DATE OF ISSUE: 9 July 1999
DATE OF EFFECT
Purpose |
The purpose of this Departmental Instruction is to provide policy information and procedural guidelines outlining the joint 1997/98 Department of Veterans' Affairs (DVA) and Department of Family and Community Services (FaCS) Budget initiative, referred to as 'Date of Effect' (DoE) in DVA and the 'Payment Cycles Project' in FaCS. |
Authorised by
RJ HayBRANCH HEAD INCOME SUPPORT |
PART 1POLICY and LEGISLATION
1.1Date of Effect policy – Background
Introduction
Introduction |
The 1997/98 Budget introduced an initiative that changes the way in which DVA and Centrelink will calculate and pay income support. The Date of Effect (DoE) initiative (known as the 'Payment Cycles Project' in Centrelink) makes adjustments to the rules determining when changes to a pensioner's circumstances become effective, and when they are reflected in the pension instalment. |
Objective of DoE |
The objective of the initiative is to achieve greater efficiency, equity and accuracy in the reassessment of income support entitlements when pensioners' circumstances change. This will be achieved through changes to the way we calculate and pay income support pensions and a shorter notification period. These changes will ensure that pensioners receive their exact entitlement for each day, and changes in entitlement will be reflected in the pension instalment earlier. |
Entitlements affected by DoE |
The initiative will affect income support entitlements, ie:
Associated allowances will also be affected, ie:
These allowances will be affected in that they will commence and end on particular days, rather than on paydays. All allowances except for telephone allowance will also be paid on a daily basis. For a more detailed explanation, see Part 1.3 Date of Effect policy – rules., 'Daily Entitlement' sub-part. |
Entitlements not affected by DoE |
The DoE changes do not affect disability pension, war widow/ers pension and allowances paid under Part VI of the VEA, ie:
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Implementation date |
The implementation date for the DoE initiative is 13 July 1999. |
Legislation |
The legislative amendments for DoE are contained in the Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act 1998. This is Act No 132, 1998. |
Introduction
Purpose |
The purpose of this chapter is to identify significant changes to the Veterans' Entitlements Act 1986 (VEA) (and the Social Security Act 1991 (SSA)), and to explain their impact in relation to the 'Date of Effect' 1997/1998 Budget changes being introduced from 13 July 1999. |
Act 132, 1998 |
The Payment Processing Legislation Amendment (Social Security and Veterans' Entitlements) Act, No. 132, 1998 was assented to on 24 December 1998. This Act contains the changes to both the VEA and SSA necessary to effect the Date of Effect Budget initiative. Schedules 4 and 7 relate to the VEA. Schedules 1, 2, 3 and 6 relate to the SSA. Schedule 5 relates to amendments to the Income Tax Assessment Act 1997 and Child Care Payments Act 1997. The amendments contained in Act No. 132, 1998 are incorporated into the VEA from July 1999. Hyperlinks: Access Act No. 132, 1998 via Access the current internet version of the VEA via Access the current internet version of the Social Security Act via |
Transitional provisions |
This chapter does not deal with the transitional provisions contained in Schedule 6 or Schedule 7 of Act No. 132, 1998. For information about transitional provisions, see chapter 1.5 Transitional Arrangements. |
Summary of changes
Pension period |
A new definition of pension period is contained in subsection 5Q(1) VEA. Paragraph (b) relates to income support. This defines pension period as a period of 2 weeks that starts 2 days before a pension payday (i.e. Tuesday) and ends 2 days before the next payday (i.e. close of business Monday). SSA ref: subsection 23(1) SSA. |
Effective date of new grant |
In conjunction with section 36M VEA, amendments to subsection 5S(2) ensure that Service Pension (SP) and Income Support Supplement (ISS) may be granted effective from a day other than a payday. SSA ref: section 54 SSA (age pension) or section 158 SSA (wife pension). |
Half instalment |
The SP and ISS half instalment provisions (Division 7 of Part III and subsections 45S(3) and (4)), that were necessary for pensioners transferring from Centrelink to DVA have been repealed. They are no longer necessary, as pension is paid based on daily entitlements under DoE. SSA ref: repealed section 59A SSA (age pension) or repealed section 163A SSA (wife pension). |
Bereavement period |
There are two main changes to section 53H VEA. The bereavement period is no longer referred to as a period of 14 weeks. It has been changed to a period of 98 days. The commencement of the bereavement period is changed to commence on the day of death, rather than on the day after death. SSA ref: subsection 21(2) SSA. The bereavement period is specified as a period of 14 weeks that starts on the day of death. |
Bereavement: re-assessed rate for survivor |
The main change to section 53K VEA is that on the death of a member of a couple, the survivor's new reassessed rate of pension is effective on the day of death, rather than on the day after death. For cases assessed under section 53L VEA, the new reassessed rate continues to be effective from the day after the end of the bereavement period. SSA ref: no equivalent reference. |
Bereavement: payment on death of single pensioner |
Subsection 53Q(1) has been repealed, and substituted with a new subsection based on daily rates. The effect of this new subsection is that on the death of a single pensioner, pension is paid for another 14 days commencing on the day after death, as if the pensioner had not died. This is instead of the old rules where one pension instalment was released on the payday after death. SSA ref: section 91 S — S — A has not changed. However, the payments are now calculated differently. Please refer to Part 2.2 for further information on these policy changes. |
Notification period |
Amendments to subsection 54(5) VEA change the period within which the pensioner is obliged to notify of changes to their circumstances. The period is changed from at least 14 days, to not later than 14 days. SSA ref: subsection 68(4) SSA (age pension) and subsection 172(4) SSA (wife pension). |
Notification period: extension |
New subsection 54(5A) VEA provides for the 14 day notification period to be extended to a maximum of 28 days, in special circumstances. SSA ref: subsection 68(4AA) SSA (age pension) and subsection 172(4AA) SSA (wife pension). |
Notification period: bereavement |
New subsection 54(5AA) VEA allows for a section 54(5) notice to be considered to have been complied with, if notification of the death is received within the bereavement period. SSA ref: subsection 68(4AB) SSA (age pension) and subsection 172(4AB) SSA (wife pension). The bereavement notification period under the SSA is 28 days. |
Date of effect for reductions (compliance with s54) |
New subsection 56(3) VEA allows for pension to be reduced from the day after the end of the notification period, where a pensioner has complied with their obligations under section 54. The impact of this change is that it is possible to incur a retrospective reduction (and thus overpayment) even where notification has been made within the required period. SSA ref: SSA sections 72, 73B and 81 (age pension), and 176, 177A and 185 (wife pension). SSA rules for reductions/cancellations where notification period complied with, are not the same as the VEA. Refer to part 1.4, 'DVA and FaCS – policy comparison' (page 27). |
Date of effect for reductions & cancellations (non compliance with s54) |
Subsection 56A(1) and section 56B VEA are amended to allow a reduction or cancellation to take effect from the day of event, where a pensioner has not complied with their obligations under section 54. SSA ref: section 73 and 74 SSA (age pension) and section 177 and 178 SSA (wife pension). Refer to part 1.4, 'DVA and FaCS – policy comparison' (page 27). |
Date of effect for increases |
Subsection 56G(2) VEA is repealed and substituted with a new subsection that allows a pension increase to take effect from the day of notification. SSA ref: section 80 SSA (age pension) and section 184 SSA (wife pension). |
Pension instalments |
Sections 58AA, 58A and 58B VEA have been repealed and substituted with one new section 58A. The main provisions of section 58A are:
SSA ref: sections 57, 59 (age pension), sections 161, 163 (wife pension) and points 1064-A1 and 1065-A1 SSA, contain similar provisions. |
Introduction – changes to pension payments |
Currently, income support pensions are paid neither in advance nor arrears. This means that if a pensioner is eligible, and the pension is payable on a payday, they will receive a full instalment of pension. In other words, a person is paid either a full 14 day instalment or nothing. Under DoE, the method of paying pensions will change to a method that:
DVA will retain the existing pension payday. |
Pension Period
Pension period – a definition |
A pension period is a period of 2 weeks that starts 2 days before a pension payday (i.e. Tuesday) and ends 2 days before the next payday (i.e. close of business Monday). |
How is the pension period applied? |
Under the new method of calculating pensions, an instalment of pension will be payable in respect of the number of days during each 'pension period' for which the person is eligible, and the pension is payable. In other words, on a payday, pensioners will receive only what they were eligible for on each day in the pension period that relates to that payday. The cut off for pension processing will be the close of business on the Monday before the Thursday payday. A pension period is illustrated in the diagram below. |
Sun |
Mon |
Tue |
Wed |
Thu |
Fri |
Sat |
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Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
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Day 6 |
Day 7 |
Day 8 |
Day 9 |
Day 10 |
Day 11 |
Day 12 |
Day 13 |
Day 14 |
PAYDAY |
KEY
pension period |
|
payday relating to pension period |
Events not actioned in same pension period |
Any events notified but not actioned within a pension period, for any reason, will be carried over to the following pension period. This may create an amount of positive or negative arrears. |
