Schmidt and Secretary, Department of Family and Community Services

[2002] AATA 961

DECISION AND ORAL REASONS FOR DECISION [2002] AATA 961

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2002/42

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      GERHARD SCHMIDT       
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Senior Member WJF Purcell        

Date3 October 2002

PlaceAdelaide

Decision      For the reasons given orally at the Hearing of this matter, the Tribunal affirms the decision under review.      
  (Signed)
  WJF PURCELL
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Age Pension – Pension Bonus Scheme – whether applicant qualifies for a pension bonus  
Social Security Act 1991 sections 92A, 92C, 92H

ORAL REASONS FOR DECISION

3 October 2002   Senior Member WJF Purcell   

1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 29 January 2002, which affirmed the decision of an Authorised Review Officer of 15 November 2001, to  reject the applicant's claim for a pension bonus.

2. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with an exhibit tendered by the applicant, who appeared on his own behalf and gave oral evidence. Ms Pugsley represented the respondent (the Department).

3. The applicant turned 65 years of age on 23 September 1995, and was qualified then for Age Pension; but as he was a self-funded retiree, he did not apply for Age Pension until 22 June 2000.  The Social Security Act 1991 (the Act), was amended in 1998. Part 2.2A introduced a Pension Bonus Scheme with effect from 1 July 1998. The simplified outline of the scheme appears at section 92A of the Act in the following terms:

   "A person who qualifies for an age pension but defers claiming that pension may be able to get a single lump-sum pension bonus.
   A person who wants to get a pension bonus must register as a member of the pension bonus scheme.
   To get a pension bonus, a person must accrue between 1 and 5 bonus periods while deferring age pension.
   Generally, a bonus period runs for 1 year.
   To accrue a bonus period, the person must pass the work test for that period.
   To pass the work test for a year, either the person, or the person's partner, must gainfully work for at least 960 hours during that year.
   The amount of a person's pension bonus depends on the number of accrued bonus periods and the person's annual rate of age pension.  A person may get a bigger bonus by accruing more bonus periods."

4. Section 92C of the Act provides:

   "92C    A person is qualified for a pension bonus if:
             (a)       both:

   (i)the person starts to receive an age pension at or after the time when the person makes a claim for the pension bonus; and

   (ii)that age pension is received otherwise than because of a scheduled international social security agreement (within the meaning of section 1208); and

   (b)the person has not received an age pension at any time before making a claim for the pension bonus; and

   (c)the person is registered as a member of the pension bonus scheme; and

   (d)the person has accrued at least one full-year bonus period while registered as a member of the pension bonus scheme; and

   (e)       the person has not received:

   (i)a social security pension (other than an age pension or a carer payment): or

   (ii)a social security benefit; or

   (iii)a service pension (other than a carer service pension); or

   (iv)an income support supplement (other than an income support supplement that is payable as a result of the operation of subclause 8(3) of Schedule 5 to the Veterans' Entitlements Act);

   at any time after the person qualified for an age pension; and

   (f)        the person has not already received:

   (i)        another pension bonus; or

   (ii) a bonus under Part IIIAB of the Veterans' Entitlements Act."

5. Section 92H(2) of the Act provides:

   "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."

6. The front page of the claim form provided to the applicant on 22 June 2000 contained under the heading "Pension Bonus Scheme" the following information:

   "The Pension Bonus Scheme provides a tax-free lump sum to people who defer claiming Age Pension and continue to work.  The bonus is payable when people registered as members of the Scheme finally retire and are paid an Age Pension.  For a bonus to be payable the minimum period of working membership is 12 months.  A bonus cannot be paid to anyone who has received Age Pension."

The form then asks the question "Are you a registered member of the Pension Bonus Scheme?", to which the applicant replied "No".  Alongside the box marked "Yes" appears the notation "You will need to complete and attach a Pension Bonus Scheme form" [T4/15].

1. The applicant was granted Age Pension from 1 July 2000.  On 17 October 2001, he made application for the Pension Bonus Scheme for the period 1 July 1998 to 1 July 2000.  Page 1 of the Claim Form for a Pension Bonus contains information including under the heading "Things you should know about claiming for a Pension Bonus", a question which reads "Is there a time limit for claiming the bonus?  You need to claim your bonus within 13 weeks of finishing work or of failing to meet the work test".  On 22 October 2001 a delegate decided to reject the application.  This decision was affirmed by an Authorised Review Officer on 15 November 2001; and on 29 January 2002 the SSAT affirmed the decision.

