Social Security (Pension Bonus Scheme — Non-accruing Members) Declaration 2007

Administered by Department of Social Services

Legislation au F2007L04986 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

Social Security (Pension Bonus Scheme  —  Non-accruing Members) Declaration 2007

 

Summary

 

Section 92Q of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs to declare that a specified kind of member of the Pension Bonus Scheme (the Scheme) is a non-accruing member through a period as provided in the Declaration.   

 

Background

 

Under Part 2.2A of the Act, the Scheme allows people of age pension age to choose to continue working and defer claiming Age Pension in return for a tax free lump sum bonus payable when they eventually claim and receive Age Pension.

 

The intention of the Declaration is to enable people registered with the Scheme to be non-accruing members of the Scheme for a specified maximum period in certain circumstances.  The effect of this Declaration is that these particular customers are not required to pass the work test for that period.  This means that the period specified in the Declaration in relation to the particular circumstance will, in effect, extend the period in which a member is required to pass the work test.  A person does not, however, during a period of non-accruing membership accrue a bonus.

 

The Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration (No 1) 1998 and the Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006 declared a number of types of members to be non-accruing members.  These declarations are being revoked and replaced with this new declaration that provides for the same types of non-accruing members and adds two new types of non-accruing members. The new types of non-accruing members are members affected by Cyclone Larry in 2006 and members who are on paid or unpaid leave from their employment. 

 

A declaration under section 92Q is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Explanation of the provisions

 

Section 1 sets out that the name of the declaration is the Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007.

 

Section 2 states that this Declaration commences on 1 January 2008. 

 

Section 3 revokes the following legislative instruments:

 

(a)   the Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration (No 1) 1998; and

 

(b)   the Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006.

 

Section 4 defines the terms used in this Declaration as follows: 

 

‘Act’ means the Social Security Act 1991.

 

‘pass the work test’ has the meaning given by:

 

(a)   sections 92U and 92 V of the Act for a member of the Scheme; and

 

(b)   sections 45TS and 45TT of the Veterans’ Entitlements Act (as referred to in the note at the end of this subsection) for the partner of a member of the Scheme who is a member of the corresponding Scheme under Part IIIAB of the Veterans’ Entitlements Act.

 

A note at the end of subsection 4(1) informs the reader that a number of expressions used in this Declaration are defined in the Act under subsections 4(2) and 23(1).

 

Subsection 4(2) provides that the period during which a major disaster affects a person’s ability to pass the work test may include a period during which preparations are made to cope with an impending disaster, for example, the evacuation of an area shortly before a cyclone is forecast to reach the area.

 

Section 5 provides that a member of the Scheme is a non-accruing member if that person is a member, for the period specified in section 6, of any of the following: 

 

(a)   a member who is a CDEP participant;

 

(b)   a member who is in gaol, within the meaning of subsection 23(5) of the Act;

 

(c)   a member who is undergoing psychiatric confinement, within the meaning of subsections 23(8) and (9) of the Act, because the member has been charged with committing an offence;

 

(d)   a member who is not a participant in the workforce, but whose partner:

 

(i)            is a participant in the workforce; and

(ii)            is not a registered member of the Scheme or the corresponding Scheme under Part IIIAB of the Veterans’ Entitlements Act; and

(iii)            intends to be come a registered member of the Scheme or the corresponding Scheme under Part IIIAB of the Veterans’ Entitlements Act.

 

(e)   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 that includes the period of leave.  For the purposes of this provision, leave includes, but is not limited to  annual/recreation leave, long service leave, sick leave, carer’s leave, special leave, maternity leave and personal leave.

 

Members should not be considered a non-accruing member if they could meet the Scheme’s work test for their bonus period despite their periods of leave. For example, if a member works for nine months in a bonus year and takes three months leave and completes 960 hours of work in the first nine months, there is no need for them to be made a non-accruing member during their leave. The member met the work test for the bonus year.

 

(f)    a member whose partner is on paid or unpaid leave of any kind, or combination of kinds, from gainful work and who would not pass the work test of a bonus period that includes the period of leave.  (See paragraph (e) above regarding explanations involving paid and unpaid leave, as well as passing the work test).

