Borg-Olivier and Secretary, Department of Families, Community Services and Indigenous Affairs
[2007] AATA 1211
•5 April 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1211
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2006/1452;
GENERAL ADMINISTRATIVE DIVISION ) N2006/1462 Re MARY BORG-OLIVIER Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member, Mrs Josephine Kelly Date5 April 2007
PlaceSydney
Decision The decision under review, being the decision of the Social Security Appeals Tribunal dated 19 September 2006, is set aside and substituted therefore is the decision that Mrs Borg-Olivier does not qualify for the pension bonus..
.......................[sgd].......................
Senior Member, Mrs Josephine Kelly
CATCHWORDS
SOCIAL SECURITY – Pension Bonus Scheme – whether Applicant met the requirements for registration as a member of the Pension Bonus Scheme – whether the Secretary could extend the period in which the Applicant could apply for registration - whether Applicant is qualified for the Pension Bonus Scheme – held Applicant did not meet requirements to be registered as a member – Applicant did not qualify for the Pension Bonus – decision under review set aside
LEGISLATION
S43, 23(5B) and Part 2.2A of Chapter 2 Social Security Act 1991
REASONS FOR DECISION
Senior Member, Mrs Josephine Kelly Introduction
1. Ms Mary Borg-Olivier applied for registration, and was accepted as a member of the Pension Bonus Scheme on 13 November 2003. In simple terms, that scheme provides a lump sum payment to people who qualify for an age pension but defer claiming that pension and continue to work. The pension bonus is paid when they stop working and claim the age pension and the pension bonus.
2. Both Ms Borg-Olivier and the Secretary, Department of Families, Community Services and Indigenous Affairs (the Secretary) have applied for the review of the decision made by the Social Security Appeals Tribunal (“the SSAT”) on 19 September 2006. That decision set aside a decision to reject Ms Borg-Olivier’s claim for pension bonus and substituted a new decision, that she is entitled to be paid a pension bonus for the financial years 2000-2001 and 2001-2002.
3. For the reasons that follow, the reviewable decision of the SSAT is set aside and substituted therefor is the decision that Mrs Borg-Olivier does not qualify for the pension bonus.
4. The issues are best summarised by referring to the contentions put on behalf of the Secretary:
(a) Ms Borg-Olivier is not qualified for a pension bonus because she did not meet the requirements for registration as a member of the pension bonus scheme;
(b) Even if her registration were lawful, she did not qualify for a pension bonus because she did not accrue at least one full year bonus period while registered as a member of the scheme.
Background
5. The following is not in dispute. Ms Borg-Olivier was born on 13 May 1934 and came to Australia in 1968. She has worked as a pharmacist in hospitals for many years. Relevantly she was working at Hornsby Hospital until about January 1998 when she stopped work for over a year. She took long service leave during that period. She began working at Royal North Shore Hospital on 23 August 1999 and ceased working there on 31 December 2004. The records of the hours she worked provided by her employer were in evidence.
Ms Borg-Olivier’s evidence
6. Ms Borg-Olivier said that she sometimes worked in the pharmacy longer hours finishing filling prescriptions, than her employer’s records show, but that she was not paid for that work. In her application to this Tribunal and during her oral evidence, Ms Borg-Olivier stated that she did housework for her son for 4 hours a week from the middle of 2001 until about the end of 2005. In return she attended 3 yoga classes per week. Her son is a co-director of a yoga centre. She asked that I take that into account for the purpose of determining her hours of work per year.
7. Ms Borg-Olivier emphasised that since her arrival in Australia she has never claimed welfare benefits, including during the period in 1998/1999 when she was not working and from January to October 2005 after she had finished work at Royal North Shore Hospital. During the latter period she was hopeful of finding other employment but has found her age an impossible hurdle, although she retains her professional registration and insurance.
8. She expressed frustration and restrained anger about the refusal of her claim for pension bonus and, I infer, what she considers to have been a less than fair decision by the SSAT. I understand that her frustration stem from the fact that Centrelink accepted her registration as a member, and that she has never been provided with details of the criteria which have been referred to in the various decisions that have been made, and in the course of these proceedings. She said that she found out about the pension bonus when she saw a reference to it in a seniors magazine, which I infer occurred in 2003.
9. She provided to the Tribunal material from the Ombudsman’s office and a comment from Clearview Retirement Solutions, a financial advice service, criticising the lack availability of information about the registration and other requirements to qualify for the pension bonus and lack of understanding of the scheme by some Centrelink officers.
Consideration
10. The statutory regime that applies to pension bonus is complex. Mr Richardson who represented the Secretary assisted me by his detailed Statement of Facts and Contentions, and oral submissions.
