Annette Melzer and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 68
•7 February 2012
[2012] AATA 68
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/3766
Re
Annette Melzer
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Ms N Bell, Senior Member
Date 7 February 2012 Place Sydney The Tribunal sets aside the decision under review and instead decides that Ms Melzer’s 2010 claim for pension bonus should be accepted out of time and the pension bonus periods accrued by her until her first failure to meet the work test should be taken into account in the calculation of her pension bonus.
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Ms N Bell, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pension Bonus Scheme- work test-non-accruing membership – special circumstances – decision set aside and substitution made
LEGISLATION
Social Security Act 1991 (Cth), ss 92A, 92R, 92T, 92Q
Social Security (Administration) Act 1999 (Cth), s 21
CASES
Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634
SECONDARY MATERIALS
Guide to Social Security Law
REASONS FOR DECISION
Ms N Bell, Senior Member
7 February 2012
Under the pension bonus scheme established by Part 2.2A of the Social Security Act1991, a person who is qualified for age pension, but defers claiming, may later be able to obtain a deferred lump sum pension bonus. A person must register as a member of the pension bonus scheme and must meet a “work test”, that is, the person must work for at least 960 hours in any “bonus year”. A person may accrue up to five consecutive bonus years. Provision is made for a period of “non-accruing membership” to separate two periods of accruing membership, but only in specified circumstances. If in line with those specified circumstances, those separate periods may then be considered consecutive. To obtain a pension bonus, a person must claim both the age pension and the bonus in the 13 weeks immediately after he or she fails to meet the work test.
Ms Melzer registered for the scheme from 1 July 1998. It is not in dispute that she worked at least 960 hours per year in 1998/99, 1999/00, 2000/01 and 2001/2, in satisfaction of the work test. However, it also not in dispute that Ms Melzer did not work 960 hours per year again until the 2008/09 financial year.
Ms Melzer’s post pension age working life was interrupted by a number of difficult and tragic events. This raises the question of whether her circumstances were special within the meaning of section 21(2) of the Social Security (Administration) Act 1999 so as to justify the exercise of the discretion to allow her a longer period than 13 weeks in which to make her claim.
ISSUES
To decide whether Ms Melzer is qualified to receive a pension bonus, I must consider, given the interruptions to her working life, the following questions:
(a)Was Ms Melzer a non-accruing member of the pension bonus scheme within the meaning of section 92Q of the Social Security Act 1991?
(b)If not, did Ms Melzer lodge her claim for pension bonus in the 13 weeks immediately after she failed the work test?
(c)If not, were Ms Melzer’s circumstances so special as to justify allowing her a longer period to make her claim?
WAS MS MELZER A NON-ACCRUING MEMBER OF THE SCHEME?
Section 92Q of the Act provides:
(1) The Secretary may, by legislative instrument, declare that, for the purposes of this Part, a specified kind of member of the pension bonus scheme is a non‑accruing member throughout a period ascertained in accordance with the declaration.
(1A) Despite subsection 12(2) of the Legislative Instruments Act 2003, a period ascertained in accordance with a declaration made under subsection (1) may begin before the date on which the declaration is registered under that Act.
(2) The kinds of members that may be specified under subsection (1) include (but are not limited to):
(a) a member who is a participant in the Community Development Employment Program; and
(b) a member who is in gaol (see subsection 23(5)); and
(c) a member who is undergoing psychiatric confinement (see subsections 23(8) and (9)) because the member has been charged with committing an offence; and
(d) a member who is not a participant in the workforce, but whose partner:
(i) is a participant in the workforce; and
(ii) is not a registered member of the pension bonus scheme or of the corresponding scheme under Part IIIAB of the Veterans’ Entitlements Act; and
(iii) intends to become a registered member of the pension bonus scheme or of the corresponding scheme under Part IIIAB of the Veterans’ Entitlements Act; and
(e) a member who is on sick leave for a continuous period of at least 4 weeks and not more than 26 weeks.
