Amends DI No.

N/A

Replaces DI No.

N/A

Purpose of Instruction

The purpose of this Departmental Instruction is to provide information about the Pounds Sterling exchange rate variation exercise.

Introduction

Following the recent variation in UK – Australian exchange rates, DVA will apply a new exchange rate for the assessment of the rate of income support and disability pensions for those in receipt of all income paid in Pounds Sterling:

• war disablement pensions (British DP, including EATS and Composite)
• social security pensions
• official public service pensions
• armed forces superannuation pensions
• British other income (all other British income)

New Exchange Rate

The exchange rate used to convert Pounds Sterling to Australian dollars for income support assessment purposes has changed:

  -  from one Pound Sterling = A$1.5466

  -  to one Pound Sterling equals A$1.5002 (i.e. A$1 = £0.6666).

This rate reflects the average of the “on demand airmail buying rate” for the two weeks to 22 June 2012.

Date of Effect

26 June 2012

Effective from 26 June 2012 the current exchange rate will change. Due to the early fortnightly IPS processing for payday 12 July 2012, pension increase — s for the period 26 June 2012 to 9 July 2012 will be paid as arrears.  On pension payday 26 July 2012 pensioners with relevant British income will receive a full instalment at the new assessed rate.

Automatic Processing

Processing to implement the new exchange rate is scheduled for the evening of T — hur — sday, 5 July 2012.

Amounts recorded as foreign super type non-government British other income (07), British Social Security Pension (08) or British Official Public Service/Forces Pension (09) will be varied by applying the exchange rate to the pounds sterling amount recorded, to determine the new rate of pension in Australian dollars. The income support payment will then be reassessed automatically.

Manual Cases

Cases with actions in submission or determined status will not be processed automatically and will be frozen. These cases will be recorded on the manual listing for follow up action and CMS/PIPS cases will be created automatically for action.  Any cases processed through PIPS should be reassessed with effect from 26 June 2012 for payday 26 July 2012.

Non-Government British Other Income (07)

Previously non-government British other income (07) was refreshed every six months in March and September with other foreign currencies (GROOVER).  As a result of a review of British pensions approved by the Repatriation Commission, all sterling payments, including British other income (07) are adjusted in uniform exchange rate variations.

British DP Cases

Income Support pensioners who are in receipt of ISS, age pension (AP) or service pension with rent assistance (SPRA); and who also receive disability (war) pension direct from Britain should have the value of that disability pension converted to Australian dollars using this exchange rate.  ISS, AP and SPRA should be recalculated by doing a PIPS assessment.  These cases can be extracted through AIS by each location.

Note: If DP has already been assessed as income in determining hardship cases it should not also be assessed as income for RA.

EATS and Composite Cases

EATS and Composite cases are subject to the daily exchange rate variation of plus or minus 2.5%.

These cases can be extracted through AIS by each location and recalculated by doing a PIPS assessment.  Attachment A shows the amount per fortnight in Australian dollars to be applied for the varying United Kingdom amounts.

For further details, refer to Departmental Instruction DI 22/2005 issued by Veterans' Compensation.

Printing & Lodgement of Letters

The mailing house contractor will print, envelope and lodge the advice letters with Australia Post on or before 13 July 2012.

An advice letter will only be produced for cases where there is a variation in payment.  The letters will be four pages and include the new exchange rate, the amount of income and the new ongoing pension amount.

Joint letters will be produced where both members of a couple are in receipt of pension from the British government and their pension varies.

Age pensioners will receive separate advices unless joint advices have been requested.

Estimated Number of Advices to be generated

The approximate number of advices to be produced  for each State, based on the previous run of 29 May 2012, are:

New South Wales 1295

Queensland — 897

Victoria 1140

Western Australia — 949

South Australia 1154

Tasmania — 186

Tasmania Overseas — 264

Total 5885

Tasmanian Overseas Clients

Tasmanian clients who have an overseas postal address will have the full overseas address printed on their advice letters.  The advice letters will be printed, enveloped and sent from the mailing house.

Streamed Advices

The advices of the following types of cases will be streamed for printing to local printers at each state location:

•       reduction to nil cases
•       overseas cases for all locations apart from Tasmania
•       treatment changes as a result of the reassessment

The nominated local printers are:

NSW — N607P

QLD — Q402P

SA — S116P

TAS — T005P

VIC — V005P

WA — W010P

Contact officers

The contact officer for this exercise is Ruth Nicholls (ext 27406).