Daily Entitlement
Daily entitlement – a definition |
'Daily entitlement' is the amount of pension that is payable on a given day. This method of calculating pension payments means that the pension paid each fortnight will be made up of an amount for each day of the 14 day pension period. |
How is daily entitlement applied? |
From 13 July, an instalment of pension will be calculated using daily entitlement. A pensioner will receive an amount of pension for each of the 14 days in a pension period that the pensioner is eligible and the pension is payable. The rate of pension payable will continue to be calculated subject to the current income and assets tests and their corresponding free areas – these income and assets tests have not changed. The rate payable will then be converted to a daily rate. The rate of pension payable to a person for a day is calculated by dividing the annual rate of pension by 364. This figure represents 26 fortnights multiplied by 14 days. A system of daily entitlement will mean:
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How will daily entitlement be applied to SP allowances? |
According to the SP and ISS rate calculator in Schedule 6 of the VEA, rent assistance, pharmaceutical allowance, and remote area allowance are added into the pension rate calculation before it is converted into daily entitlement. This means that these allowances are treated as a component of the rate of SP/ISS and are thus paid at a daily rate. For example, if an SP only pensioner is eligible and payable for only 4 days out of a pension period, they will receive 4 days worth of pharmaceutical allowance as part of their SP daily rates. In the case of pharmaceutical allowance, if a person's full 14 day instalment of pension is less than the amount of pharmaceutical allowance they are entitled to, their instalment of pension will be rounded up to be equal to the full amount of pharmaceutical allowance. For example, if the sum of daily rates for an entire pension period for a single pensioner is $2.50, this would be rounded up to $5.40. In other words, the minimum amount of pension an SP only pensioner can receive as a full 14 day instalment of pension is the amount of pharmaceutical allowance to which they are entitled. This rule applies to income support pensions. If a pensioner receives pharmaceutical allowance in respect of their disability pension, the minimum amount of SP the pensioner can receive for a full 14 day instalment is $1 of SP. |
Rounding for daily rates of pension |
Daily rates of pension will be rounded to 4 decimal places. The result will be a more accurate calculation of the pensioner's instalment. The fortnightly instalment will be rounded to the nearest 10 cents, in accordance with s58A of the VEA. |
Notification period
Change to the notification period |
The notification period for pensioners to advise the Department of changes in their circumstances has changed from 'at least 14 days' (in practice 21 days) to 'not more than 14 days' [ss54(5)]. The 14 day notification period can be extended to a maximum of 28 days in 'special circumstances' [ss 54(5A)]. In cases of bereavement, the period allowed to notify of the death is the entire bereavement period of 98 days [ss54(5AA)]. For more information on Bereavement rules, see chapter 2.2 Bereavement. |
How will the new notification period be applied? |
In practice, the legislative term 'not more than 14 days' means that DVA must receive the notification within 14 days of the date of event. The 14 day notification period is exclusive of the day of event. If the information is received up to COB by conventional mail, telephone contact or personal visit, or up to 12 midnight by fax, on the 14th day after the event, then the person has complied. The shorter notification period should allow changes in pensioners' circumstances to be reflected in their pension instalments earlier. |
Special circumstances |
New ss54(5A) of the VEA allows for the period of 14 days that a person is given under s54 to be extended to a maximum of 28 days in 'special circumstances'. This means that for certain groups determined by the Secretary to have 'special circumstances' under ss54(5A), the notification period may be specified as a period up to a maximum of 28 days. The groups entitled to a 28 day notification period are:
Note: FaCS policy allows the 28 day notification period to apply to people living overseas only. This applies to age pensioners paid by DVA. |
Pensioner unable to comply with notification period -ss54(6) |
If a person does not comply with the notification period specified in a section 54 notice (i.e. 14 days, or up to 28 days if subsection 54(5A) applies), because they were unable to comply, it may be necessary for the decision maker to examine the reasons for non compliance in accordance with subsection 54(6), in order to determine the effective date for the variation. If the person is found to have reasonable excuse for not complying with the notice, the decision maker may determine the date of effect of the change in circumstances, based on an assessment of the facts of the case. This date of effect determination could be made under either sections 56C or 56F, or sections 56D, 56E, 56EA, 56EB or 56EC VEA, in accordance with sections 56G or 56H VEA. Such a decision would effectively result in the notification period specified in the notice not being applied when determining the date of effect. Consequently, the person would not be unduly penalised for failing to comply with the notice. For example, a reasonable excuse for failing to comply with a section 54 notice would include:
Note 1: Reasons for any decisions should be fully documented by the decision maker. The National Office, Income Support Branch, Policy Section is available to provide advice if required. Note 2: In cases of bereavement, subsection 54(5AA) VEA provides for notification to be taken as being received within the notification period, if the Department is informed of a death within the bereavement period. Note 3: A section 54 notice applies to a trustee or agent of a person, as it would to the person. Being a trustee or agent is not a reasonable excuse in itself for not complying with the notification provisions. |
Public holidays and weekends |
A special rule applies where the last day of the notification period falls on a Saturday, Sunday or public holiday. Where this occurs, the pensioner has until the next working day to notify. This rule only applies if the holiday is in the region where the DVA processing office is located (State Office or agent office). That is, it has to be a holiday where the notification is received, rather than where the pensioner resides [Acts Interpretation Act 1901, ss36(2)]. |
Data-Matching |
The Data-Matching Program is not impacted by the DoE 14 day notification period. Under the Data-Matching Program, pensioner details stored on DVA files are compared to those of other agencies such as the Australian Taxation Office, Centrelink, etc. If a discrepancy is identified, DVA may send a notice to the pensioner concerned to query the discrepancy.
The Data-Matching Program (Assistance and Tax Act) 1990, specifies that a Notice of Proposed Action must allow 28 days from the day the notice is given. This 28 day notification period will continue to apply. |
S54 Request for information from the client |
Under s54A, the Secretary may request particular information from the pensioner. The legislation stipulates that this information must be provided within a specified period which 'must end at least 14 days after the day on which the notice is given'. This section has not changed under DoE amendments, however to achieve consistency with the 14 day notification period under s54, pensioners will be informed in a s54A notice that they have 14 days from receipt of the notice to provide the information. The time allowed for delivery should be five working days (section 163 of the Evidence Act 1995). If the person lives overseas, or receives remote area allowance, this period may be extended to 28 days (plus 5 working days). |
S 128 – Request for information from a third party |
Under s128, the Secretary may request particular information from a third party. The legislation stipulates that this information must be provided within a specified period 'not being less than 14 days after the notice is given'. This section has not been changed under DoE amendments. However, this will be treated in the same manner as s54A (above). The period specified in the s128 notice for provision of the requested information is 14 days from the day they are given the notice. A period of 5 working days will be allowed for delivery of a notice to a person under the Evidence Act 1995. |
Determining the date of effect
The date of event – a definition |
An event is an incident that may cause a change in income support entitlement, for example, the sale of a property or commencing work. The date of event is the day on which this incident occurs. For guidelines on determining the date of event, see Attachment A. |
The date of effect – a definition |
The date of effect is the day on which a certain incident or 'event' begins affecting a pension assessment. |
How is the date of effect determined? |
In income support cases, the date of effect for a change in circumstances is determined by:
Non-compliance with a section 54 notice means that a reduction, suspension or cancellation in pension will take effect sooner. The rules determining dates of effect are illustrated in the table below. |
If notification is received... |
an increase in pension will take effect.... |
a reduction in pension will take effect.... |
within 14 (or 28) days of the change occurring |
on the day of notification |
on the day immediately following the end of the 14 (or 28) day notification period |
after the 14 (or 28) day notification period has passed |
on the day of notification |
on the day the change in circumstances occurred |
Thus, changes to pension no longer have to take effect on a payday, but can take effect on any given day in the pension period. |
|
|
Example - reduction A service pensioner receives an inheritance on 1 March. He notifies the Department within the 14 day notification period, on 6 March. As the result will be a reduction to his rate of payment, the variation will take effect on 16 March (ie, the day after the end of the notification period).
