EXPLANATORY STATEMENT
Social Security (Pension Bonus Bereavement Payment — Disregarded Income) Specification 2007
Summary
This specification is made by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs under subsection 93WB(2) of the Social Security Act 1991 (the Act). It is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The purpose of this specification is to specify kinds of income for the purposes of subparagraph 93WB(1)(b)(ii) of the Act.
The effect of this instrument is that a compensation amount paid in the form of periodic payments to a person or their partner is disregarded in the calculation of any pension bonus bereavement payment that may be payable to the person.
Background
The Families, Community Services and Indigenous Affairs Legislation Amendment (Further 2007 Budget Measures) Act 2007 inserted into the Act a new Division 12 in Part 2.2A to introduce a new one-off payment called pension bonus bereavement payment.
Under the new Division, a person is qualified for a pension bonus bereavement payment if the person’s partner dies and, immediately before their death, the partner was a registered member of the pension bonus scheme but had not made a claim for age pension or a pension bonus.
To work out the amount of pension bonus bereavement payment, the amount of pension bonus that would have been payable had the partner of the person made claims for both age pension and pension bonus just before the partner died is determined. However, in determining the amount payable, any ‘PBBP employment income’ (a term that is defined in the new Division 12 of Part 2.2A) is disregarded as well as any income that is specified in this instrument.
This instrument specifies that a payment of compensation, so long as it is paid as a periodic payment, is also to be disregarded when calculating the quantum of any pension bonus bereavement payment that may be payable to a person. For the purposes of this instrument, the term “compensation” means a payment of damages, a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme, a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme, or any other compensation or damages payment (but excluding compensation for a criminal injury) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
Explanation of Provisions
Section 1 states the name of the instrument.
Section 2 states that the instrument commences on 1 January 2008. This means that the instrument will have effect on and from that date.
Section 3 contains the interpretation of the term Act as it is used in the instrument. It means the Social Security Act 1991.
Section 4 specifies an income type to be disregarded in determining a pension bonus bereavement payment that may be payable to a person. That income is specified as compensation within the meaning of subsection 17(2) in the Act that is paid in the form of periodic payments.
Relevantly, compensation is defined by the Act as:
(a) a payment of damages; or
(b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) any other compensation or damages;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
However, compensation excludes a payment under a law of the Commonwealth, a State or a Territory that provides for the payment of compensation for a criminal injury suffered, or a disease or injury contracted, as a result of the commission of an offence (see subsection 17(2B) of the Act).
The effect of this section is that such compensation, provided it is paid in the form of periodic payments, is disregarded whether it is payable to the person who may be eligible for a pension bonus bereavement payment or their partner.
Consultation
The Department of Veterans’ Affairs was consulted during the preparation of this specification. This was done to ensure a co-ordinated and consistent approach to the treatment of income types disregarded for the purpose of calculating pension bonus bereavement payments under both the social security law and the Veterans’ Entitlements Act 1986.
This instrument is beneficial to persons whose deceased partners were members of the pension bonus scheme because it has the effect of either increasing or not affecting the amount of any pension bonus bereavement payment that may be payable to them. Public consultation was therefore seen as unnecessary.
Regulatory Impact Analysis
This specification does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure. This Specification 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 as a result of the effect of this instrument.