Bank of Australia, the deeming rates for pension assessment purposes are to be adjusted to reflect the current market returns.

The deeming rates are reduced from 4% to 3% for amounts up to $41,000 ($68,200 per couple), and reduced from 6% to 5% for amounts over $41,000 ($68,200 per couple).

The deeming rate change will be processed on the weekend of 22 and 23 November 2008.

Any SP/ISS/AP variations resulting from this exercise will be effective from 18 November 2008 for payday 4 December 2008.  As 18 November is the first day of the pension period for payday 4 December, no 'one-time amount' adjustments will be generated.

Advice letters will only be produced for clients whose pension has been varied by this reassessment.  Clients will not receive an advice if their pensions continue at the same rates.

This Departmental Instruction provides information about the advice letter production and mailout for this processing exercise and advises of any significant issues relating to the mailout.

Significant Issues

Issues of significance with regard to the November 2008 deeming rate change advice mailout are as follows:

• Letters will be sent to income support recipients whose rate of payment is varied as a result of the change in deeming rates.
• Clients' income and assets will not be provided in the advices. However, a table showing the total financial assets and deeming rate calculations will be provided.
• A letter will be produced for clients whose Rent Assistance (RA) has varied as a result of the reassessment - this includes clients whose income support pension is paid at the nil rate or their income support pension has not been varied.
• If a treatment change occurs as a result of the reassessment, a letter will be produced.

Impact of Deeming Rate Change and Pounds Sterling Exchange Rate Variation on Payday

4 December 2008

Staff should be aware that 18 November 2008 is also the effective date applicable for the latest exchange rate variation of pound Sterling.

Clients with British income and deemed income may have consecutive reassessments within the same pay period that result in multiple variation to pension rates for payday 4 December 2008.

A typical scenario is that a pensioner with British income will first receive an advice dated 17 or 18 November 2008 in regard to the exchange rate variation, followed by another letter dated 22 or 23 November 2008 about the deemed interest rate change.  Although both advices list the payment rates for 4 December 2008, clients should refer to the latter advice for the ongoing payment rates.

For details on the Exchange Rate Variation of Pounds Sterling, please refer to Departmental Instruction DI C30-2008 issued on 17November 2008.

$ Minimum Rules

The $ Minimum rules do not apply to the Deeming Rate change.

All pensioners will be reassessed in the deeming rate change processing run, and the actual pension rates will be applied.

Cases in Investigation Stage

The deeming rate change processing run will not update any assessment where a frozen action assessment exists.  Any such cases will be listed for subsequent manual processing by State location staff.

To minimise the number of manual cases created, all outstanding PIPS worksheets must be finalised or deleted by close of business Friday 21 November 2008.

Advice Letter Target Audience

A letter will be produced for the following clients following the Deeming Rate Change processing:

• All less than maximum rate service pensioners (SP), income support supplement recipients (ISS) and age pensioners (AP) including those in receipt of DFISA, whose amount of income support payment has been varied following the processing;
• Less than maximum rate SP/ISS/AP recipients who move to the maximum rate as a result of the reassessment;
• Treatment changes as a result of the reassessment.

Special Paragraph

Clients whose payments are varied as a result of the Deeming Rate change will receive a paragraph outlining the change:

Deemed Interest Rate Change – Financial Assets

With effect from 18 November 2008, the deemed interest rates will change.  The new deemed income rates of 3% for amounts up to $41,000 ($68,200 per couple) and 5% for amounts over $41,000 ($68,200 per couple), will be used to work out the amount of income calculated from your financial assets.

Income & Assets Attachment

We will not be providing clients with a listing of any Income and Assets.

Continuation Cases

Continuation cases will not  be sent an advice.

Obligations

Full and Partial Obligations will be suppressed for all letters produced.

The Financial Obligations paragraph, including the Prescribed Rates, will be present in the advices for all clients.

Right of Review

A right of review paragraph will be present in all letters.

Tasmanian Clients with Overseas Postal Address

Advice letters for Tasmanian Office clients with an overseas postal address will have their advices printed and posted from the Mailing House.

Blind Clients will not receive an advice

Blind clients will not receive an advice.  Where a member of a couple is assessed as 'blind', a single advice will be produced for the non-blind member who may be affected by the processing.

An exception to this rule is when a Blind client on income support is also in payment of rent assistance (RA).  The RA is subject to the income and assets tests, and as such the deeming rate change may result in a variation to their RA payment.  Where there is a variation to the RA payment for these clients, an advice will be produced.

Single & Joint Addressed Letters

All service pension and income support supplement recipient couples will receive a joint advice, provided the pensioner addresses are identical.  This includes illness separated couples.  The batch address defaults determining single and joint advices have been aligned with the PIPS PC daily advice defaults.   Where both members of a couple have the same postal address recorded, a joint advice will be produced.

Important to note: Staff are reminded when granting Age Pension or for those clients in a joint assessment who request separate or single advices, they need to update this information using the mainframe PRODIMS - Client Correspondence Client Options (CO.CO) Screen - prior to the batch processing run to initiate the client request.  The advice default requests set in CO.CO will override the DOCGEN and PIPS advice rules

Age pensioner couples will receive separate letters, providing the advice default request has been set in CO.CO.

