Kenneth Mann and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 412
•3 July 2012
[2012] AATA 412
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/5097
Re
Kenneth Mann
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Senior Member A K Britton
Date 3 July 2012 Place Sydney The decision under review is affirmed.
...............................[sgd].........................................
Senior Member A K Britton
CATCHWORDS
SOCIAL SECURITY - Pension bonus scheme - late application for registration - non-accruing member - accruing member - work test - test period - power to extend time - decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) - ss 92H(1)-(6), 92N, 92P, 92Q, 92U and Part 2.2A
Social Security (Pension Bonus Scheme - Non-accruing Members) Declaration 2007
REASONS FOR DECISION
Senior Member A K Britton
3 July 2012
Under the pension bonus scheme established by Part 2.2A of the Social Security Act 1991 (Cth) (the Act), a person who is qualified for, but defers claiming, the age pension, may later be eligible to obtain a lump sum pension bonus. A person wishing to claim that bonus must lodge an application for membership of the pension bonus scheme within 13 weeks of either side of reaching “pension age” (s 92H(1) of the Act).
Mr Mann lodged an application for registration for the scheme four years after reaching the pension age of 65 years. Centrelink refused to accept his application for registration. Mr Mann unsuccessfully challenged that decision in the Social Security Appeals Tribunal and now seeks review by the Administrative Appeals Tribunal.
The Act gives the decision-maker the power to extend the period to lodge an application for pension bonus (s 92H(3)). That power is subject to s 92H(4):
Late Applications
…
(4) 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.
Note 1: Pre-application period is defined by subsection (5).
Note 2: Test period is defined by subsection (6).
The issue in this matter is whether the power to accept an application for registration made out-of-time can and/or should be exercised. Whether that power can be exercised turns on whether Mr Mann satisfies paragraph (a) or (b) of s 92H(4). The Secretary contends that Mr Mann satisfies neither paragraph and therefore the power cannot be exercised. Mr Mann disagrees.
DOES MR MANN SATISFY S 92H(4)(A)?
Section 92H(4)(a) will be satisfied if Mr Mann would have been a “non-accruing member” for all of the pre-application period had he been a member of the Scheme (s 92H(4)(a)). The pre-application period is the period beginning on Mr Mann’s “qualification date” for the age pension and ending on the date he lodged his application for pension bonus — XXXX 2006 to 6 August 2010 (s 92H(5)). (So as not to disclose personal information, in these Reasons Mr Mann’s date of birth will be referred to as “XXXX 2006”.)
A person's membership of the pension bonus scheme at a particular time will be accruing unless their membership is “non-accruing” or “post-75” at that time (s 92N). The membership of a person who has not reached 75 years of age will be non-accruing if:
·one of the preclusion periods listed in s 92P applies; or
·they fall within one of the classes of non-accruing members listed in either s 92Q(2) of the Act or cl 5 of the Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007 (the Declaration) (see s 92Q(1) of the Act).
Section 92P provides that the membership of a person subject to a disposal, compensation or carer preclusion period is deemed to be non-accruing. Mr Mann was not subject to any preclusion period during the relevant period.
The Act and the Direction list those classes of members deemed to be non-accruing. None apply to Mr Mann with the possible exception of cl 5(e) of the Declaration which provides:
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;
The University of Wollongong employed Mr Mann on 12-monthly contracts until 2006. In 2006, he was diagnosed with a serious illness and was unable to take up the contract offered by the University. In 2007, he returned to part-time work at the University, and in addition, worked for a short period at Australia Post. He returned to full-time employment at the University in October 2007.
I cannot accept the contention advanced by Mr Mann that throughout 2006 he was effectively on unpaid leave from the University and therefore satisfies cl 5(c) of the Declaration. Because of ill health, Mr Mann was unable to accept the 12-month contract offered by the University at the start of 2006. Accordingly, there was no employment relationship between the parties and it could not reasonably be argued that Mr Mann was on “paid or unpaid leave of any kind”. It follows that Mr Mann would have been an accruing member throughout 2006 had he been a member of the Scheme.
But even if, he would have been a non-accruing member throughout 2006, he cannot satisfy the requirement imposed by s 92H(4)(a) of being a non-accruing member for the entire pre-application period, that is XXXX 2006 to 6 August 2010. This is because, as he concedes, from January 2008 to the end of the pre-application period, he was in full-time employment and would have been an accruing member of the Scheme had he been registered, for that part of the pre-application period. Accordingly he was not a non-accruing member for the whole pre-application period and s 92H(4)(a) is not satisfied.
DOES MR MANN SATISFY S 92H(4)(B)?
Section 92H(4)(b) will be satisfied if Mr Mann (i) would have been an “accruing member” for some or all of the pre-application period had he been a member of the Scheme; and (ii) passed the work test for each “test period”. There is no argument that Mr Mann would have been an accruing member of the Scheme for at least part of the pre-application period. Therefore the only issue to be decided is whether he would have passed the work test for each applicable “test period”.
The work test
The method of determining a “test period” is set out in s 92H(6) and requires the following sequence of steps to be taken:
(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.
The test period
The first step in identifying Mr Mann’s test period(s) is the identification of the “overall accruing period”, that is, that part of the pre-application period during which he would have been an accruing member of the Scheme had he been registered. For the reasons as given, in my opinion he would have been an accruing member of the Scheme for the entire pre-application period. It follows that the first test period commences on when he turned 65 on XXXX 2006. The test periods are therefore:
·XXXX 2006 to xxxx 2007 (the full-year period beginning at the start of the overall accruing period)
·xxxx 2007 to xxxx 2008 (succeeding full-year period)
·xxxx 2008 to xxxx 2009 (succeeding full-year period)
·xxxx 2009 to xxxx 2010 (succeeding full-year period)
·xxxx 2010 to 6 August 2010 (remainder of the overall accruing period).
Does Mr Mann pass the work test?
Section 92U provides that a person passes the work test if:
Work test—full-year period
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
…
There is no argument that Mr Mann worked less than 960 hours for each of the first two test periods. I accept that the reason Mr Mann did not pass the work test during these periods is because of ill–health. Nonetheless, s 92H(4)(b) imposes a mandatory requirement that the work test be passed for each test period. The Act does not confer a discretionary power to waive that requirement in special circumstances.
Even if, as Mr Mann contends, the first test period did not commence until 1 January 2007 on the basis that 2006 was a period where his membership would not have been accruing, he would not have passed the work test for the test period, commencing on 1 January 2007 and ending on 31 December 2007.
According Mr Mann does not satisfy s 92H(4)(b).
CAN THE POWER TO EXTEND TIME BE EXERCISED?
As Mr Mann does not satisfy either limb of s 92H(4), the power to extend the period in which he must lodge an application for pension bonus cannot be exercised. I have considerable sympathy for Mr Mann’s position. Had it not been for illness, he would probably have worked at least 960 hours per annum after retirement age and satisfied the work test. However, as neither of the pre-conditions for the exercise of the power to extend time is met, the power to extend the time for Mr Mann to lodge his application cannot be exercised — regardless of the reasons he delayed making the application.
For these reasons, I must affirm the decision to refuse Mr Mann’s application for registration of the pension bonus scheme.
I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton ..............................[sgd]..........................................
Associate to Senior Member A K Britton
Dated 3 July 2012
Date(s) of hearing 19 June 2012 Applicant In person Solicitors for the Respondent J Maclean, Centrelink Program Litigation and Review Branch
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