11. I begin with the first argument relied on by the Secretary which is that Ms Borg-Olivier should never have been registered as a member of the pension bonus scheme, or in other words that her registration was invalid.
12. The Secretary raised no issue in relation to Ms Borg-Olivier’s satisfying Australian residency criteria in the legislation and I proceed on that basis.
13. The provisions relating to pension bonus appear in Part 2.2A of Chapter 2 of the Social Security Act 1991, (the Act) beginning at s 92A. Section 92C sets out the criteria for qualification for a pension bonus, including that a person is registered as a member of the pension bonus scheme (s 92C(c)).
14. Division 3 is headed “Registration as a member of the pension bonus scheme”. Section 92H provides for the timing of applications for registration for pension bonus, depending on whether a person’s date of qualification for the age pension occurs before, or on or after 1 July 1998 (the commencement date of the pension bonus scheme).
15. Section 43 sets out the criteria for qualification for age pension. Relevantly for Ms Borg-Olivier the criterion is that she has reached pension age. As she was born before 1 July 1935, she reached pension age when she turned 60, that is, 13 May 1994 (s 23(5B)).
16. Section 92H(2) is a critical provision. It says:
If a person's date of qualification for the age pension occurs before 1 July 1998:
(a) the person must lodge an application during the period that begins on the commencement of this section and ends 13 weeks after 1 July 1998; and
(b) if registration occurs as a result of an application lodged within that period--the registration takes effect on 1 July 1998.
17. Clearly, Ms Borg-Olivier did not lodge her application within the specified period.
18. The Secretary went on to argue that the power to extend the time for lodgement pursuant to s 92H(3) cannot be exercised because of the operation in this case of s 92H(4). However, before dealing with that question, it is useful to refer to some other provisions.
19. Section 92J provides that the Secretary must register an applicant if application is made in accordance with the subdivision. Section 92K provides that a person’s membership of the pension bonus scheme begins on the date on which the registration of that membership takes effect and continues until the membership is cancelled under the Act.
20. Returning to the provisions relating to extending the period for lodging an application for registration, s 92H(3) provides:
The Secretary may extend the period within which a person must lodge an application. If registration occurs as a result of an application lodged during an extended period, the registration takes effect:
(a) on the date on which the application is lodged; or
(b) if the Secretary decides that it should take effect on another date--on that other date.
21. Section 92H(4) provides:
The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre‑application period:
(a) the person would have been a non‑accruing member for all of the pre‑application period; or
(b) both:
(i)the person would have been an accruing member for some or all of the pre‑application period; and
(ii) the person would have passed the work test for each test period that is applicable to the person.
(Emphases added).
22. To understand the effect of s 92H(4) it is necessary to consider the meaning of the terms “pre-application period”, “non-accruing member”, “accruing member”, “work test” and “test period”,.
23. Section 92H(5) defines “pre-application period” relevantly:
For the purposes of this section, the pre‑application period is the period beginning on:
(a) …
(b)in the case of a person whose date of qualification for the age pension occurs before 1 July 1998—1 July 1998;
and ending on the date on which the person lodged the application.
24. Therefore, the pre-application period for Ms Borg-Olivier begins on 1 July 1998 and ends on about 12 November 2003. Her application for registration was not in evidence but given that she was accepted on 13 November 2003, Mr Richardson who appeared for the Secretary accepted that it was reasonable to take the 12 November 2003 date.
25. Section 92H(6) defines “test period”:
For the purposes of this section, to work out what is a test period:
(a) identify the overall accruing period , which is that part of the pre‑application period for which, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre‑application period, the person would have been an accruing member of the scheme;
(b) if the overall accruing period is 365 days or less--the overall accruing period is the only test period;
(c) if the overall accruing period is longer than 365 days--each of the following periods is a test period:
(i) the full‑year period beginning at the start of the overall accruing period;
(ii) if 2 or more succeeding full‑year periods are included in the overall accruing period--each of those full‑year periods;
(iii) the remainder (if any) of the overall accruing period.
26. The meaning of “accruing member of the pension bonus scheme” has the meaning given in s 92N (s 92B). Section 92N provides:
For the purposes of this Part, a person's membership of the pension bonus scheme at a particular time is accruing unless the person's membership is non‑accruing or post‑75 at that time.
27. The Secretary accepted that Ms Borg-Olivier would have been relevantly an accruing member of the scheme during the whole of the pre-application period, from 1 July 1998 to 12 November 2003. I was taken to the various provisions that define “non-accruing” and agree that they do not apply (s 92P and 92Q). Further Ms Borg-Olivier was not a post-75 member (s 92S). Therefore the overall accruing period within the meaning of s 92H(6)(a) is 1 July 1998 to 12 November 2003. That is a period of more than 365 days and therefore s 92H(6)(c) applies. Each of the following is therefore a test period:
The period 1 July 1998 to 30 June 1999 is the “full-year period beginning at the start of the overall accruing period” (s 92(H)(6)(c)(i).