Example – increase A service pensioner ceases work on 12 August. He notifies the Department on 1 September. His increase takes effect on 1 September (the day of notification). |
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Note: events that impact on assessment take effect in chronological order, according to their dates of effect. |
Advance notification |
Events that are notified in advance (ie before the event occurs) will take effect on:
|
Date of effect for grants |
Under DoE rules, the effective date for commencement of a new grant will change from the payday following the date of grant, to the date of grant. The table below illustrates which rules and payment system will apply when pension is granted either pre or post 13 July 1999: |
Date of grant |
Payment System |
on or before 12 July 1999 |
Pre-DoE – full fortnightly instalment on payday after grant. |
on or after 13 July 1999 |
DoE – paid for number of days entitled during the pension period on payday after grant. |
Rent assistance |
If a rent assistance (RA) variation is due to a variation in Disability Pension (DP), the effective date for the RA change will be the same as the effective date for the DP variation (ie on a payday). Any negative arrears of RA that result from a retrospective grant of DP, would need to be recovered from positive arrears of DP owing, prior to the release of the positive DP arrears to the veteran. Other situations that affect RA, such as ceasing renting, can take effect from the date determined by the DoE rules (ie, on any day, not necessarily a payday). |
Casual earnings |
The treatment of casual earnings will not change under DoE - income will still be assessed using an average fortnightly amount, derived from earnings (estimated or actual) over a three month period. Pensioners will still be required to provide updated statements of their earnings for each 3 month period. However the dates of effect for these cases will be slightly different. All the relevant dates are set out below:
➢ the date of event if not notified within the notification period; or ➢ the day after the end of the notification period if notified within the notification period (ie, this would be the 15 — th day after commencing work in most cases);
Note: The revised DI 45/95 Calculation of Income contains more detailed information on this topic.
|
Changes in marital status - unresolved |
Adjusted date of effect rules apply in cases where people end or commence relationships, and the result is that one partner has an increase in pension, and the other partner has a decrease in pension. This is to avoid the problem of each partner having different effective dates for the change to their pension. The example below outlines this problem: For example, if a couple separates on 1 November and notify on 5 November, they have notified within the notification period. The pensioner receiving a reduction would have the change take effect on 16 November (the day after the end of the notification period), and the pensioner receiving the increase in pension would have the change take effect from 5 November (the day of notification). Between the effective dates of 5 November and 16 November, their assessments would remain linked, even though they had separated on 1 November. DVA does not yet have the system capability for individual assessment of pensioners with joint income and assets. To overcome this problem, the date of effect to be used where one partner has an increase in pension and the other a decrease, is the date of effect for the reduction. The partner who receives the increase in pension will then have their pension adjusted manually, to achieve the payment they would have received if the correct date of effect had been used (ie the date of notification). |
Effective dates for DIAs
DIAs – a definition |
A Department Initiated Action (DIA) is a reassessment action undertaken by the department. Global or 'batch' runs are DIAs, undertaken by the department for a number of clients with income/assets that fall into a specific category, eg, British Retirement Income revaluations, Managed Investment (MI) updates, etc. |
DIRs – a definition |
A Department Initiated Review (DIR) is a review or investigation action initiated by the department. It can include targeted reviews. |
Treatment of DIAs |
Changes to pension assessments, where the pensioner is not under obligation to notify, such as DIAs, DIRs and new claims, are not subject to general DoE rules in specifying effective dates. This means that effective dates will be specified by the determination, the legislation or the date of a batch run. This distinguishes Effective Date cases (where there is no obligation on the pensioner to notify of an event) from Date of Effect cases (PIRs, where there is a specific event that the pensioner is required to notify within a stipulated period). |
Effective dates for DIAS |
Currently, the effective dates for most DIAs, are either:
This will continue to be the case under DoE, however:
➢ Income Streams ➢ Managed Investments and Shares ➢ Statutory increases; |
Effective dates for DIAS - cntd |
|
Superannua-tion |
Super runs should be effective from the 15 — th day from the day of the increase in super. The rationale behind this is that pensioners' obligations to notify of increases to Commonwealth/State super have been removed, therefore they should not be penalised in the application of the resulting reduction in pension. Pensioners who notify of a change in private super values which results in a reduction in pension within the 14 day notification period have the reduction take effect from the day after the end of the notification period (ie the 15 — th day). Having the super runs effective from the 15 — th day after the super increase extends this benefit equally to all pensioners. |
Review requested by a pensioner |
If the pensioner requests a review of established holdings of managed investments and shares, the DoE will be:
Note: If, during the course of conducting a DIA, information is found about changes to income or assets that were notifiable events, but not notified by the pensioner, the date of effect rules should be applied to events highlighted by this information. If appropriate, an investigation into a possible overpayment would commence. If something has occurred that would result in a reduction in pension, it should be backdated to the date of the event. If something has occurred which would result in an increase, it should take effect from the day the determination is made. |
MIs and shares- fortnightly processing |
The practice of revaluing Managed Investments (MIs) and shares at the time of an unrelated PIR will be discontinued from 13 July 1999. Therefore, revaluations will occur:
If a PIR makes no reference to MI/share changes, there will be no refresh of MI/share data. |
Introduction |
As discussed above, the dates of effect for certain DIAs are specified in the legislation. Similarly, with the change of payment methods for income support payments to daily entitlements, the Date of Effect legislation specifies certain dates of effect for commencement and end dates for particular schemes and benefits. These specified dates of effect are for:
|
New grants |
The date of effect for a new grant will be the date of grant. |
Pension loans scheme |
The following changes will occur for decisions relating to the pension loans scheme:
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Treatment |
For cases where the 13 week period of grace applies following a loss of treatment entitlement, the veteran will continue to be eligible for treatment benefits for 13 weeks from the day on which the veteran's pension is reduced. This amends the current procedure in which treatment continues for 13 weeks from the first pension payday after the event [para 53E(3)(c)]. |
Bereavement-reassessed rate for survivor |
Section 53K states that the survivor's new reassessed rate of pension is effective on the day of death, rather than on the day after death. For cases assessed under 53L, the new reassessed rate becomes effective from the day after the end of the bereavement period. |
1.4DVA and FaCS – policy comparison
Payments
Purpose |
The purpose of this part is to outline the differences in the date of effect provisions under the Veterans' Entitlements Act 1986 (VEA) and the Social Security Act 1991 (SSA). |
Multiple paydays for Centrelink |
As part of this initiative, Centrelink will be adopting multiple paydays. This means that there will be ten possible paydays within a fortnight. Pensioners paid income support payments by Centrelink will be able to select any weekday as their pension payday. DVA will be retaining the existing Thursday pension payday. People paid age pension by DVA will not have a choice of payday, but will be paid on the DVA payday. |
Transfer from Centrelink to DVA |
Currently, pensioners transferring from Centrelink to DVA for payment of their age pension are paid a one-off half instalment of pension to cover the transition to DVA's alternate payday. As Centrelink pensioners will be paid on various paydays, this will no longer be a half instalment in every case. The change in calculation of pensions to daily entitlement will enable the Centrelink payment to be paid up to the day the person ceases to be eligible for that payment. Payment under the VEA may then commence the day after the day the person ceased to receive the Centrelink payment. |
Reductions and cancellations
Introduction |
There is a fundamental difference between the VEA and the SSA in the operation of date of effect provisions for a reduction or cancellation of an income support payment. The difference arises in determining effective dates for reductions or cancellations where the pensioner complies with their obligations. The rules under the VEA and SSA in these cases are illustrated below. |
VEA/SSA reductions/cancellations- obligations not met |
In cases where the pensioner does not comply with their obligations, both the VEA and the SSA specify the date of effect to be the date of event. |
VEA –reductions/Cancellations –obligations met |
VEA provisions: Under section 56 of the VEA. If a DVA income support pensioner:
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SSA - reductions/Cancellations – obligations met |
SSA provisions: For cases of reduction or cancellation for age pensioners, under sub section 72(f) of the SSA, the pension would only continue to be payable until the end of the notification period if it was not possible to reduce/cancel before the end of the notification period. Under the SSA, there are three possible effective dates for reductions/cancellations where the pensioner has complied with their obligations;
The effective date is dependent on when processing takes place. This is illustrated in the table below: |
IF the reduction/cancellation is processed in... |
THEN the effective date is the day... |
the pension period in which the change occurs |
of event |
the pension period immediately following the pension period in which the change occurs |
after the end of the pension period in which the change occurs |
a later pension period |
after the end of the notification period |
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Pension Period |
Pension Period |
Pension Period |
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Notification period |
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change |
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If change processed this PP, effective date is date of change. |
If change processed this PP, Effective date is day after end of Last PP |
If change processed this PP or later, effective date is day after end of notification period |