Ms Melzer does not conform to any of the kinds of members specified in section 92Q. It follows that she was not a non-accruing member and her break from meeting of the work test from 2002/03 interrupts her accrual of bonus years. Her later meeting of the work test in 2008/09 cannot be taken into account as a continuation of her earlier period of satisfaction of the test. Her time for claiming pension bonus commenced to run from the time she first failed to meet the test.
DID MS MELZER LODGE HER CLAIM WITHIN 13 WEEKS?
Ms Melzer ceased to meet the work test in 2002/03 when her hours of work dropped below 960 per annum. She claimed age pension and pension bonus on 25 November 2010, more than seven years after she ceased to meet the work test.
WERE MS MELZER’S CIRCUMSTANCES SPECIAL?
Ms Melzer started work at Lawlers Max Value Pharmacy in November 1998. She continued to work at the pharmacy for more than 960 hours per annum until her daughter suffered severe post natal depression in 2003 and she reduced her hours of work so she could help her daughter who could not afford other care. During this period Ms Melzer’s daughter’s stepdaughter tragically died in her sleep. Naturally, this exacerbated the situation. The pharmacy employed someone else to cover Ms Melzer’s hours and she was not able to regain her normal hours of above 960 per annum until 2009.
In 2010 Ms Melzer’s other daughter was diagnosed with cancer. Ms Melzer reduced her hours again so she could help her daughter with treatment and spend as much time with her as possible. Her daughter passed away in June 2011. Ms Melzer decided to retire soon after.
Ms Melzer now suffers from reactive depression.
Throughout the period of Ms Melzer’s lowered earnings she supported herself with a $60,000 inheritance and by drawing on some of her superannuation. The balance of her superannuation fund is currently $60,000, down from $85,000.
Ms Melzer said she was aware that she might have qualified for carer pension during the periods of her daughters’ illnesses, but that too much was happening at those times for her to claim.
Ms Melzer recalled receiving letters from Centrelink that said she should “stay on track” with the pension bonus scheme but did not explain what that meant. I note that such letters were sent to Ms Melzer on 10 December 1999, 13 November 2000, 12 November 2001, 12 November 2002, 12 November 2003, and 12 November 2011. Each of the letters warned Ms Melzer that she must lodge her pension bonus scheme within 13 weeks of ceasing work or within 13 weeks from the date she no longer meets the work test. The letters also invited her to “confirm at the end of each working year that you are still ‘on track’ with the Scheme.”
I agree with Ms Melzer that the letters do not explain what it means to be “on track” with the scheme. I also agree that an invitation to contact Centrelink to check whether one is “on track” would not have been compelling at a time when she was involved in the care a daughter suffering severe post natal depression. I consider Ms Melzer’s failure to do so at the key time, the end of 2003, was understandable in the circumstances.
The discretion in section 21(2) of the Social Security (Administration) Act is unfettered. However, it is appropriate for me to have regard to the policy contained in the Guide to the Social Security Law in the exercise of the discretion (Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634). On the exercise of the discretion to accept late claims for the pension bonus scheme, the Guide provides:
The intention of the late claims provisions is to allow acceptance of late claims from members who have not been able to lodge a claim within the time limits due to special circumstances, and not for members who deliberately claim late in order to get a higher bonus. The member should be asked for their reasons for making a late claim for pension bonus and evidence should be provided, where applicable/appropriate.
The reasons for acceptance of a late claim are different to those that apply to late PBS registrations.
Examples may include cases where a member:
· has poor numeracy or literacy skills,
· was ill,
· was located in a remote area,
· performed irregular work that made it difficult for the member to determine the lodgement period,
· was helping a close family member suffering from a serious illness,
· has experienced the death of a close family member,
· had experienced a major disruption to their living arrangements (such as their home being fully or partially destroyed or the member or member's partner moved into a nursing home),
· was unaware that post 20 September 2009 they could no longer be a non-accruing member whilst their younger partner was working and the working partner was affected by the closure of the scheme to new entrants (a time limit of approximately 12 months would apply to these cases).
The list above is not a full list of acceptable reasons to accept a late claim. Each case should be judged on its merits.
