Kelly and Secretary, Department of Social Services (Social services second review)

[2018] AATA 939

Kelly and Secretary, Department of Social Services (Social services second review) [2018] AATA 939 (19 March 2018)

Division:GENERAL DIVISION

File Number(s):2017/3651      

Re:Noelene Kelly  

APPLICANT

Secretary, Department of Social ServicesAnd  

RESPONDENT

DECISION

Tribunal:M J McGrowdie, Senior Member

Date of decision:               19 March 2018

Date of written reasons:        18 April 2018

Place:Sydney

The decision under review is affirmed.

............................[sgd]............................................

M J McGrowdie, Senior Member

Catchwords

SOCIAL SECURITY – age pension – asset-tested income stream – amendments to income test treatment of account-based superannuation income streams – consideration of deemed income from superannuation purchased after 1 July 2015 – no discretion – decision affirmed

Legislation

Social Security Act 1991

Social Security and Other Legislation Amendment Act 2014

WRITTEN REASONS FOR DECISION

M J McGrowdie, Senior Member

18 April 2018

1. This is a matter where the applicant, Noelene Kelly, seeks to have the benefit of grandfathering provisions under the Social Security legislation in respect of monies she had with UniSuper Limited (UniSuper).

2. There was a relevant change to the Social Security Act 1991 (Cth) from 1 January 2015. That is the relevant date. However, there were savings provisions in the Social Services and Other Legislation Amendment Act 2014, which had the effect of preserving entitlements to the age pension for those who had before and after 1 January 2015, the same asset tested income as before.

3. What is relevant here is income derived by the applicant from her superannuation provider. Prior to 1 January 2015 she had relatively small sums of money in super. An amount of $11,000 was in an accumulation account and the balance of approximately $148,000 was held in a pension account by UniSuper. The total funds at that time came to about $159,000.

4. Around that time, the applicant received correspondence from UniSuper suggesting, as I understand it, that she could consolidate those funds into one pension fund account that, as I understand it, would have some very minor tax benefits. To the applicant's mind, the attraction appeared to be simply upon the basis that it seemed a good idea to have everything consolidated into one fund.

5. She did not obtain legal or financial advice but simply signed forms she was sent believing that it really didn’t make very much difference to her at all but sounded like a good idea.

6. Unfortunately she didn’t receive any individual advice from UniSuper although a booklet was attached with explanatory material. From a lay point of view, understanding this material and the consequential effects that change may have had would have been very difficult for a layperson, particularly as they related to her pension benefit.

7. I refer now to the respondent's Statement of Facts, Issues and Contentions and in particular start with paragraph 6.9 where it states:

   An essential element of the grandfathering provisions in clause 48(2)(c)(ii) of Schedule 11 [to the Social Security and Other Legislation Amendment Act 2014]… is that the asset-tested income stream (long term) “has been provided to the person” since 1 January 2015…

8. This is elaborated in the Explanatory Memorandum for Schedule 11:[1]

   (d)That income stream has continued to be provided to the person since 1 January 2015.

   [1] Social Services and Other Legislation Amendment Bill 2013 – Explanatory Memorandum.

9. What happened as a result of the materials forwarded to her by UniSuper and her acceptance of a proposal consolidating her pension fund and her accumulation fund was that on 11 March 2016, new units were purchased by her in a pension fund for the sum of $159,833.99, being 16.18 units. In other words, although she had an existing pension fund, the 'new' pension fund was new in the sense that from 11 March 2016, it contained different units and was given a different account number.

10. I did by way of analogy consider whether, say, having two savings accounts and putting the money from one savings account into another would be the same thing as saying that the original savings account still continued. However, what distinguishes that analogy from what has happened here is that new units were purchased on 11 March 2016 for the full value of monies that the applicant had with UniSuper.

11. The matter was reviewed by the Social Services & Child Support Division of this Tribunal (AAT1) and in a decision of Member Dordevic dated 27 April 2017, she states that against the background of this discussion with regard to the grandfathering provisions contained in the amending Act:

    …on 11 March 2016 Ms Kelly cancelled her UniSuper annuity held in account … On the same day she purchased a new allocated pension, with a purchase price of $159,833. The tribunal is satisfied that this new allocated pension meets the definition of an income stream under section 9 of the [Social Security Act 1991] and thereby is subject to the deeming provisions in place from 1 January 2015.

12. The effect of this is that there is no facility for exempting income from that newly-allocated pension. The Tribunal acknowledges Ms Kelly's circumstances, her very substantial contribution to the community over many years as a religious person in a monastery and her significant teacher career, including being the principal of substantial school.

13. It is in my view a simple mistake that had been made on her behalf, not realising the implication that consolidating her pension accounts would have. If there was a discretion that could be taken into account to allow for her new allocated pension to be insulated from the deeming provision, there would, in all ‘likelihood’, be an exercise of the discretion in the Applicant’s favour.  

14. Centrelink have looked closely at the matter and have also concluded that they have no discretion in the matter. But they accept implicitly that there was no attempt, even on the applicant's part, to rearrange her affairs in a way in which she would obtain some further pension benefit. In fact, the opposite is correct, the changes that occurred affected her pension entitlements adversely and that in terms of her own circumstances is a most unfortunate event, something which Centrelink also acknowledges.

15. However, for the reasons I have stated and in particular in agreement with what was said in the decision of the AAT1, that there had been a change affected on 11 March 2016. The fund was no longer protected as it had been before 1 January 2015.

16. Apparently I am given to understand and accept that UniSuper would change the applicant's fund to put things back as they were before and would be prepared to do that, if Centrelink saw no compliance issues arising. However, as I say, Centrelink have looked at it very closely and there is just no getting around the fact that there was a change made on 11 March 2016. And even to change it back now would not restore Ms Kelly to her position prior to 11 March 2016 as there had been a change, therefore, she does not get the benefit of the grandfathering provisions.

    DECISION

17. Accordingly, I affirm the decision under review.

    I certify that the preceding 17 (seventeen) paragraphs are a true copy of the reasons for the decision herein of Senior Member M J McGrowdie

    .............................[sgd]...........................................

    Associate

    Dated: 18 April 2018

Date(s) of hearing:	19 March 2018
Advocate for the Applicant:	Mr V Falconer
Solicitors for the Respondent:	Dr S Thompson, Department of Human Services