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1.5Transitional Arrangements
Overview
Purpose |
The purpose of the transitional arrangements is to change income support recipients from a payday-based payment system to period-based payments with minimum disruption and disadvantage to pensioners. |
Timeframe for transitional arrangements |
The transitional period will be from 1 July 1999 to 12 July 1999. As of 13 July 1999, pensions will be calculated on a daily basis and paid fortnightly in arrears. |
Methods of payment for transitional period paydays |
The last normal payday–based payment under current rules (ie neither in advance nor arrears) will be 1 July 1999. A transitional payday-based payment will be made on the payday of 15 July 1999. This payment will be an entire instalment of pension, calculated based on the rate of income support pension payable on 12 July 1999. The first proper daily entitlement-based payment will be made on the payday of 29 July 1999. This payment will be made in respect of the first pension period, which will be from 13 to 26 July. Each pensioner will receive the number of days at the daily rate of pension to which they were entitled in that period. The transitional period is illustrated on the calendar below: |
Sun |
Mon |
Tue |
Wed |
Thur |
Fri |
Sat |
27 |
28 |
29 |
30 |
01 July PAYDAY |
02 |
03 |
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04 |
05 |
06 |
07 |
08 |
09 |
10 |
11 |
12 |
13 |
14 |
15 PAYDAY |
16 |
17 |
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18 |
19 |
20 |
21 |
22 |
23 |
24 |
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25 |
26 |
27 |
28 |
29 PAYDAY |
30 |
31 |
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01 August |
02 |
03 |
04 |
05 |
06 |
07 |
08 |
09 |
10 |
11 |
12 PAYDAY |
13 |
14 |
Determining the DoE during the transitional period
Introduction |
When determining the date of event for a change in circumstances (PIR) during the transitional period, the following questions need to be considered:
The following tables will assist in answering these questions. |
Notification period |
The date of event determines what notification period applies, the new (14 days, or 28 days if living overseas or receiving remote area allowance) or the old (21 days). A pensioner who has an event occur on or before 12 July 1999 will be entitled to the old 21 day notification period. |
Event date |
Notification Period |
On or before 12 July 1999 |
21 days |
On or after 13 July |
14 days |
Date of effect rules |
The date of notification, in turn, determines whether the new or old rules determine the date of effect: |
|||
Notification Date |
How to determine DoE |
|||
On or before 12 July |
Old rules determine DoE. Increases: Payday after notification. Reductions: Next available payday (depends on cut-off). |
|||
On or after 13 July |
New DoE rules determine DoE ie
|
|||
|
For some examples of dates of effect for variations during the transitional period, see Attachment B. |
||||
No change in circumstances |
A person who is receiving pension and has no change of circumstances during July 1999 will continue to receive his or her full (and regular) amount of instalment for each of the paydays on 1, 15, and 29 July. |
Grants |
The commencement date for new grants during the transitional period will not change. The effective date will be the date of grant. The table below illustrates the date of effect and the basis of payment for new grants during the transitional period: |
Commencement date |
Date of effect |
Payment |
Pension becomes payable on or before 12 July 1999 |
Date of grant |
Payday-based – fortnightly instalment of pension on the first payday after claim received (up to and including the payday of 15 July). |
Pension becomes payable on or after 13 July 1999 |
Date of grant |
Daily entitlement-based – person paid for the actual number of days entitled during the pension period on the next payday. |
PART 2 IMPACT ON OTHER INCOME SUPPORT POLICIES
2.1Overpayments
Effective date for reductions & cancellations – SP & ISS
Introduction |
The DoE rules determining when reductions and cancellations to SP and ISS take effect, have an impact on the calculation and incidence of overpayments. |
Retrospective reductions/cancellations- obligations met |
Changes to section 56 VEA mean that it is possible for a reduction/cancellation to be retrospective, even where a pensioner has complied with their obligations under section 54 VEA. The new provision, at subsection 56(3) VEA, specifies that where a pensioner has complied with their obligation to notify within a certain period, the reduction/cancellation takes effect from the day after the end of the notification period. This means that even if DVA delays processing the reduction/cancellation, the effective date is still the day after the end of the notification period. The concept of effecting the reduction/cancellation from the current reduction date (i.e. a date in the future) does not apply. |
Retrospective reductions/cancellations- obligations not met |
Changes to section 56A VEA (cancellations) and section 56B VEA (reductions) allow for them to take effect retrospectively from the day of the event. These provisions apply where a pensioner has not complied with their obligations under section 54 VEA. |
Effective date for reductions & cancellations – age pensioners
Introduction |
From 13 July 1999 changes to the rules that determine the effective date for pension variations also affect age pensions paid under the SSA. The new rules governing variations that result in a reduction or cancellation in age pension differ in part to the rules that apply to SP and ISS. |
Retrospective reductions/cancellations- obligations met |
Changes to sections 72 (cancellation), 73B (reduction) and 81 SSA mean that it is possible for a reduction/cancellation to be retrospective, even where an age pensioner has complied with their obligations under section 68 SSA. The new provisions specify that where a pensioner has complied with their obligation to notify within a certain period, the reduction/cancellation takes effect from either:
This means that even if DVA delays processing the reduction/cancellation, the effective date is still the day specified. The concept of effecting the reduction/cancellation from the current reduction date (i.e. a date in the future) does not apply. An explanation of the SSA rules for reductions and cancellations is at chapter 1.4 DVA and FaCS – policy comparison. |
Retrospective reductions/cancellations- obligations not met |
Changes to section 73 SSA (cancellations) and section 74 SSA (reductions) allow for reductions/cancellations to take effect retrospectively from the day of the event. These provisions apply where a pensioner has not complied with their obligations under section 68 SSA. These rules are the same under both the SSA and VEA. |
The impact of retrospective reductions & cancellations
Implications |
The implications of effecting retrospective reductions/cancellations means that it is possible to incur an overpayment, even where a pensioner has complied with their obligations. |
Impacts |
The impact of this is that there will probably be an increase in the incidence of this type of overpayment. |
Contributing factors |
Factors determining the incidence and size of these overpayments include our ability to respond to changes in circumstances quickly, which depends to a large degree on the system automation available. |
Delay of system automation |
It was originally proposed that the automated debt calculation and recovery system would be available from about August 1999. This system is known as the Recovery Plan component of the Integrated Payments System, Receivables sub-system. However, due to the lack of suitably experienced IT professionals the entire Income Support Information Systems suite of systems has slipped from their original implementation dates, consequently affecting the implementation time frame for the Recovery Plan component. |
Impact of system delays |
These delays leave us uncertain as to when the automated Recovery Plan system will be implemented. Thus, interim guidelines have been developed to assist us to cope with the increased incidence of overpayments that have to be handled manually. |
Debt recovery overview – general principles
Introduction |
The following sections set out how to handle DoE related overpayments while the Receiveables component of the Integrated Payment System is not available. Action to be taken will depend on whether or not obligations have been met. The basic premise is that where obligations are met, and the overpayment has arisen due to processing delays, the overpayment will be waived. If obligations are not met, the overpayment will generally be recovered by following standard recovery procedures, currently in place. This premise is shown in the table below. |
IF obligations are... |
THEN overpayment is... |
Met |
Waived, no recovery advice sent |
Not met |
Recovered, recovery advice sent |
Obligations met |
If a pensioner meets their obligations (i.e. we are notified of an event within 14 days, or 28 days if the pensioner lives overseas or receives remote area allowance), the overpayment is waived, regardless of the amount. This applies to SP, ISS and age pension overpayments. |
Obligations not met |
If a pensioner does not meet their obligations (i.e. we are not notified of an event within 14 days, or 28 days if the pensioner lives overseas or receives remote area allowance), the overpayment is not waived if greater than or equal to $200 ($50 for age pensioners). Overpayments which, in the opinion of the delegate, appear to be less than these amounts would generally be waived. |
Advices |
A standard letter recovery advice will not be sent if an overpayment is waived. A standard letter recovery advice will be sent if an overpayment is to be recovered. Note: this standard letter advice of an overpayment recovery would be sent after the pensioner has received their initial advice telling them that their pension payment has varied due to a change in circumstances. |
Waiver of overpayments |
Overpayments waived under the waiver provisions will need to be recorded in order to maintain statistics, as is currently the case. Overpayments equal to or greater than $200 can be waived under sub para 206(1)(b)(i). Although the pensioner has complied with their notification obligations, these overpayments have arisen due to administrative or processing delays. Overpayments of less than $200 can be waived under sub para 206(1)(b)(ii). In all cases of overpayments, the correct date of effect for the reduction or cancellation in pension should be recorded. |
Management Information |
In relation to overpayments the following information should be recorded:
|
Recovery approach |
To minimise disruption, the recovery methods normally used by Overpayment Management Units should be used to recover overpayments arising out of the DoE initiative. |
Overpayments caused by retrospective reduction/cancellation – SP and ISS
Obligations met |
Use this table where an SP or ISS pensioner has notified of an event within the notification period, but DVA delay in effecting the change has resulted in a recoverable overpayment. |
Step |
Action |
|||||
1 |
Identify the date of event |
|||||
2 |
Did the pensioner notify of the event within the notification period? |
|||||
Yes |
Go to Step 3 |
|||||
No |
Go to 'obligations not met' table- SP & ISS, start at Step 3 |
|||||
3 |
How much is the overpayment? |
|||||
< $200 |
Waive under sub paragraph 206(1)(b)(ii) VEA Go to Step 4 |
|||||
≥ $200 |
Waive under sub paragraph 206(1)(b)(i) VEA Go to Step 4 |
|||||
|
Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.
