C21/2013 Annual Allocated & Market Linked Income Streams Review - 2013

Replaces DI No.

N/A

Purpose

The purpose of this Departmental Instruction is to provide staff with information on the review strategy for the 2013 annual allocated and market linked income streams review and to also to provide advice on where to direct client or procedural enquiries.

Review

strategy

The 2013 review has been initiated during October and November 2013, and processing has commenced within the Income Support Reviews area in Perth.

A Risk Analysis has been applied to reduce the number of income streams reviewed.

Background

All allocated and market linked income streams are asset tested and have an asset value determined by a current account balance.

As the asset value cannot be automatically calculated by DVA, it is necessary to manually obtain and update the current account balance.

From 1 July every year, the gross annual payments made by these income streams may also change, for:

• allocated income streams – as the owner may select a new level of payment every 1 July or if they have elected to receive the minimum level of payment, their minimum payment level will change every 1 July based on their new current account balance and minimum payment factor; and
• market linked income streams – as the annual payment will change every 1 July based on the new current account balance and payment factor each year.

DRS review

in 'review set' status

Departmental Review System (DRS) 'Adhoc' Review functionality will be used to generate a unique DRS Review in 'review set' status for each allocated and market linked income stream selected for review.

The DRS Review details will appear on DRS as follows:

• Review Type = Adhoc Review
• Review Exercise Reason = Annual Allocated Income Stream Exercise
• Review Exercise ID Codes begin with = AAIS
• Submit Status = Review Set
• Review Case Description = Annual Allocated & Market Linked Income Streams Review 2013 :  . . . plus . . .  Case specific comments (i) to identify the income stream the DRS review relates, (ii) to indicate whether there are more DRS income stream reviews connected to the assessment, and if so, (iii) to identify the other income stream providers connected to the assessment.
• Assign To = Unassigned
• Future Review Date = 1 Jan 2014

Number of income streams and  DRS reviews

The risk analysis has reduced the number of cases to be reviewed by excluding allocated income streams that:

• are held by maximum rate Service Pension/Income Support Supplement/Aged Pension (SP/ISS/AP) assessments, except 138 high risk cases;
•  
• are held by low risk income tested less than maximum rate SP/ISS/AP assessments where the owners have never made commutations and have either zero assessable income or have a history of drawing the same gross income each year and their assessable income does not change;
•  
• have already been by updated since 1 July 2013.

The total number of individual allocated and market linked income streams to be reviewed in 2013 will be 7457.  These income streams are held by the following client categories :

Asst Tested Less than maximum rate SP/ISS/AP

Income Tested Less than maximum rate SP/ISS/AP

High Risk Maximum Rate SP/ISS/AP

Self Managed Super Funds

(SMSF)

TOTAL INCOME STREAMS

2763

3574

138

982

7457

Review to be initiated by Investment Database Unit

The Investment Database Unit will:

• initiate the annual review;
• request income stream schedules; and
• instruct income stream providers to return the appropriate schedules to Robert Vere in Perth.

Robert Vere will then be responsible for:

• monitoring the receipt of the requested schedules;
• processing the returned schedules; and
• re-requesting missing schedules.

DRS / PIPS Processing

Processing officers will follow these steps to action the review:

Step

Action

1

Upon receipt of the income stream schedule from the provider, access the appropriate DRS Review.

2

Advance the DRS Review to Create PIPS PC worksheet, select 'Notification Rules Do Not Apply' and enter the date of receipt of the income stream schedule as the date of effect.

3

Update the income and asset details on the income stream data collection screen using the income stream schedule and data collection tip sheets.

4

Check the assessment outcome on 'Calculate Pension', and where the:

• assessed rate of pension increases or continues – proceed to step 5
• assessed rate of pension reduces – go to 'Edit Event' and change the date of effect to day 1 of the next pay period.

Where multiple income stream schedules have been received refer to page 4 for more detailed date of effect rules.