Each of the years 1 July 1999 to 30 June 2000, 1 July 2000 to 30 June 2001, 1 July 2001 and to 30 June 2002, 1 July 2002 to 30 June 2003 (s 92H(6)(c)(ii)).
The period 1 July 2003 to 12 November 2003 (s 92H(6)(c)(iii)).
28. The difficulty faced by Ms Borg-Olivier is that s 92H(4)(b)(ii) requires that she passed the work test for each of those test periods. Relevantly s 92U provides:
For the purposes of this Part, a person passes the work test for a full‑year period of the person's accruing membership of the pension bonus scheme if:
(a) in any case–the person satisfies the Secretary that the total number of hours gainfully worked by the person during that period was at least 960 and that at least 640 of that total number of hours were worked in Australia; or
…
and either:
(d) the person satisfies the Secretary that the applicable record‑keeping requirements (see section 93C) have been complied with in relation to that period; or
(e) the Secretary decides to waive compliance with the applicable record‑keeping requirements in relation to that period.
29. Ms Borg-Olivier was not working during the first test period. She left Hornsby hospital in January 1998 and began working at Royal North Shore Hospital on 23 August 1999. During the second test period, 1 July 1999 to 30 June 2000 she carried out 624 hours and therefore did not pass the work test during that year either. Therefore, the Secretary had no power to extend the period within which Ms Borg-Olivier could lodge her application for registration as a member of the pension bonus scheme.
30. In the event that that finding is incorrect, I address an alternative submission made on behalf of the Secretary which was that if it were accepted that Ms Borg-Oliver’s registration was lawful with effect from 1 July 1998, she did not qualify for a pension bonus because she did not accrue at least one full-year bonus period while registered, which is required by s 92C(d). The provisions relating to accrual of bonus periods are set out in Division 4. Section 92T(1) provides:
The first bonus period that accrues to a person is the full‑year period of the person's accruing membership of the pension bonus scheme:
(a) that began on whichever of the following dates is applicable:
(i) if the person was an accruing member of the pension bonus scheme on the date the person's registration as a member took effect–the date the registration took effect;
(ii) in any other case–the date on which the person first became an accruing member of the pension bonus scheme; and
(b) for which the person passes the work test.
31. In my opinion, Ms Borg-Olivier’s circumstances fall within subsection (a)(ii) and therefore, the first bonus period began on 1 July 1998. However, as set out above, she did not pass the work test for that year. The contention made on behalf of the Secretary is that as no first bonus period accrued to Ms Borg-Oliver, there is no provision for any subsequent full-year or part-year period of accruing membership The relevant provisions are:
s 92T(2) Each succeeding full‑year period of the person's accruing membership of the pension bonus scheme:
(a) that is specified in the person's claim for pension bonus; and
(b) for which the person passes the work test;
is a bonus period that accrues to the person.
92T.(3) A part‑year period of the person's accruing membership of the pension bonus scheme is a bonus period that accrues to the person if:
(a) the person passes the work test for that period; and
(b) the person specifies the period in the person's claim for pension bonus; and
(c) the period begins immediately after the end of a full‑year bonus period that accrues to the person; and
(d) the period is the last bonus period that accrues to the person.
Note: Accruing membership is defined by section 92N.
92T.(4) A person cannot accrue more than one bonus period unless:
(a) the bonus periods are consecutive; or
(b) the bonus periods are separated only by a period of non‑accruing membership.
32. I agree that the effect of these provisions is as argued on behalf of the Secretary. Ms Borg-Olivier could not have accrued any bonus periods.
33. During the proceedings I foreshadowed that I would recommend that Mrs Borg-Olivier be considered for compensation for defective decision-making. However, having considered the evidence, it seems to me that while it was unfortunate that Mrs Borg-Olivier’s registration was accepted, she did not qualify for the pension bonus for other reasons as well. The criticism of the scheme made by the Ombudsman is borne out by what has happened to Ms Borg-Olivier. However, it seems to me that the complexities of the scheme and the apparent lack of information available to potential beneficiaries is a matter for government and not for me.
Decision
34. For those reasons, the decision under review is set aside and substituted therefor is the decision that Mrs Borg-Olivier does not qualify for the pension bonus.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine KellySigned: Ms P Nimmagadda
AssociateDate of Hearing 26 March 2007
Date of Decision 5 April 2007
Representative for Applicant UnrepresentedRepresentative for the Respondent Centrelink Legal Services Branch
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