|
||||||
4 |
Do not send a recovery advice |
|||||
Obligations not met |
Use this table where an SP or ISS pensioner has not notified of an event within the notification period. |
Step |
Action |
|||||
1 |
Identify the date of event |
|||||
2 |
Did the pensioner notify of the event within the notification period? |
|||||
Yes |
Go to 'obligations met' table- SP & ISS, start at Step 3 |
|||||
No |
Go to Step 3 |
|||||
3 |
In accordance with ss54(6) does the pensioner have reasonable excuse for not complying with the notification period to the extent that they were capable of complying? |
|||||
Yes |
Go to Step 4 |
|||||
No |
Go to Step 5 |
|||||
4 |
In accordance with s56H, the decision maker may determine the effective date, under s56D, 56E, 56EA, 56EB or 56EC, as appropriate. Stop here. |
|||||
5 |
How much is the overpayment? |
|||||
< $200 |
Discretionary: EITHER Waive under sub paragraph 206(1)(b)(ii) VEA; Do not send a recovery advice; and Stop here. OR Go to Step 6 |
|||||
≥ $200 |
Go to Step 6 |
|||||
|
Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount. |
||||||
Step |
Action |
|||
6 |
Was the overpayment compounded by admin delay? |
|||
Yes |
Go to Step 7 |
|||
No |
Recover the overpayment. Use traditional recovery methods, including the usual standard letters. Stop here. |
|||
7 |
Recover the portion of the overpayment caused by the pensioner's failure to comply with their obligations. Use traditional recovery methods, including the usual standard letters |
|||
8 |
Waive the portion of the overpayment caused by admin delay using sub paragraph 206(1)(b)(ii) VEA |
|||
Overpayments caused by retrospective reductions/cancellation – Age Pension
Obligations met |
Use this table where an age pensioner has notified of an event within the notification period, but DVA delay in effecting the change has resulted in a recoverable overpayment. |
Step |
Action |
||||||
1 |
Identify the date of event |
||||||
2 |
Did the pensioner notify of the event within the notification period? |
||||||
Yes |
Go to Step 3 |
||||||
No |
Go to 'obligations not met' table – age pension, start at Step 3 |
||||||
3 |
How much is the overpayment? |
||||||
|
< $50 (if still in payment) < $200 (if not in payment) |
Waive under sub section: 1237AAA(2) SSA 1237AAA(1) SSA Go to Step 4 |
||||||
|
≥ $50 (if still in payment) ≥ $200 (if not in payment) |
Waive under section: 1237AAD SSA 1237AAD SSA Go to Step 4 |
||||||
|
Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.
|
|||||||
4 |
Do not send a recovery advice |
||||||
Obligations not met |
Use this table where an age pensioner has not notified of an event within the notification period. |
Step |
Action |
|||||||
1 |
Identify the date of event |
|||||||
2 |
Did the pensioner notify of the event within the notification period? |
|||||||
Yes |
Go to 'obligations met' table- age pension, start at Step 3 |
|||||||
No |
Go to Step 3 |
|||||||
3 |
In accordance with ss68(4AA) (age) or 172(4AA) (wife), does the pensioner have reasonable excuse for not complying with the notification period, to the extent that they were capable of complying? |
|||||||
Yes |
Go to Step 4 |
|||||||
No |
Go to Step 5 |
|||||||
4 |
In accordance with s81 (age) or s185(wife), the decision maker may determine the effective date under s77, 78, 78A or 78AA (s181, 182, 182A or 182AA (wife)), as appropriate. Stop here. |
|||||||
5 |
How much is the overpayment? |
|||||||
|
<$50 (if still in payment) < $200 (if not in payment) |
Waive under subsection: 1237AAA(2) SSA 1237AAA(1) SSA Do not send an advice; and Stop here. |
|||||||
|
≥ $50 (if still in payment) ≥ $200 (if not in payment) |
Go to Step 6 |
|||||||
|
Note: the overpayment must be waived by an officer with the appropriate delegated authority to waive the amount.
|
||||||||
6 |
Recover the overpayment using traditional recovery methods, including the usual standard letters. |
|||||||
Standard letters where overpayment recoverable
Introduction |
During the time that the Recovery Plan system is not operational, we will generally recover overpayments that have arisen as a result of the pensioner's failure to notify within the required time frame (usually 14 days, or 28 days if pensioner lives overseas or receives remote area allowance). This means we will have to send a standard letter notifying the pensioner of the overpayment and specifying recovery information. A recovery letter will not be sent to pensioners whose overpayment has been waived. |
Letter to use – SP and ISS |
The initial letter suggested for use is under Microsoft Word, IS Standard Letters, Overpay, “1 — st recov- No pre OP adv.dot”. This is an existing standard letter that has been amended to take into account DoE related changes. A sample of this letter is at Attachment C |
Letter to use – age pensioners |
The initial letter suggested for use is under Microsoft Word, IS Standard Letters, Overpay, “1 — st recov- No pre adv (age).dot”. This is an existing standard letter that has been amended to take into account DoE related changes. A sample of this letter is at Attachment C |
2.2Bereavement
Introduction
Purpose |
|
Intention of payments on death of a pensioner |
Payments made on the death of a single pensioner, a partnered pensioner, child or pensioner in care are known as bereavement payments. The intention of the bereavement payment is to maintain payments that were payable to the deceased and where relevant, to allow a surviving pensioner time to make financial adjustments if necessary before any changes are made to the ongoing rate of pension. |
Tax exemption |
Bereavement payments are tax exempt. |
Payments on death of a pensioner – single pensioners
Definition |
A single pensioner is one who either does not have a partner, or does not have a partner receiving an income support payment under the VEA or the SSA. |
Legislative References |
Sections 53P and 53Q VEAapply to the death of a single pensioner. |
Entitlement |
Any (one) person whom the Commission thinks appropriate,. is entitled to payment of an amount equal to the pension that would have been payable to the pensioner for the period of 14 days after the day on which the pensioner died. This is calculated at the rate at which the pension would have been payable on those days, if the pensioner had not died. |
Payments on death of a pensioner – partnered pensioners
Definition |
A partnered pensioner is one whose partner immediately prior to death, was in receipt of an income support pension from DVA or a social security pension from Centrelink. |
Legislative References |
Sections 53H, 53J, 53K, 53L and 53M VEA apply to the death of a partnered pensioner. |
Entitlement |
The surviving pensioner is entitled to receive a bereavement payment on the death of their partner. The bereavement payment is the amount that would have been paid to the deceased for the period of 98 days commencing on the day of death. The rate of that payment is based on the amount that was payable on the last day of the last pension period prior to the death. Although the bereavement payment is calculated on a daily basis, it may be paid as a lump sum. |
Section 53K |
If the pensioner's reassessed rate is equal to or greater than the combined pensioner couple rate that was payable to the pensioner and the partner before the partner died, then section 53K applies. As the survivor's pension entitlement is reassessed at an equal or higher rate than the pre-death rate, a lump sum is not normally paid. The amount of pension that would have been payable to the deceased is taken to represent the bereavement payment. This amount is a tax exempt component of the ongoing payment to the survivor for the duration of the bereavement period. |
Section 53K example |
The combined pension rate for the couple prior to death is $20.00 ($10.00 each) per day, and on the death of the pensioner, the surviving pension is reassessed at $30.00 per day. The bereavement payment is $10.00 per day and will be paid as a part of the survivor's ongoing pension entitlement of $30.00 per day for the duration of the bereavement period. The $10.00 per day bereavement component is tax exempt. |
Section 53L |
If the pensioner's reassessed rate is less than the combined pensioner couple rate then section 53L applies. The bereavement payment payable under this section is the amount of pension payable on the last day of the last pension period prior to death of the deceased. This amount is payable to the survivor for the duration of the 98 day bereavement period, commencing on the day of death, as either a lump sum or as ongoing fortnightly payments. |
Section 53L example |
If the combined rate of pension prior to death is $40 per day (each pensioner receiving $20 per day) and the surviving pensioner is reassessed at $25 per day, the bereavement payment rate is $20 per day. This amount is then multiplied by the 98 day bereavement period ($20 x 98) and totals $1,960. The ongoing rate is paid at $20 per day until the end of the bereavement period, and then increases to $25 per day. |
Payment to saved carers
Definition |
Where a person is receiving a carer service pension or carer ISS (saved carers) because they are caring for a severely handicapped person, and that person dies, the carer is entitled to a bereavement payment. (N.B. The carer provisions have not been altered for the provision relating to bereavement payments payable to carers, Schedule 5, clause 8). |
Legislative References |
Sections 53U, 53V, 53W and 53X VEA apply to the death of a non-partner who is being cared for by a person in receipt of a pension. |
Entitlement |
A carer bereavement payment can only be made to the carer of a deceased person if the person was:
The bereavement payment consists of 98 days of the carer's rate of pension. This payment may be paid as a lump-sum. Carer pensioner bereavement payments are based on the payment rate of the carer, not the deceased caree. In addition to the bereavement payment, the carer may also be entitled to receive the rate of carer pension which he or she was receiving on the last day of the last pension period before the person died for the 98 days of the bereavement period. This payment is also considered to be a bereavement payment and may be paid as a lump-sum. If the veteran was partnered and the partner was in payment of income support pension, then the partner is entitled to a partnered bereavement payment. No carer bereavement payment is made to the carer in this case. However, the carer may be entitled to receive the rate of carer pension which he or she was receiving on the last day of the last pension period before the person died, for the 98 days of the bereavement period. This payment is considered to be a bereavement payment for tax purposes and may be paid as a lump-sum. |
Death of dependent child
Definition |
Pensioners eligible for a dependent child bereavement payment are those who were receiving: (a)a service pension; or (b)income support supplement and (a) pension, including an additional amount of pension payable to the pensioner as a result of applying the additional income free area in respect of the deceased child; or (b) additional components of that pension for a dependent child when that child died. |