2. It is not in dispute that the applicant and his wife owned a building in Adelaide and that after the applicant reached the age of 65, they continued to operate as a youth hostel; that until mid 2001 the applicant was unaware of the details of Centrelink benefits as he did not expect to be entitled to any payments.  The applicant gave evidence, which I accept, that he did not think any payments would apply to his circumstances.  He and his wife consulted an accountant about their finances, including superannuation and income from real estate, but the accountant did not inform them of any possible Centrelink benefits.  After they sold the building they enquired about potential entitlements and were informed by a Comskil investment adviser to consult a Centrelink financial information services officer.  The officer is recorded as telling them that they would qualify for Age Pension, and explaining the various income and assets tests, prior to the applicant completing the claim form for Age Pension on 7 July 2000. 

3. The applicant gave evidence, which I accept also, that it was not until he received the Spring Edition of "News for Seniors" and read page 6 headed "Pension Bonus Scheme", that he realised tat there was such a scheme.  The "News for Seniors" reads:

   "The Commonwealth Government introduced the Pension Bonus Scheme (PBS) in 1998, to pay a tax free lump sum to people who defer claiming the age pension and go on working.
   While the scheme has been extensively promoted since its introduction, there are still people who haven't heard about it – probably because they are too busy working and don't have much to do with Centrelink!
   To address this situation, the Minister for Community Services Larry Anthony recently wrote to about 250,000 people in the target group – age pension and approaching age pension age in the next few years and who are possibly employed.  Many of our readers do not qualify to join the PBS because they are already on a pension.  However, you might know someone who received a letter or someone such as a friend, relative or neighbour who could use this information and it would be helpful if you could pass the information onto them.
   Anyone who has ever received any social security payment (except carer payment) after turning age pension age is not eligible for a bonus under the scheme.  The scheme is voluntary.  Conditions apply, and to make sure that we get an opportunity to tell you about those conditions, you are required to register for the scheme with Centrelink if you want to be in it.  The PBS is not right for everyone, and you need to consider all options before deciding either to join or apply for the age pension.
   Although applicants should register for the scheme around the time they reach age pension age, later registrations can be accepted.  Registration can even be backdated in some circumstances.
   Both members of a couple need to register for each to be eligible for a bonus.  You then need to meet a work test for a minimum of one year.  The work test requires that either you or your partner work at least 960 hours per year.
   The bonus is paid when you retire and claim age pension and the bonus.  You can only be paid a bonus if you then receive age pension, since the amount of bonus depends on the rate of pension payable to you.  People who want to know more about the Pension Bonus Scheme should telephone 13 2300."   [Exhibit A1]

4. The applicant submits that although he was not aware of the existence of the Pension Bonus Scheme, because he did not want anything from Centrelink, nor did he expect to be able to receive any benefit from Centrelink because he was self employed, he is entitled to make a late claim.  This is permitted in accordance with the news item in the News for Seniors, which states that "later registrations can be accepted".  Centrelink should have contacted him as an eligible person, as it is doing now, as outlined in the "News for Seniors" article.

5. The Department contends that as the applicant did not, at any time, register as a member of the Pension Bonus scheme; and that as he made application for a pension bonus after he had commenced to receive an Age Pension, he does not satisfy the qualification provision as set out in section 92C of the Act, and is not qualified for a pension bonus.

6. I have taken into account the applicant's evidence and the parties' submissions.  The Pension Bonus Scheme came into effect on 1 July 1998, nearly 3 years after the applicant's 65th birthday.  It requires that a person apply in writing in accordance with a form approved by the Secretary for registration as a member of the Pension Bonus Scheme; that the application be lodged, in the applicant's situation, within 13 weeks of 1 July 1998; that the person must accrue between 1 and 5 bonus points while deferring Age Pension and also, inter alia, pass the work test for that period. 

7. It is clear that the scheme requires early application, before the person applies for Age Pension. The legislation is specific. Section 92C of the Act, provides that "the person is qualified for pension bonus if he has not received an Age Pension before making a claim".  The applicant had been in receipt of Age Pension for some 15 months before he applied for the bonus. In addition, section 92H(2) of the Act, required him to lodge an application within 13 weeks of 1 July 1998. He lodged his application 3 years and some 3 months after 1 July 1998. I am satisfied, on the evidence, that the applicant is not qualified for payment of pension bonus.

8. For these reasons the Tribunal affirms the decision under review.

I certify that the 14 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell

Signed:         .....................................................................................
  Associate

Date of Hearing  3 October 2002
Date of Decision  3 October 2002
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Ms A Pugsley
Solicitor for the Respondent    Centrelink