C02/2009 January 2009 Deeming Rate Change Letter Production and Mailout

Amends DI No.

Replaces DI No.

Purpose of Instruction

This Departmental Instruction is to provide you with information about the processing arrangements for the January 2009 Deeming Rate change advice letter production and mailout.

Introduction

In recognition of the continuing downturn in the global investment market and recent interest rate reductions, the upper deeming rate for pension assessment purposes is to be reduced by 1%.

As a result, the deeming rate for financial assets above the deeming threshold ($41,000 for singles and $68,200 for couples) is reduced from 5% to 4%.  The below-threshold rate will remain unchanged at 3% - this rate was lowered in November 2008.

The deeming rate change will be processed on the weekend of 31 January to 1 February 2009.

Any SP/ISS/AP variations resulting from this exercise will be effective from 27 January 2009, the first day of the pension period, for payday 12 February 2009.

Advice letters will only be produced for clients whose pension has varied due to a change in deemed income.  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.

Advice Letter Target Audience

• Letters will be sent to approximately 31,000 income support recipients whose rate of payment is varied as a result of the change in deeming income.
• No advice will be produced for pension continuation cases.
• No advice will be sent to clients whose deemed income remains unchanged.  This happens when the total financial asset is below the deeming threshold, whereby the unaltered lower deeming rate of 3% still applies.
• 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.

$ Minimum Rules

• The $ Minimum rules do not apply in this processing run. 
• All pensioners will be reassessed in the deeming rate change processing run, and the actual pension rates will be applied.

Note that there may be a small number of pensioners whose pension varied solely due to a previous suppression of less than $1 pension change, but whose deemed income remained unchanged.  An advice in the format described in this instruction will not be produced, as such an advice will not convey the correct reason for the pension variation.  Such cases, if any, will instead be reported out separately for further consideration.

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.

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.

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.

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 27 January 2009, the deemed interest rates will change.  The new deemed income rates of 3% for amounts up to $41,000 ($68,200 per couple) and 4% for amounts over $41,000 ($68,200 per couple), will be used to work out the amount of income calculated from your financial assets.

This has resulted in a change to the income amounts used to work out your rate of service pension/age pension/income support supplement.

Income & Assets

Clients' income and assets will not be provided in the advices. However, a table showing the total financial assets, deeming rates and deemed income will be provided.

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.

Deeming Rate Change  Processing

The Deeming Rate Change Processing is scheduled to run on the weekend 31 January to 1 February 2009.

Critical Dates

Processing weekend within DVA (includes advices processing)

31 January to

1 February 2009

Transmission of Production Data to Mailing House

Monday,

2 February 2009

Mailing House to commence printing Advice Letters

Tuesday, 3 February 2009

Mailing House to commence National Lodgement of letters with Australia Post from:

Friday,  6 February 2009

Mailing House must complete National Lodgement of all Advice Letters with

Australia Post by:

COB Friday, 6 February 2009

Printing of Letters

The contracted mailing house, SALMAT Businessforce, will print, fold and insert advice letters, and handle all mail processing from their site at Mulgrave Victoria.

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.  Lodgement is scheduled to take place on 6 February 2009, with the deadline for all letters to be lodged with Australia Post by COB Friday, 6 February 2009.

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.

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 30 January 2009.

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 2 February 2009.  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 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 2 February 2009.

Holding of daily advice letters

Daily payment advice letters produced from 2 February 2009 after the processing run 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

4%

$X — X — X.XX

$XXX,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

4%

$X — X — X.XX

$XXX,XXX.XX

$XXX.XX