Legislative References |
Sections 53R, 53S and 53T VEA apply to the death of a dependent child. |
Entitlement |
The pension continues to be payable to the pensioner for the 98 day bereavement period as if the child had not died. The bereavement payment payable under these sections is based on the amount of pension relating to the child and payable on the last day of the last pension period prior to death of the child. This amount is payable to the parent for the duration of the 98 day bereavement period, commencing on the day of death, as either a lump sum or as an ongoing payment. Although the bereavement payment is now calculated on a daily basis, it may be paid as a lump sum. |
Deceased ISS War Widow or Widower
Determining daily rate for bereavement payment |
Where a war widow or war widower who is a member of a couple dies and he or she was receiving ISS at the time of death, a bereavement payment is payable for a period of 98 days commencing on the day of death. The amount payable is calculated in accordance with the rate calculator (SCH6-A1(6) VEA) without applying the ceiling rate or counting the war widow's or widower's pension as adjusted income. Divide the fortnightly amount achieved using the rate calculator by 14 to achieve a daily rate. |
Tax exemption
Introduction |
Although DoE will have no direct impact on the tax-exempt aspect of bereavement payments, it has highlighted an existing system flaw, which is unable to be rectified at this point in time. |
Work practice |
All bereavement payments are tax exempt. Currently the Death Processing System (DPS) calculates a lump sum amount payable to the surviving partner or to a person the Commission identifies, or the estate of a single pensioner. DPS calculates this amount incorrectly so that it does not accurately reflect the tax-exempt component of the payment. The tax exempt amount is 98 times the daily rate of entitlement that was payable to the deceased on the last day of the last pension period before death. Recording the tax exempt amount on the Tax Database is a manual calculation. |
PIR processing during the bereavement period
Single Pensioners |
Single pensioners should continue to have any outstanding PIRs processed, as if they had not died. |
Partnered pensioners - rules |
The following rules apply to PIR processing during the bereavement period for partnered pensioners:
Note: This decision provides consistency in the treatment of pensioners under the VEA provisions 53K and 53L during the bereavement period. Most importantly for the bereaved pensioner it provides the benefit of an extended obligation period to notify of the death of their partner and any changes in circumstances that may have occurred during the bereavement period. |
Partnered pensioners - effective dates |
For events occurring in the bereavement period the effective date for:
|
Partnered pensioners -advance PIRs |
PIRs notified in advance before the death of a pensioner with the date of effect occurring in a pension period prior to the pension period in which the pensioner dies, should be actioned as normal. PIRs notified in advance before the death of a pensioner with the date of effect occurring either:
should be not be actioned until day 99 for increases and day 114 (day 128 if the pensioner lives overseas or receives remote area allowance) for reductions. |
Partnered pensioners - retrospective reductions |
Negative PIRs with a date of effect on or before the last day of the last pension period immediately prior to the death and notified after the death may affect either the bereavement payment or the ongoing rate of the surviving pensioner. If the bereavement payment has already been paid, then the bereavement payment itself cannot be altered, however the ongoing rate of the surviving pensioner should be reassessed and necessary adjustments made. Negative PIRs with a date of effect after the last day of the last pension period immediately prior to the death and before the day of death, should have an effective date of day 99 if notified within the bereavement period. |
Bereavement payment where survivor receives automatic grant of ISS
Introduction |
The information provided in this section outlines the bereavement rules and effective dates relating to automatic grants of ISS (i.e. where a veteran dies and the surviving partner is eligible for automatic grant of ISS (and WWP). |
Effective date for ISS grant |
The effective date for the grant of ISS depends on whether s53K or s53L VEA applies to the survivor after the partner's death, and is shown in the table below. Note: s53L VEA will apply to the great majority of cases. |
IF assessed under section... |
THEN effective date for ISS grant is... |
53L |
the day after the end of the 98 day bereavement period |
53K |
day 2 of the bereavement period (i.e. same day as grant of WWP) |
Payments made after bereavement: DoE |
Under DoE rules, assuming the survivor was receiving partner service pension (PSP) prior to the death of the veteran, the tax exempt bereavement payment and the taxable ongoing payment, made to the survivor during the 98 day bereavement period are shown in the table below. These examples represent the daily rates applicable. |
Payment type |
Section 53L |
Section 53K |
Bereavement payment |
Vet's married SP × 98 days |
Vet's married SP × 98 days |
Taxable payment |
Survivor's married PSP × 98 days |
|
Payments made after bereavement: DPS |
Using the DPS approach, the tax exempt bereavement payment and the taxable ongoing payment, made to the survivor during the 98 day bereavement period are shown in the table below. These examples represent the daily rates applicable. Note: DPS does not appear to make a distinction between s53K and s53L VEA when calculating payments after bereavement. |
Payment type |
DPS |
Bereavement payment |
|
Taxable payment |
|
Payment of WWP |
In all cases (i.e. where ISS and WWP grant are automatic), WWP is granted from the day after death (ss13A(2) VEA refers). The DoE daily entitlement rules have not affected WWP. Thus, in real terms, this means that WWP is paid effective from the payday after death. |
Calculations compared |
On calculating the bereavement payment under DPS, and then in accordance with the DoE legislation (s53L), the total amount received by the surviving partner over the 98 day period is exactly the same. The only difference, is that the tax exempt component (i.e. the actual bereavement payment) is less under the DPS method. The impact of this is a possible disadvantage to the pensioner, if they pay tax, unless the taxable and tax exempt amounts are amended on the tax data base (or equivalent new system).
Note: it is unlikely that s53K VEA would apply to a survivor in this situation. Hence, no s53K example calculation is given. |
Example calculation (53L) |
The table below provides an example calculation of the payments made after bereavement using the DoE rules, and then the DPS calculation method.
|
Method |
Bereavement Payment |
Taxable payment |
Total |
DPS |
(($21 + $21) - ($22)) × 1 (($21 + $21) – ($8.57)) × 97 |
$22 × 1 $8.57 × 97 |
$4116 |
DoE (53L) |
$21 × 98 |
$21 × 98 |
$4116 |
Background references |
|
2.3 Age pensioners – payment on death of pensioner
Introduction |
These Age Pensioner rules should be read in conjunction with both the Service Pensioner bereavement rules and the Age Pensioner processing rules. |
Single age pensioners
Legislative Reference |
Section 91 of the SSA applies to the death of a single age pensioner. |
Entitlement |
If a single pensioner dies, their estate is entitled to payment from the beginning of the death entitlement period, to the day prior to the customer's date of death. This is an ongoing entitlement rather than a bereavement payment. Bereavement provisions generally then allow for payment of entitlement from the day of death to the end of the entitlement period in which the death occurs. Date of effect rules decide what the bereavement payments are. The diagram below sets out the possible scenarios. The table that follows details the period for which bereavement payments are made. |
Receipt of Notification of Death |
Actioning of Death Notification |
Bereavement Payment |
Period 1 |
Period 1 |
From date of death to end of period 1 |
Period 1 |
Before the end of period 3 |
From date of death to end of period 2 |
Period 1 |
After period 3 |
From date of death to the notification period end date |
Period 2 |
Before the end of period 3 |
From date of death to end of period 2 |
Period 2 |
After period 3 |
From date of death to the notification period end date |
Period 3, prior to end of notification period |
Period 3 |
From date of death to end of period 2 |
Period 3, prior to end of notification period |
After period 3 |
From date of death to the end of the notification period |
After notification period end date |
(Any time) |
The bereavement payment is payable from the date of death to the end of the entitlement period in which the death occurs. |
Partnered age pensioners
Definition |
A partnered pensioner is one whose partner immediately prior to death, was in receipt of a pension paid by DVA or a social security pension or benefit administered by Centrelink. |
Legislative References |
Sections 21, 82, 83, 84, 85, 86 and 87 of the SSA apply to the death of a partnered age pensioner. |
Entitlement |
The surviving pensioner is entitled to receive a bereavement payment on the death of their partner. The bereavement period is a period of 98 days (14 weeks) commencing on the day of death. The notification period for the death is 28 days. The surviving partner is entitled to the equivalent number of days remaining in the deceased partner's entitlement period in which the death occurred plus six more entitlement periods (84 days) of the deceased person's entitlement. |
Notification within notification period |
If the death is notified within the 28 day notification period, and the resulting determination on the survivor's assessment is:
(This is the same as the age pension reduction/cancellation rules). |
Notification outside notification period |
If the death is notified outside of the 28 day notification period, and the resulting determination on the survivor's assessment is:
|
Age pensioners – PIR processing
Single pensioners -rules |
Single pensioners should continue to have any outstanding PIRs processed, as if they had not died. |
Partnered pensioners - rules |
All events (excluding death) occurring within the bereavement period, should be processed according to the Date of Effect rules for age pensioners. The notification period for all events (excluding the death) during this period is 14 days (28 days if the person lives overseas). |
PART 3 PROCEDURAL INFORMATION
3.1Improving information gathering/communication
Introduction |
The DoE initiative will require some additional data collection on the part of the State Office staff at the time of a PIR. The purpose of this chapter is to:
|
Data Collection
Introduction |
There are certain data items the pensioner will be required to provide at the time of a PIR to allow the examiner to determine the date of event. The date of event and the date of notification are essential data items, as the interaction of these two dates determines the date of effect for the variation. |
