John Herbertson and Repatriation Commission
[2013] AATA 868
[2013] AATA 868
Division VETERANS' APPEALS DIVISION File Number
2013/2838
Re
John Herbertson
APPLICANT
And
Repatriation Commission
RESPONDENT
DECISION
Tribunal Dr M Denovan, Member
Date 5 December 2013 Place Brisbane The decision under review is affirmed.
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Dr M Denovan, Member
CATCHWORDS
VETERANS’ AFFAIRS – Pension bonus scheme – Whether applicant satisfied the work test – Non-accruing member – Application not within lodgement period – Pension bonus not payable – Decision under review affirmed
LEGISLATION
Veterans’ Entitlements Act 1986 (Cth) ss 5QA, 45TO, 45TR, 45TS, 45TT, 45UK, 45UL
Veterans' Entitlements (Pension Bonus Scheme - Non-accruing Members) Declaration 2007 (Cth) ss 5, 6
SECONDARY MATERIALS
Senate Community Affairs Legislation Committee, Parliament of Australia, Social Security and Veterans' Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998 (1998)
REASONS FOR DECISION
Dr M Denovan, Member
5 December 2013
Mr Herberton is the applicant in these proceedings. He is appealing a decision of the Repatriation Commission, which found that he was not eligible for payment of pension bonus pursuant to the Veterans’ Entitlements Act 1986 (Cth) (“the Act”).
The pension bonus scheme (“PBS”) provides an incentive for older Australians to remain in the workforce and defer age pension. If they meet all eligibility criteria, a one off lump sum amount is payable.
The facts of this matter are not in dispute. Mr Herbertson registered for the PBS, and accrued 5 bonus periods, from May 2005 to May 2010. He continued to work full-time, and thereby satisfied the work test until January 2011. From 15 January 2011 to 26 June 2012, Mr Herbertson took a combination of annual leave, long service leave, and sick leave. Mr Herberstson’s application for service pension and pension bonus were received by the department on 25 June 2012.
CONSIDERATION
Mr Herbertson made an application to join the PBS in August 2007, some time after he reached the eligible age for pension of 60 years.[1] His registration was backdated to
26 May 2005, in recognition that special circumstances prevented him from registering at an earlier date.
[1] s 5QA of the Act.
The requirements for eligibility for the PBS were set out in the letter sent to
Mr Herbertson by the respondent when his registration was accepted.[2]
[2] See letter dated 2 October 2007 at exhibit 7.
To qualify for a pension bonus, a person must continue to defer pension and meet the requirements of the work test. To meet the work test a person must gainfully work at least 960 hours during each 12 month period,[3] and a pro rata number of hours if the last period of deferral is less than 365 days.[4]
[3] s 45TS of the Act.
[4] s 45TT of the Act.
Under s 45TR of the Act, Mr Herbertson’s first bonus period began when his registration was accepted, on 26 May 2005. Mr Herbertson continued to work full-time and meet the work test from the date of registration until 15 January 2011.
Mr Herbertson told me that, because of the employment terms set by his employer, Qantas, for most of his career as a pilot, he has been unable to take the long service leave he has accumulated. Qantas recently changed the policies relating to long service leave, allowing Mr Herbertson to use his accumulated leave. He intended to return to work when his leave was complete, however one-month prior, health and personal reasons interfered. It was intended that he undergo a one to two month retraining program prior to recommencing full-time duties. He did not commence this program, although the program has been drawn up.
Mr Herbertson contends that whilst on leave, he was still fully employed by Qantas, earning a salary, paying tax, being paid superannuation and completing employer required medical tests to maintain his Air Transport Pilot Licence.[5] He argues therefore that he was still engaged in gainful work, until his retirement in late June 2012.
[5] See also exhibit 1, pp. 35-38.
The Act provides for a person to continue as a non-accruing member of the PBS if they are not gainfully working, in certain circumstances, including sick leave, for a period not exceeding 26 weeks.[6] Section 45TO(1) of Act also allows for the Commissioner to specify by legislative instrument that certain periods are non-accruing periods, the Veterans' Entitlements (Pension Bonus Scheme - Non-accruing Members) Declaration 2007 (Cth) (“the Declaration”) has been registered under this section. The Declaration provides in s 5 that:
A member of the pension bonus scheme who is a member of any of the following kinds is a non‑accruing member:
…
(e) a member who is on paid or unpaid leave of any kind, or combination of kinds, from gainful work and who would not pass the work test for a bonus period during which any part of the leave is taken; …
[6] s 45TO(2)(d) of the Act.
