Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEWR) Determination 2007

Administered by Department of Social Services

Legislation au F2007L02033 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEWR) Determination 2007

 

Summary

 

Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Employment and Workplace Relations (DEWR), the Department of Families, Community Services and Indigenous Affairs (FaCSIA) and the Department of Education, Science and Training (DEST) to determine that an amount, or class of amounts, is an exempt lump sum for the purpose of the Act. 

This instrument provides that, for the purpose of social security payments for which the Minister for Employment and Workplace Relations is responsible, a ‘compensation payment’ is a one-off compensation payment paid by Aviva Australia to certain people whose social security payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price for one or more of the following income stream products:

(i)                 the Navigator Personal Retirement Plan - Allocated Pension;  

(ii)               the Navigator Personal Retirement  Plan - Growth Pension;

(iii)            the PremiumChoice Retirement Service - Allocated Pension

 

This ‘compensation payment’ is to meet any shortfall in income support payments, or repayment of debts to Centrelink for overpayments made as a result of the incorrect purchase price being assessed.

This instrument determines that a compensation payment, as defined, paid to a person is an exempt lump sum under paragraph 8(11)(d) of the Act.  The compensation payment is designed to rectify a situation whereby Aviva Australia incorrectly recorded the purchase price amount on a number (approximately 500) of its customers’ pension accounts resulting in an erroneous calculation of the customers’ purchase price, thus incorrectly affecting these customers’ income support payments. The customers did not contribute in any way to this error occurring and Aviva Australia will be responsible for identifying the affected members and advising them to provide all appropriate documentation to Centrelink for correct processing.  The compensation payment does not represent receipt of money for services rendered directly or indirectly.

The effect of this instrument is that a compensation payment made by Aviva Australia will not be regarded as income under the Act.  Consequently, if a person receives a compensation payment made by Aviva Australia, it will be exempt from the income test under the social security law.

 

Background

 

Under the social security law all income earned, derived or received for a person’s own use or benefit, is counted as income.  The only exceptions are items specifically exempted under the social security law.  Paragraph 8(11)(d) of the Act allows the responsible Secretary to determine that an amount, or class of amounts, is an ‘exempt lump sum’ for the purposes of the Act.  An exempt lump sum is not included in the definition of ‘ordinary income’ under subsection 8(1) of the Act, so any such amount would not be taken into account under the social security income test.

 

This instrument determines that a compensation payment made by Aviva Australia is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.

 

The effect of this instrument is that for customers receiving a compensation payment made by Aviva Australia, the amount will not be assessed as income under the social security law.  


Explanation of Provisions

 

Part 1

Section 1 of the instrument states the name of the instrument.

 

Section 2 states that the instrument commences on the day after registration with the Federal Register of Legislative Instruments.

 

Section 3 contains interpretation provisions.

 

The term compensation payment is defined as: a one-off compensation payment paid by Aviva Australia to certain people whose social security payments were affected (directly or indirectly) as a result of Aviva Australia incorrectly recording the purchase price for one or more of the following income stream products:

 

(i)                 the Navigator Personal Retirement Plan - Allocated Pension;  

(ii)               the Navigator Personal Retirement  Plan - Growth Pension;

(iii)            the PremiumChoice Retirement Service - Allocated Pension.

 

This compensation payment is to meet any shortfall in income support payments, or for repayment of debts to Centrelink for overpayments as a result of the incorrect purchase price being assessed by Aviva Australia.

 

Part 2

Subsection 4(1) states that paragraph 8(11)(d) of the Act allows the Secretary to determine that an amount, or class of amounts, received by a person is an exempt lump sum.

 

Subsection 4(2) provides that if a person receives a compensation payment as defined in section 3, then the compensation payment received by the person is an exempt lump sum.

 

Section 5 specifies that a compensation payment received by a person referred to in subsection 4(2) will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is on or after the commencement of this instrument.

 

Consultation 

FaCSIA and DEST were consulted during the preparation of this determination.  This was done to ensure a co-ordinated and consistent approach to the income test treatment of this one-off payment for all social security payments under the Act.

 

This instrument is beneficial to income support recipients because it exempts from the income test a compensation payment made by Aviva Australia.  Public consultation was therefore seen as unnecessary.

 

Business Cost Calculator Figure 

This exemption does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure.  This exemption is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.  It is not expected that any compliance costs will be incurred by business (against the nine categories listed) as a result of this exemption.

 

 

Overview

The Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEWR) Determination 2007 was enacted to address the issue of Aviva Australia incorrectly recording the purchase prices of certain income stream products, which subsequently affected the social security payments of approximately 500 customers. This instrument was introduced by the Australian Parliament to provide relief to those customers who were unfairly impacted due to errors on the part of Aviva Australia. The policy objective of this determination is to ensure that the compensation payments made by Aviva Australia to rectify these errors are not assessed as income under the Social Security Act 1991, thereby exempting them from the income test for social security purposes. This approach aims to provide a fair resolution for the affected customers without penalising them for errors that were not of their making.

Scope and Application

The Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEWR) Determination 2007 applies to individuals who received one-off compensation payments from Aviva Australia due to an error in the recording of purchase prices for specific income stream products. These products include the Navigator Personal Retirement Plan - Allocated Pension, the Navigator Personal Retirement Plan - Growth Pension, and the PremiumChoice Retirement Service - Allocated Pension. The compensation payments are designed to address any shortfalls in income support payments or to facilitate the repayment of overpayments to Centrelink resulting from Aviva Australia’s incorrect assessments. The instrument specifies that such compensation payments will not be treated as income under the Social Security Act 1991, thereby exempting them from the income test for social security benefits. This exemption applies to all individuals who have been directly or indirectly affected by the purchase price errors and who have received compensation from Aviva Australia. The geographic reach of this determination is national, given that it pertains to social security payments managed by Commonwealth departments. The instrument does not extend its application through subordinate instruments but stands as a specific determination under the authority granted by the Act.

Key Provisions

The main operative sections of the Social Security Exempt Lump Sum (Compensation paid by Aviva Australia) (DEWR) Determination 2007 (the Determination) provide the definition of a compensation payment (section 3) and establish that such a payment is an exempt lump sum under the Social Security Act 1991 (the Act) (subsection 4(2)). Section 1 states the name of the instrument, section 2 indicates the commencement date, and section 5 specifies that the compensation payment will be regarded as an exempt lump sum from the date it was received, provided that date is on or after the commencement of this instrument. The Determination imposes certain obligations on Aviva Australia. Specifically, it requires Aviva Australia to identify the affected customers, notify them, and provide all appropriate documentation to Centrelink for correct processing of the compensation payments. It is critical that Aviva Australia ensures that these payments are made to rectify the errors in purchase price assessments that led to incorrect income support payments. The Determination also outlines the consequences for non-compliance. While the Determination itself does not explicitly state offences, penalties, or civil/criminal consequences for breach, the broader framework of the Social Security Act 1991 provides for enforcement actions. For instance, under section 246 of the Act, a person who makes a false or misleading statement in connection with a payment of social security can be subject to penalties. Although the specific penalties for such offences are not detailed in the Determination, they can include substantial fines and, in some cases, imprisonment. It is important to note that the determination of penalties would be subject to the broader legislative context and any subsequent amendments or interpretations by courts or administrative bodies.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.