Data items for DoE – impact on SOs |
Under the DoE initiative, all information currently sought by Income Support officers will continue to be relevant and will need to be collected. In addition, it will be required that the following data items be collected from the pensioner when they contact the Department to report a change of circumstances: Date of event The date/s of the change/s in circumstances being notified will need to be provided. As explained above, the dates of event and notification determine the date of effect. |
Data items for DoE – impact on SOs - ctd |
Date of notification The date of notification is the day the Department receives information about a change in a pensioner's circumstances, in whatever form this information takes: Letter/fax– if the pensioner notifies by letter or fax, the date of notification will be the day the letter or fax is received by the Department, rather than the day the letter or fax was sent. Phone call – The day of the initial phone call notifying of a change in circumstances, or the day a phone message was left. In person – if the person notifies by a personal visit, the notification date is the date of the visit. Note: The date of notification for all of these forms of notification is the date of the initial contact, regardless of whether the pensioner may have to ring or write back to the Department with further information. At present the Department cannot accept e-mail notification. Notification period Which notification period applies, 14 days or 28 days? (the 28 day notification period only applies to those pensioners living overseas or receiving remote area allowance). Note: A 98 day notification period applies for partnered income support pension bereavement cases. |
Data items for DoE – impact on pensioners |
Pensioners are currently required to provide the date that a change in their circumstances affecting their pension occurs. However, under DoE, this will become even more important. Pensioners will need to be aware of this requirement. The methods of informing pensioners of the need to provide the date of event, and the need to notify of changes in circumstances within 14 days are outlined in the next part, 'Communication with pensioners'. |
Changes to forms |
Forms have been updated to reflect:
All updated forms are the current electronic versions. It is essential that State Offices use the electronic version of all forms after the implementation date of 13 July 1999. Old versions of forms may contain incorrect information. Electronic forms can be found on the intranet, within the DVA Facts system. National Office does not have the capacity to locate and change pre-printed or state-specific forms. It is the responsibility of each State Office to ensure that such forms are made compliant with the DoE legislative requirements. |
Communication with pensioners
Introduction |
As the DoE initiative involves a change to pensioners' obligations, there has been substantial publicity material, as well as changes to advices, standard letters and forms, to ensure that pensioners are aware of the changes associated with the DoE initiative. |
Vetaffairs Articles |
The March edition of Vetaffairs included an article explaining the DoE initiative. This article was followed up with a second article in the Budget edition of Vetaffairs. These articles outlined the new rules for when variations to pensions are applied, in addition to explaining the need for pensioners to provide the date of event of a change in circumstances within 14 days. |
Fact sheets |
The following fact sheets are available on DoE:
|
June SI |
The June SI mailout will contain some information on the DoE initiative, so pensioners are aware of the changes being implemented on 13 July 1999. DoE information in the June SI will include:
|
You and Your Pension bookletupdate |
As indicated above, it is necessary to amend the obligations in the You and Your Pension booklet. Those pensioners who already have a copy of the booklet will receive an amending notice in the June SI mailout. Those pensioners being sent a booklet at the time of a new grant will also need a copy of the amending notice with their booklet. This notice should be mailed along with the booklet. The notice has been provided in pre-printed bulk stock, stored in the State Office, and will also be available in a desk top printable version via the DVA Facts System, through the Online Forms, number D560. Enough bulk stock has been pre-printed to match the number of remaining booklets (approximately 20,000). Numbers of bulk stock distributed to each State was calculated on a pro rata basis, based on an assessment of expected claim volumes. The internet version of You and Your Pension has been revised to reflect the changes resulting from DoE. Existing advices paragraphs that refer to You and Your Pension have been amended to warn pensioners that the obligations in the booklet are no longer current. |
Changes to Advices |
Advices have been amended to reflect the new DoE obligations. From and including the June SI, there will be an obligations paragraph warning pensioners that the notification period is changing to 14 days on 13 July 1999. There will be additional paragraphs from 13 July to explain that a change in circumstances may result in an 'adjusted' payday before the ongoing pension rate is reached, due to daily calculations. |
Changes to Standard letters |
Standard letters have been amended to reflect the new DoE obligations and legislative changes. There are approximately 100 letters with amendments, affecting most categories of the standard letters. Most of the changes relate to the reduction of the 21 day notification period to 14 days (28 days if living overseas or receiving a remote area allowance). |
Date of Event Determination Guidelines – Eligibility
Event |
Determining Event Date |
If in receipt of Invalidity Service Pension, and commence work |
Date work commenced |
Other pension grant |
Effective date of grant not date of first payday |
Imprisonment for more then 14 days |
Either:
|
Health treatment |
|
Date of Event Determination Guidelines – Personal
Event |
Determining Event Date |
Marriage |
Date of marriage |
Enter or leave marriage like relationship |
The date of event, as notified |
Divorce |
Date of divorce |
Separation |
The date of event, as notified |
Ill health separation |
Date partner entered separate residence, e.g nursing home/hostel/hospital/hospice |
Death |
Date of death |
Child not dependent |
Date child:
for saved children, their income exceeds $6565.00 per year if living at home or $7025.20 if living away from home. |
Child/student receives other payment |
Date other payment becomes payable |
Date of Event Determination Guidelines – Residential
Event |
Determining Event Date |
Change of address |
Date address changed |
Home contents change |
Date of purchase or disposal of significant assets (only where pensioner is assets tested) |
Home sale |
Date of settlement |
Home being sub let to boarders or lodgers |
Date commence to have boarders/lodgers |
Home title transferred to another person |
Date of transfer |
Left home for more then 12 months |
Date left home plus 12 months |
Moved into a nursing home, retirement village, granny flat |
Date entered the nursing home, retirement village, granny flat |
Retirement village service fees change |
Date new fees apply |
Start renting |
Commencement date of lease/rental agreement |
Cease renting |
Date left premises or ceased to rent |
Rent amount changes |
Date new rental amount applies |
Sublet from a government tenant |
Date commenced to sublet or date moved in |
Receiving rent assistance and enters respite care |
Date entered respite care |
Leave Australia temporarily or permanently |
Date left for overseas |
Receiving Remote Area Allowance and away from home for more then 8 weeks |
Date left remote area plus 8 weeks |
Date of Event Determination Guidelines – Financial
Event |
Determining Event Date |
Commence work |
Date work commenced |
Cease work |
Date work ceased |
Salary change |
Date new salary commenced |
Commence receiving superannuation income |
Date superannuation becomes payable |
Superannuation income change |
Date superannuation rate changed or date client became aware of the change |
Commence receiving overseas income – eg British Retirement Pension |
Date overseas income becomes payable |
Overseas income change |
Date income changed or date client became aware of the change |
Receipt of lump sum compensation payment |
Date lump sum compensation payment received |
Commence receiving periodic compensation payments |
Date periodic compensation becomes payable |
Periodic compensation payments change |
Date compensation payments changed or date client became aware of the change |
Receipt of inheritance – income or asset |
Date inheritance received |
New investment –eg bank account, managed investment, shares etc |
Date new investment purchased |
Investment sold |
Date investment sold |
Bank account asset value change |
Date asset value changed |
Managed investment asset value change |
Date :
|
Cash asset value change |
Date cash value changed |
Bullion asset value change |
Date bullion value changed |
Date of Event Determination Guidelines – Financial continued
Event |
Determining event date |
New loan |
Date money loaned |
Existing loan's asset value change |
Date loan value changed |
Number of shares gained or lost |
Date of change, or date the pensioner became aware of the change |
Real Estate sale/purchase |
Date of settlement |
|
Real Estate investment income
|
• Date new rental amount changed |
Private company; partnership; or family trust formed |
Date on trust deed |
Private company; partnership; or family trust sold/dissolved |
Date of dissolution |
Trust income change |
Date value changes or date pensioner becomes aware of change |
Gifts more then $10,000 per year |
Date income/assets gifted |
Car, boat, caravan, trailer asset value change |
Date value changed (purchased, sold, depreciated) |
|
Life insurance policy
|
|
Attachment B – transitional period examples
For events occurring throughout the transitional period the following rules apply:
If the date of event is: |
the notification period is: |
Determining effective date |
Payment system |
on/before 12 July 1999 |
21 days |
notify on/before 12 July – old rules determine date of effect (ie date of effect always a payday) |
payday-based – full payment/instalment varied next payday (15 July 1999 last payment based payday) |
|
notify on/after 13 July (or fail to notify) – new DoE rules determine date of effect |
if DoE before 13 July, payday-based instalment adjustment for payments up to and including pay day 15 July, and daily entitlement for first pension period beginning 13 July |
||
on/after 13 July 1999 |
14 days ★ |
new DoE rules determine date of effect |
new payment system - daily entitlements |
★New notification period will only apply if person receives a proper section 54 notice notifying him or her of the changes of obligation. This will occur with the June SI mailout.