The period of time a person may be non-accruing member in accordance with s 5(e) of the Declaration is limited to 26 weeks.[7]
[7] s 6 of the Declaration.
The explanatory statement to the Declaration provides in regard to s 5(e) that:
(e) …Leave includes, but is not limited to annual/recreation leave, long service leave, sick leave, carer’s leave, special leave, maternity leave and personal leave.
Mr Herbertson became a non-accruing member of the scheme when he went on leave in January 2011. Although he was still employed by Qantas, I do not accept he was engaged in gainful work, as defined in the Act, as there was no substantial degree of personal exertion by Mr Herbertson in relation to that employment, whilst he was on leave.
As the maximum period a person can be on leave and still remain a member of PBS is
26 weeks, Mr Herbertson effectively exited the scheme on 16 July 2011, 26 weeks after he commenced leave. Had he returned to work on or before that date, he would have remained a member. Mr Herbertson’s intention to return to work has no bearing on the matter, however I note that at no time was his intention to return at a time that would have allowed him to remain a member. Mr Herbertson said he would have returned earlier had he understood the consequences of taking such a long period of leave. Whilst I accept that is probably the case, there is no discretion in the Act which allows me to make an exception on those grounds.
Non-accruing members must apply for a pension bonus within 13 weeks of ceasing to be a non-accruing member.[8] This means Mr Herberton needed to apply by 15 October 2011, to be eligible for a pension bonus payment.
[8] s 45UL of the Act.
Mr Herbertson points out that it would have been futile to lodge a claim prior to his retirement in June 2012, as he would not have been eligible for pension at that time since he was still working. He contends that ambiguity in the Act exists (ss 45UL and 45UK), and this is why he was unable to claim a bonus lump sum, prior to being eligible for age pension. According to Mr Herbertson, I should therefore be guided by the purpose of the scheme, as explained in a Parliamentary committee report for the relevant amending bill.[9] Mr Herbertson contends that by taking his long service leave as he did, he satisfied all of the objectives of the scheme as enunciated in that document. The objectives set out in the report are:[10]
·to increase labour market participation of retirement age pensions, and
·allow people who defer their pension to increase their retirement savings during the deferment period, and
·restrain growth in pension outlays.
[9] Senate Community Affairs Legislation Committee, Parliament of Australia, Social Security and Veterans' Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998 (1998).
[10] Ibid at 2.
I agree that whilst on leave, Mr Herbertson was accumulating, rather than using superannuation assets, and he postponed collecting age pension. However, I do not accept that he was increasing labour market participation simply by being on the payroll of Qantas.
Further, I do not accept that there is any ambiguity in the legislation. Pension bonus is a lump sum payment that is designed to be paid to a person at the time they retire. The Act is not designed to simply reward those persons who have continued to work for up to five years beyond the age at which they were eligible to retire. If that were the case, there would not be a requirement that the application for pension bonus be made at the same time as application for pension.
The legislation anticipates retiring members may be paid a lump sum payment for reasons such as unused long service leave and holiday leave. The amount of pension bonus paid is reduced accordingly. To allow a person to stop working and then delay collection of the pension bonus until an unlimited amount of accrued long service and holiday leave are used, would result in those person collecting a much larger sum for pension bonus than a person who applied for pension bonus at the time they ceased working. It would be effectively a loophole in the scheme, and result in a greater drain on pension resources than was anticipated by the Act.
CONCLUSION
When Mr Herbertson commenced leave on 15 January 2011, he became a non-accruing member of the PBS. Because Mr Herbertson did not recommence gainful employment he ceased being a member of the scheme 26 weeks later, and as he did not lodge an application for pension bonus within 13 weeks of his membership ceasing he is not eligible for a pension bonus.
DECISION
The decision under review is affirmed.
I certify that the preceding 21 (twenty-one) paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member
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Associate
Dated 5 December 2013
Date of hearing 7 November 2013 Applicant In person Advocate for the Respondent Mr Bruce Williams
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