Deeming Rate change  Processing

The Deeming Rate change Processing is scheduled to run on the weekend of 22 and 23 November 2008.

Critical Dates

Processing weekend within DVA (includes advices processing)

22 and 23 November 2008

Transmission of Production Data to Mailing House

Monday,

24 November 2008

Mailing House to commence printing Advice Letters

Tuesday, 25 November 2008

At the completion of processing, the Mailing House can commence National Lodgement of letters with Australia Post from:

Wednesday,  26 November 2008

Mailing House must complete National Lodgement of all Advice Letters with

Australia Post by:

COB Friday, 28 November 2008

Printing of Letters

The contracted mailing house, SALMAT Businessforce located in Mulgrave Victoria, will print, fold and insert advice letters from Tuesday, 25 November 2008.

Lodgement of Advice Letters with Australia Post

Once the advice letters have been processed for all States they will be lodged as a national lodgement with Australia Post.  The earliest lodgement date is Wednesday, 26 November 2008, with the deadline for all letters to be lodged with Australia Post by COB Friday, 28 November 2008.

A representative from the Systems, Cards and Advices Team will notify and confirm all lodgement details.

The Contact Officers for this exercise will be given progress reports and advised of any changes to this timetable.

Treatment Advices to be Checked

Enclosure (treatment change) advices will be printed at the nominated printer at each location, as listed:

NSW -   N604P

QLD -    Q403P

SA -       S116P

TAS -     T003P

VIC -      V011P

WA -      W014P

These advices will be available on Monday morning 24 November 2008.  It is suggested that these letters be checked for accuracy, and reconciled against the Advice Schedule Reports to ensure they reflect the correct treatment changes.

ZIP Files of Advice Schedule Reports

A Zip File listing details of all clients who receive an advice will be emailed to the Income Support System Support Officers in NSW and QLD in the week following the processing run.

MOA 15 or MOA 16 Cases - An advice to be produced

Clients who are paid War Widows Pension and Rent Assistance (RA) but whose income support supplement or service pension is paid at the nil rate will receive an advice letter if their RA has varied following the Deeming Rate change.

Reprints of Advices Available using VIEW – Advices Tab

Reprints of individual advice letters produced from the Deeming Rate change processing can be requested via VIEW - Advices Tab Reprint facility.  The advices can be requested using the 'DAILY' option in Reprint Advices – Pre DOCGEN2 folder.  Staff will be able to request a reprint immediately after the processing run on Monday 24 November 2008.

Holding of daily advice letters

Daily payment advice letters produced after the processing run on the weekend of 22/23 November 2008 should be held pending notification that the Deeming Rate change letters have been dispatched.  This will ensure that pensioners receive their advice letters in chronological order.

Manual Advices Required – for PA only back onto payment of Service Pension

Following the Deeming Rate change, there may be some instances where clients have gone from payment of Pharmaceutical Allowance (PA) (MOA 99 cases) only, onto payment of Service Pension.  These cases are to be processed manually via PIPS.

Following PIPS processing of these cases, a 'new grant' advice with fringe benefits paragraphs and other related new grant information is produced.  A new grant advice does not convey the appropriate wording for this situation, and as such the PIPS advice should be suppressed and a manual advice produced.

Income Support  Contact Officers

NSW, SA, WA & TAS:   Peter Rajaratnam– ext 27106

QLD & VIC:       Steve Jensen – ext 48835

Feedback from Staff

Any concerns regarding letters produced as part of this run should be directed to Anissa Lam.   Please forward your feedback or query to Anissa Lam via

Phone : ext 27169

Fax     : (02) 9213 7885

Email  : anissa.lam@dva.gov.au

Every effort will be made to develop solutions to address any concerns raised.  Please ensure that problems are reported as early as possible.

Letter Content

Details of the content of the letters, including sample letters and sequencing of paragraphs are included in Attachment A.

Attachment A – Paragraph sequencing and Advice Letter Examples:

Example 1A: SP increase – Either from Less than Maximum rate to Less than Maximum rate or increase from Less than Maximum rate to Max rate amount.

Example 2A: Age Pensioner Increase, DFISA varied

Letter Variables

Please note, in the following samples:

• Letterhead, DC name and signature block will change according to State;
• The words “service pension”, “age pension”, “income support supplement” each represent variables which will appear for those clients in receipt of the applicable pension.

GPO Box 651, Brisbane  QLD  4001

FINANCIAL ASSETS VALUE

DEEMED INTEREST RATE

DEEMED INCOME PER FORTNIGHT

$XX,XXX.XX

3%

$XX.XX

$XX,XXX.XX

5%

$XX.XX

$XX,XXX.XX

$XXX.XX

GPO Box 651, Brisbane  QLD  4001

FINANCIAL ASSETS VALUE

DEEMED INTEREST RATE

DEEMED INCOME PER FORTNIGHT

$XX,XXX.XX

3%

$XX.XX

$XX,XXX.XX

5%

$XX.XX

$XX,XXX.XX

$XXX.XX