5.6.7 Calculating the Bonus

Last amended: 22 April 2014

Rate of pension payable

In order to calculate the amount of pension bonus to be paid, the department must first determine the rate of pension payable when income support pension [2] is granted. If the rate of pension to be paid is zero, then the bonus payment will also be zero.

Standard formula for calculating amount of pension bonus

The basic formula used to calculate a person's amount of pension bonus payable (calculated to 3 decimal places) is as follows:

(annual pension rate)  x  (pension multiple) x (no. of years in the overall qualifying period)

Where there has been a change of marital status or a change in the pension type being deferred during the qualifying period, different formulae apply.     

Pension multiple

A person's pension multiple is calculated using the following formula:

[(0.094) ? (no. of years in the overall qualifying period)].

Annual pension rate

The annual pension rate is a term specifically used for the pension bonus scheme [2]. It is ascertained at the date of grant of the [glossary:designated:] pension. The annual pension rate is the person's pension including only the pension supplement basic amount [2] and excluding rent assistance [2], and [glossary:remote area allowance:].

Overall qualifying period

The overall qualifying period begins at the start of the first qualifying bonus period and ends at the end of the last qualifying bonus period. If a person has up to five bonus periods, all of these bonus periods are qualifying bonus periods. Where a person has more than five qualifying bonus periods, each of the five most recent full-year bonus periods is a qualifying bonus period. Any period of [glossary:non-accruing membership:] is taken not to form a part of the person's overall qualifying period.     

Where the claimant is a war widow/widower [2] and has been deferring age pension [2], the first qualifying bonus period may commence before they became eligible for a DVA pension.    

Example of overall qualifying period calculation

Mr Harvey accrues 2 full-year bonus periods. He is then unable to work for 4 months due to illness, after which he continues to work for another 200 days before claiming pension bonus.

The 4 months of sick leave are a non-accruing period and do not count toward Mr Harvey's overall qualifying period. However, because Mr Harvey returned to work and continued to meet the work test after the non-accruing period, his further 200 days of work will count toward his overall qualifying period.

Therefore, his overall qualifying period is 2 years and 200 days or 2.548 years ([2 x 365 + 200]/365).

Example of standard pension bonus calculation

Mr Ford has deferred his pension for 4 full-year bonus periods and is now claiming service pension [2] and pension bonus. He is single and has been single throughout the period he has been deferring the pension. At grant his calculated annual pension rate is $9,390.

Pension multiple is 0.094 x 4 = 0.376

Pension bonus is 9390 x 0.376 x 4 = $14,122.56 (rounded to the nearest 10 cents)

Example of standard pension bonus calculation – last period part-year

Mrs Holden has deferred her pension for 4 full-year bonus periods and a part-year period of 152 days and is now claiming a service pension and pension bonus. She is partnered and has been partnered throughout the period she has been deferring the pension. At grant her calculated annual pension rate is $8,360.

Overall qualifying period is 4.416 years ([4x 365 + 152]/365)

Pension multiple is 0.094 x 4.416 = 0.415

Pension bonus is 8,360 x 0.415 x 4.416 - $15,320.90

Factors that might affect the calculation

The standard formula will not apply in some circumstances. Reference should be made to Section 9 for factors which might require a variation of that formula.