Before accepting a late claim, the delegate of the Secretary should consider how late the claim is, and whether this is reasonable when considering the event/s that caused the member to claim late. For example, if a person was ill for 4 months after ceasing work, it would not be reasonable for the claim to be 12 months late (unless there were other special circumstances that contributed to the delay).
Ms Melzer’s circumstances reflect at least two of the “reasons for acceptance” set out in the Guide: her daughters’ illnesses and the deaths of, first, her daughter’s stepdaughter and then her own daughter .I am mindful of the distinction made in the Guide between those who claim late so as to maximise the bonus they might receive and those whose circumstances are simply special and whose reasons for claiming late are linked to those special circumstances.
I was urged by the Secretary not to exercise the discretion in Ms Melzer’s case because she had, in order to survive on her lowered income, drawn on an inheritance and on her superannuation fund. I was referred to the advantage she had created in doing this because her rate of pension would be higher and, consequently, her pension bonus, calculated by reference to her rate of pension, would also be higher. This was presented to me as the reason I should not exercise the discretion.
Any person who delays claiming the pension and pension bonus and at the same time fails to meet the work test is likely to have need to draw on their own funds to live. The argument of the Secretary places this need as a bar to the exercise of discretion. This argument is not in line with the Guide which distinguishes between those who have engineered to maximise their pension and bonus by delaying their claim and those who have delayed because of their special circumstances.
I consider Ms Melzer falls within the second category. Her reason for failing to meet the work test in 2004 was her daughter’s health; this led to a period of non-accrual during which she continued to care for her daughter and was unable to retrieve her usual work hours. Her eventual return to usual hours, though of no effect because unbeknown to her she was no longer a member of the pension bonus scheme, was cut short by her other daughter’s terminal illness. Ms Melzer said she did not claim carer pension even though she knew of it because “there was too much happening”. I consider it likely that was also a cause of her inattention to her own interests under the scheme. I also consider her awareness of the steps she needed to take to safeguard her bonus was not assisted by the vague language of Centrelink’s letters to her.
There is no evidence to suggest that she delayed claiming age pension and the pension bonus with the intention of maximising her pension and bonus.
I am also mindful that Ms Melzer continued to work throughout the period, although not at her usual rate of hours, but for a substantial number of hours and never for fewer than 665 hours per annum. She continued to attempt to support herself, to minimise her drawings on her funds and avoided dependence on the social security system.
On the other hand, I am mindful of the length of Ms Melzer’s delay in claiming. Seven years is a very substantial delay. But, as the Guide says, I must also look to the reasons for the continuation of the delay. Ms Melzer appears not to have understood the scheme and its requirement for continuous accrual, except in specific circumstances, and the precise requirements of the work test. I accept that she was intent on continuing to work, and did so as far as her responsibilities to her daughters allowed her, and that it was always her intention to resume her usual hours and continue in the scheme when circumstances permitted. However, the first months of 2004 passed without her making a claim, and what she considered was a continuing accrual of bonus periods under the scheme was in fact a continuing delay. She continued under this misapprehension until she finally made her claim and it was rejected. At the base of the rejection of her claim was her failure to meet the work test in 2004 and her failure to claim within 13 weeks of that. As I have said, the work test failure is due completely, and the failure to claim is due in part, to her special circumstances. The delay was caused in part by her inattention to her interests under the scheme and that was due in part to her special circumstances.
Notwithstanding Ms Melzer’s long delay in claiming age pension and the bonus, I consider the discretion in section 21(2) should be exercised in her favour.
DECISION
The Tribunal sets aside the decision under review and instead decides that Ms Melzer’s 2010 claim for pension bonus should be accepted out of time and the pension bonus periods accrued by her until her first failure to meet the work test should be taken into account in the calculation of her pension bonus.
25.
26. I certify that the preceding 24 (twenty four) paragraphs are a true copy of the reasons for the decision herein of Senior Member N Bell.
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Associate Rawan Abdul-Nabi
Dated 7 February 2012
Date of hearing 13 December 2011 Applicant In person Solicitors for the Respondent James Larcombe
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