5

Add 'Free Text' to the Advices screen as follows:

“Following information received from (insert provider name e.g. AMP) your account based income stream details have been updated.  You must advise the department within 14 days if you change your gross nominated income payments or make a lump sum withdrawal (i.e. a commutation) from your account balance.  If this occurs, please ask your income stream provider to provide you with a new Income Stream Schedule for Veterans' Affairs assessment purposes which shows your new gross nominated income, total commutations and current account balance.  This will assist us to accurately update your records and reduce the possibility of any overpayment of your pension”.

Income stream schedules sent in by pensioners

When an income stream schedule is:

• provided by the income stream provider in connection with this review, then the unique DRS 'Adhoc' Review must be submitted in 'PIPS Action' to create a CMS case and finalise the review;
• provided by a pensioner, and their PIR notification does not involve other income and assets changes, and there is a unique DRS 'Adhoc' Review in 'review set' status for that income stream, then the income stream schedule must be processed as part of the unique DRS 'Adhoc' Review and submitted in 'PIPS Action' to create a CMS case to finalise the review;
• provided by a pensioner, and their PIR notification involves other income and asset changes, and there is a unique DRS 'Adhoc' Review in 'review set' status for that income stream, then the income stream schedule must be processed as part of the unique DRS 'Adhoc' Review and submitted in 'PIPS Action' to create a CMS case to finalise the review.  The other income and asset changes should be processed using the PIR registration;
• provided by a pensioner in connection with Compliance Review and there is a unique DRS 'Adhoc' Review in 'review set' status, then the income stream schedule must be processed as part of the Compliance Review, and the unique DRS 'Adhoc' Review should be withdrawn.

Date of effect rules

The 'Annual Allocated & Market Linked Income Streams Review - 2013' is being processed as a Departmentally Initiated Review (DIR) via a DRS 'Adhoc' Review.

The review must be processed using DIR date of effect rules.

As the review involves processing income stream schedules for each allocated and market linked income stream held in a service pension, age pension or ISS assessment, each income stream will have a DRS Review with a review description and information / comments to identify the income stream the DRS review relates to.

Each income stream schedule must be treated as a 'DIR' and processed individually, based on the date of receipt and the review outcome, as follows:

For Increases / Continuations:

•       u — se the date of receipt of the income stream schedule as the date of effect.

For Reductions:

• useday 1 of the next pay period following the date of the determination as the date of effect.

Multiple income stream schedules

If multiple income streams are held in a client's assessment, then each income stream schedule must be processed separately based on the date of receipt of the schedule and its review outcome.

If multiple income stream schedules are received on the same day for the same case, then all schedules can be processed simultaneously.

If multiple income stream schedules are received for the same case, and every schedule results in a pension reduction, then all of the schedules can be processed simultaneously.

Where multiple income stream schedules are processed simultaneously, any additional DRS Reviews must be withdrawn to account for each schedule processed with comments added to indicate the reason for the withdrawal.

Commutations

If a client has failed to notify of a partial or total commutation from their income stream, and that event would have resulted in a reduction in the assessed rate of service pension, age pension or ISS, follow up action to obtain full details of the event is required (e.g. date of commutation, amount commuted, new payment rate, how commutation proceeds were disposed of and reinvested).

The commutation event should be processed separately to calculate an overpayment from the date of the event.  These cases may require multiple PIPS actions and multiple dates of effect in order to effect the correct historical reassessments.

Self managed super fund (SMSF) cases

All income streams paid from self managed super funds (SMSFs) will also be reviewed.  This includes non-allocated income streams where there is an asset test exempt Lifetime or Life Expectancy income stream paid from the SMSF which requires the owner to provide a new actuarial certificate to ensure the income stream continues to qualify for an ongoing asset test exemption.

As a result of client feedback from the 2012 exercise a review of client correspondence relating to the request for Self Managed Superannuation Fund information was undertaken to encourage both compliance with the intent of the correspondence or, if required, to encourage impacted clients to seek additional time.

Enquiries

All telephone or counter enquires in relation to a request for information regarding this exercise should be directed to Robert Vere (Perth office) on (08) 9366 8248.

Any procedural enquiries regarding the 'Annual Allocated & Market Linked Income Streams Review - 2013', including assistance with data collection, follow up of non-returns of income stream schedules, should be directed to Eddie Bolanac, Team Leader Investment Database Unit, (02) 9213 7875 (extension 27875).