Examples of these rules are contained in the table overleaf. In summary:
- Date of event determines which notification period applies;
- Date of notification determines which DoE rules apply in determining date of effect;
- Date of effect determines which method of payment applies.
Date of event: |
Notification date: |
Notification period complied with? |
Effective date will be: |
Payment is made up of: |
|
5/7 Increase |
9/7 |
✓(within 21 days) |
15/7 |
Full instalment 15/7. |
5/7 Reduction |
9/7 |
✓(within 21 days) |
15/7 |
Instalment at reduced rate 15/7. ★★ |
|
5/7 Increase |
30/7 |
N/A |
30/7 (day of notification) |
Daily entitlement from 30/7. |
5/7 Reduction |
25/7 |
✓( within 21 days) |
27/7 (day after end of 21 day notification period) |
Reduction in daily entitlement from 27/7. |
30/7 |
✗ (outside 21 days) |
5/7 |
Automatic recovery of overpayment from instalment of paydays 15/7 and 29/7. Daily entitlement paid at reduced rate from 27/7 (ie, beginning of pension period). |
|
|
14/7 Increase |
16/7 |
N/A |
16/7 |
Increase in daily entitlement from 16/7. |
14/7 Reduction |
20/7 |
✓ (within 14 days) |
29/7 (day following end of 14 day notification period) |
Reduction in daily entitlement from 29/7. |
15/8 |
✗ (outside 14 days) |
14/7 |
Automatic recovery of overpayment from instalment of paydays 29/7 and 12/8. Daily entitlement paid at reduced rate from 10/8. |
Note: Under the post 13 July rules, notification period is irrelevant for increases – they always take effect from the day of notification.
★★If this reduction was not processed until 1/8, for example, pre-DoE rules determine the date of effect, and the pensioner would be entitled to a full instalment on next available payday of 5/8. On the 5/8 the method of payment is daily entitlement, so in order to replicate the effect of a full instalment of pension, the date of effect would have to be the first day of the pension period relating to the payday 5/8, which is 20/7.
Attachment C – overpayment recovery standard letters
Letter for SP and ISS (1st recov - No pre OP adv.dot)
Dear
I am writing to advise you that the income support pension paid to you has been overpaid.
Income support pensions are income/assets tested payments. Recipients are required to notify this Department within a prescribed period of any change in income or assets and of any changes to personal or domestic circumstances. The prescribed period is currently 14 days (28 days if you live overseas or receive remote area allowance).
(optional)
In addition, recipients of rent assistance are required to notify of any changes to the amount of rent paid or if they commence paying rent to a government authority.
Overpayment Background
On.......
As you [did not advise this Department of .... within the prescribed period] or [provided incorrect information in relation to .....] your income support pension has been cancelled/reduced from .....
This means that your income support pension have been overpaid.
The overpayment commenced on and continued until {being the day before pension was correctly assessed/cancelled). The overpayment amounts to $ .
Please refund the amount of to the Receiver/Collector of Public Moneys at the above address within 14 days of being given this advice (28 days if you live overseas or receive remote area allowance). If payment is made by mail, please cross your cheque or money order “Not Negotiable”. If you pay in person at this office, payment may be made in cash.
(Optional)
Please return the enclosed card with your payment.
If no reply or refund is received within 14 days (28 days if you live overseas or receive remote area allowance), the Department will pursue recovery action without further consultation.
Administrative Charge
If, for any reason, your overpayment is not fully refunded within three months of the date of this letter, the amount outstanding will be increased by an administrative charge. This is a once-only charge which comprises an amount of $ plus of the balance outstanding at that time. The maximum charge is $ . In your case, the amount of the charge would be, at most $ .
Application for Review
If you disagree with the income or assets details forming the basis of the assessment or the period during which the overpayment occurred, you may apply for a review of the variation to your income support pension from .
Any application for review should:
- be in writing; and
- be lodged within three months of the date of this letter; and
- contain a full statement setting out why you disagree with the variation.
If you apply for a review, the overpayment must still be repaid. If your application is successful, any monies refunded will be returned to you.
There is no right of review in relation to the decision to recover an overpayment.
Taxation information
This refund of overpaid income support pension will effectively reduce the amount of taxable pension received by you during the financial year(s) concerned. If you were liable to pay income tax for the financial year(s) in which the overpayment occurred, you may apply for an amended statement of benefit for that/those year(s), after the repayment is made.
If this applies to you, you should attach a request for an amended statement of pension, to your repayment. The Department will provide you with an amended statement, which you may then send to the Australian Taxation Office, together with a request for an amended assessment in respect of tax paid on the income refunded.
(optional) The period of the overpayment covers a number of financial years. The amount overpaid in each financial year is as follows.
Obligations
I would like to remind you of your obligations under section 54 of the Veterans' Entitlements Act 1986. You must notify this Department within 14 days (28 days if you live overseas or receive remote area allowance) if any of the following occur:
Variations in your income/assets; or
Changes to your personal or domestic circumstances; or
You change your address;
as the rate of income support pension you are entitled to receive may be affected.
If there is any reason why you will not be able to repay your overpayment within 14 days (28 days if you live overseas or receive remote area allowance) or if you wish to discuss the matter further, please contact me on the telephone number at the top of this letter as soon as possible.
Yours sincerely
Letter for AP (1st recov - No pre OP adv (age).dot)
Dear
I am writing to advise you that the income support pension paid to you has been overpaid.
Income support pensions are income/assets tested payments. Recipients are required to notify this Department within a prescribed period of any change in income or assets and of any changes to personal or domestic circumstances. The prescribed period is 14 days (28 days if you live overseas).
(optional) In addition, recipients of rent assistance are required to notify of any changes to the amount of rent paid or if they commence paying rent to a government authority.
Overpayment Background
On.......
As you [did not advise this Department of .... within the prescribed period] or [provided incorrect information in relation to .....] your income support pension has been cancelled/reduced from .....
This means that your income support pension has been overpaid.
The overpayment commenced on and continued until {being the day before pension was correctly assessed/cancelled). The overpayment amounts to $ .
Please refund the amount of to the Receiver/Collector of Public Moneys at the above address within 14 days of this advice (28 days if you live overseas). If payment is made by mail, please cross your cheque or money order “Not Negotiable”. If you pay in person at this office, payment may be made in cash.
(Optional) Please return the enclosed card with your payment.
(Optional- where the debtor is in receipt of income support or disability payments)
If you cannot repay the full amount by the due date please contact me on the telephone number at the top of this letter as soon as possible. If no reply or refund is received within 14 days (28 days if you live overseas), deductions will be made from your fortnightly payments.
(Optional- where the debtor is not in receipt of any payments)
Penalty Interest
If you do not repay your debt by the due date and do not contact the Department you may be charged interest at the rate of 20% per annum on the balance of the debt, and alternative recovery action may be taken without further consultation.
Right of Review
The decision to cancel/reduce your income support pension from was made by a delegate of the Secretary under the Social Security Act 1991.
If you do not agree that you have been overpaid, or if you do not agree with the amount of the debt, and wish to discuss the matter further with the delegate phone on the telephone number at the top of this letter.
If you still disagree, there are further avenues available that you may pursue. These include:
Asking to see information on your file under the Freedom of Information Act 1982;
Having an Authorised Review Officer (ARO) take another look at your case. The ARO can change the decision if it was not correct. The ARO can tell you how you can appeal to the Social Security Appeals Tribunal (SSAT) if you do not agree with their decision. The SSAT can change the Department's decision if it considers it to be incorrect.
If you apply for a review, the overpayment must still be repaid. If your application is successful, any money refunded will be returned to you.
Taxation information
This refund of overpaid income support pension will effectively reduce the amount of taxable pension received by you during the financial year(s) concerned. If you were liable to pay income tax for the financial year(s) in which the overpayment occurred, you may apply for an amended statement of benefit for that/those year(s), after the repayment is made.
You should attach a request for an amended statement of income support pension, to your repayment, if this applies to you. The Department will provide you with an amended statement which you may then send to the Australian Taxation Office, together with a request for an amended assessment in respect of tax paid on the income refunded.
(optional) The period of the overpayment covers a number of financial years. The amount overpaid in each financial year is as follows.
Obligations
I would like to remind you of your obligations under section 68 of the Social Security Act 1991. You must notify this Department within 14 days (28 days if you live overseas) if any of the following occur:
Variations in your income/assets; or
Changes to your personal or domestic circumstances; or
You change your address;
as the rate of income support pension you are entitled to receive may be affected.
If there is any reason why you will not be able to repay your overpayment within 14 days (28 days if you live overseas) or if you wish to discuss the matter further, please contact me on the telephone number at the top of this letter as soon as possible.
Yours sincerely
Contact Officers
National Office |
Marion Springer (ph) 02 6289 6703 |
State Offices |
Fiona Thompson (Qld) (ph) 07 3223 8766 Joanne Doman (Qld) (ph) 07 3223 8886 Freda Widawski (NSW) (ph) 02 9213 7487 Tim Adams (VIC) (ph) 03 9284 6306 Robyn Del Casale (SA) (ph) 08 8290 0321 |