Hindmarsh and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 83

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 83

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No A2006/116

GENERAL ADMINISTRATIVE DIVISION		)
Re		JANETTE HINDMARSH

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date14 March 2007

PlaceCanberra

Decision The decision under review is affirmed.

..............................................

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY – Pension bonus – Rate – Assets test – Decision affirmed.

Social Security Act 1991 (Cth) ss 92, 93D, 93G, 93H, 93J, 1064, 1118

REASONS FOR DECISION

14 March 2007 Mr S. Webb, Member         

1.      Janette Hindmarsh is an age pensioner.  On her retirement in July 2005 she claimed and was paid age pension and an age pension bonus.  The rate of her age pension and the amount of her age pension bonus was subject to an assets test.  Mrs Hindmarsh disputes the amount of her age pension bonus.

2.      It is convenient to briefly set out the background facts.

(a)Mrs Hindmarsh was born on 9 May 1938.

(b)She was granted membership of the pension bonus scheme on 13 May 1999.[1]  She was in Commonwealth employment at that time.

[1] Documents filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth), T5 folio 14.

(c)She continued to work until 15 July 2005.[2]

(d)On 6 and 12 July 2005 Mrs Hindmarsh contacted Centrelink and was given information about claiming age pension.[3]  She was informed that if she lodged a claim for age pension before 20 July 2005 she would be paid from 6 July 2005 if she was qualified.

(e)Mrs Hindmarsh lodged a claim for age pension and age pension bonus on 18 July 2005.[4]

(f)At that time she was living in her home at Kambah in the Australian Capital Territory.

(g)On 21 July 2005 Mrs Hindmarsh’s claims were rejected because her income was above the allowable limit.[5]  A Centrelink officer advised her to lodge a fresh claim on 27 July 2005.[6]  Mrs Hindmarsh did so.[7]

(h)On 2 August 2005 Mrs Hindmarsh settled the purchase of a property in Gundagai, New South Wales, in which she intended to live.[8]  However, at the purchase date she had not yet sold her home in Kambah and used that property as collateral for a bridging loan.

(i)On 3 August 2005 Centrelink decided that Mrs Hindmarsh was not entitled to age pension from 2 August 2005 as the value of her assessable assets precluded payment.  Her assets were stated to be $559,234.  She was informed that she was entitled to age pension from 27 July 2005 and was paid an amount of $7,711.98, and that her pension was cancelled as of 2 August 2005.[9]  Also on 3 August 2005 Centrelink wrote and informed Mrs Hindmarsh about her income and asset details held by Centrelink.[10]  Examination of these details reveals that her assets were $274,234.[11]

(j)On 12 August 2005 Mrs Hindmarsh purchased an indexed part pension with a value of $110,000, leaving a superannuation balance of $125,498.[12]

(k)On 20 October 2005 a Centrelink officer recalculated Mrs Hindmarsh’s age pension entitlement and concluded that she was entitled to a part pension from 2 August 2005.[13]

(l)On 11 November 2005 and subsequently Mrs Hindmarsh disputed the calculation of her pension bonus amount.[14]  The matter was reviewed by an authorised review officer and decided that Mrs Hindmarsh was entitled to a pension bonus of $7,655.83 and affirmed the original determination.[15]  The Social Security Appeals Tribunal subsequently affirmed that decision.[16]

[2]  T31 folio 115.

[3]  T20.

[4]  T21 and T22.

[5] T26 folios 93 and 94.

[6] T27.

[7] T30.

[8] T35 folio 122.

[9] T37.

[10] T36.

[11] T34 folio 121.

[12] T39.

[13] T39 and T40.

[14] T45.

[15] T51-T52.

[16] T2.

3.      Thus it can be seen that the issue for determination is the amount of pension bonus to which Mrs Hindmarsh was entitled on 27 July 2005.

4.      The Social Security Act 1991 makes provision for the pension bonus scheme.[17]  The amount of pension bonus is to be calculated pursuant to subs 93D(1) by working out the person’s qualifying bonus periods[18] and the overall qualifying period,[19] working out the person’s pension multiple[20] and the person’s annual pension rate,[21]  and applying the formula set out at subs 93J(1):

Annual pension rate x pension multiple x Number of years in the person’s qualifying period

[17] See ss 92A to 93W.

[18] Section 93E.

[19] Section 93F.

[20] Section 93G.

[21] Section 93H.

A person’s annual pension rate is the rate of pension payable at grant calculated pursuant to the rate calculator at s 1064 minus pharmaceutical allowance and rent assistance.[22]  The rate of pension is subject to an income and assets test.[23]  Assets that are to be disregarded for the purposes of calculating the rate of pension are set out at s 1118 and the valuation process for an asset that is the subject of an encumbrance is at s 1121.

[22] Section 93H.

[23] See assets test at Module G of s 1064.

5.      Thus, the value of Mrs Hindmarsh’s interest in her principal home is to be disregarded for the purpose of calculating the rate of her annual pension at grant on 27 July 2005.  Her superannuation investment became an assessable asset once she reached pension age.[24]  The $15,000 deposit she paid on her new home in Gundagai is also an assessable asset at that time.  I note that Mrs Hindmarsh gave evidence that she had borrowed money from her daughter and son-in-law to assist her meet living costs in the period prior to her relocation to Gundagai.  However, there is not sufficient evidence before me to establish that the $15,000 deposit was in fact a loan that she was required to repay.  Mrs Hindmarsh owned 1250 shares in the Insurance Australia Group.  There is no evidence of the precise value of these shares on 27 July 2005.  The shares were assessed by Centrelink on 27 July 2005 to have a total value of $7,487.[25]  It appears that valuation was based on the traded value of shares on 20 July 2005.[26]  The Secretary contends that the traded value of the shares on 3 August 2005[27] should be applied because that is closer in time to 27 July 2005.  Mrs Hindmarsh gave evidence and accepted that the value of her household effects was approximately $1,000 and the value of her vehicle at the time was approximately $4,000.  The Secretary contended that the value of Mrs Hindmarsh’s assets on 27 July 2005 were $274,234.[28]  It appears to me the Secretary and Centrelink officer have not included the value of Mrs Hindmarsh’s vehicle in their calculations.  However, I am prepared to accept the Secretary’s assessment of the value of Mrs Hindmarsh’s assets as correct on the basis that Mrs Hindmarsh’s estimates of the value of her assets were approximate and the legislation in question is beneficial in nature.  Thus I will proceed on the basis that the value of Mrs Hindmarsh’s assets on 27 July 2005 was $274,234.

[24] Sub-paragraph 1118(1)(i)(v).

[25] T32 folio 118.

[26] $7,487 - T61 folio 224.

[27] $7,550 - T61 folio 223.

[28] T36 folio 123

6.      By applying Mrs Hindmarsh’s deemed annual rate of income ($12,167.70) from her financial assets, which I am satisfied is correctly calculated pursuant to s1076, the annual rate of her pension is $3,257.80.  I so find.

7.      Mrs Hindmarsh worked for more than five years as an eligible member of the pension bonus scheme and her overall qualifying period is 5 years.[29]  The pension multiple is 0.094 multiplied by 5 years,[30] that is, 0.47.

[29]  Subsection 93E and 93F.

[30]  Section 93G.

8.      Finally, the amount of pension bonus is calculated by applying the formula at subs 93J(1), that is, $3,257.80 x 0.47 x 5.  On that calculation it can be seen that Mrs Hindmarsh’s pension bonus amount is $7,655.83.  That amount is then rounded to $7,655.80.  I so find.

9.      That being so, the decision under review must be affirmed because the amount of pension bonus is correct.

10.     I note in conclusion Mrs Hindmarsh’s significant concern that she was not provided with adequate information by Centrelink in 1999 in relation to the application of an assets test, and in particular to the inclusion of superannuation investments in such a test.  She says that if she had known she would have arranged her affairs differently.  Furthermore, she maintains that she accepted as correct the information that she was given by Centrelink staff and followed the advice she was given to her detriment.  Having reviewed the documents it does appear that Mrs Hindmarsh was given advice and information that may have been inadequate.  Nevertheless, even though a person should be able to rely on the information and advice they receive from the government, in circumstances such as these it is reasonable to expect that a person will seek independent and expert advice about the arrangement of their financial affairs and the management of their income and assets when planning for their retirement.

I certify that the 10 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member.

Signed:         .....................................................................................
  Joe Meagher, Associate

Date/s of Hearing  13 February 2007

Date of Decision  14 March 2007
Representative for the Applicant     Self
Solicitor for the Respondent            Centrelink Legal Services Branch