 

(g)   a member who is:

 

(i)            a surviving member of a couple; and

(ii)            undergoing a period of bereavement; and

(iii)            unable to pass the work test for a bonus period that includes the period of bereavement;

 

(h)   a member who is unable to pass the work test for a bonus period because the amount of gainful work available to him or her in the bonus period is reduced by a major disaster;

 

(i)     a member whose partner:

 

(i)            is a member of the Scheme or the corresponding Scheme under Part IIIAB of the Veterans’ Entitlements Act; and

(ii)            is unable to pass the work test for a bonus period because the amount of gainful work available to him or her in the bonus period is reduced by a major disaster.

 

Section 6 provides for the period in which a member of the Scheme is a non-accruing member.  Subsection 6(1) provides that a member of the Scheme to whom one of the provisions of section 5 applies, is a non-accruing member (and continues to be such a member) throughout the period the member is a member of the kind mentioned under section 5. 

 

Subsection 6(2) provides that a member, to whom a paragraph in section 5 applies, can be a non-accruing member up to a maximum period as provided in the table.  Item 1 specifies that the maximum period applicable to paragraphs 5(e) and (f) is 26 weeks.  Item 2 specifies that the maximum period applicable to paragraphs 5(g), (h), and (i) is 13 weeks.

 

Section 7 provides for members of the Scheme who were affected by Cyclone Larry.  Section 7 cannot operate in a way that is adverse to members of the Scheme as members affected by Cyclone Larry would otherwise fail to pass the work test and be required to lodge a claim for pension bonus earlier than they may have wished to. 

 

Subsection 7(1) applies to a member of the Scheme:

 

(a)   who was unable to pass the work test for a bonus period because the amount of his or her gainful work during the bonus period had been reduced by the effects of Cyclone Larry; or

 

(b)   whose partner:

 

(i)            was a member of the Scheme or the corresponding Scheme under Part IIIAB of the Veterans’ Entitlements Act; and

(ii)            was unable to pass the work test for a bonus period because the amount of his or her gainful work during the bonus period had been reduced by the effects of Cyclone Larry.

 

Subsection 7(2) provides that a member of the Scheme is a non‑accruing member for up to a maximum of 13 weeks if that person is a member, throughout the period:

 

(a)   which does not commence before 1 March 2006, that:

 

(i)            the member was unable to pass the work test due to the effects of Cyclone Larry for members covered by paragraph 7(1)(a); or

(ii)            the member’s partner was unable to pass the work test due to the effects of Cyclone Larry for members covered by paragraph 7(1)(b).

 

A note at the end of subsection 7(2) informs the reader that 1 March 2006 is the date from which people are taken to be affected by the preparation for Cyclone Larry.

 

Consultation

 

The Department of Veterans’ Affairs was consulted during the preparation of this instrument.

 

These changes do not alter the spirit of the relevant legislation.  They will increase flexibility and fairness in the Scheme and minimise the circumstances in which the Scheme’s rules prevent members from obtaining access to any pension bonus they may have accrued.   Public consultation was therefore seen as unnecessary.

 

Regulatory Impact Analysis

 

This instrument does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure.  This instrument 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. 

 

Overview

The Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007, enacted by the Parliament of Australia, addresses a gap in the Social Security Act 1991 by allowing the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs to declare certain members of the Pension Bonus Scheme as non-accruing members. This means that these members are not required to pass the work test for a specified period, effectively extending the period in which they are required to pass the work test. However, during this period, they do not accrue a bonus. The policy objective is to increase flexibility and fairness in the Scheme, ensuring that members are not unfairly prevented from accessing any pension bonus they may have accrued due to circumstances beyond their control. This new declaration revokes and replaces previous declarations, maintaining the same types of non-accruing members and adding new categories such as those affected by Cyclone Larry in 2006 and those on paid or unpaid leave from their employment. The instrument does not require a Regulatory Impact Statement or a Business Cost Calculator Figure as it is not considered regulatory in nature and is not expected to impact on business activity or incur compliance costs. The changes aim to minimise circumstances where the Scheme's rules prevent members from accessing their pension bonus, thereby enhancing fairness and flexibility within the Scheme.

Scope and Application

The Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007 pertains to the administration of the Pension Bonus Scheme under the Social Security Act 1991, affecting individuals who are members of the Scheme and certain categories of their partners. This legislation applies to those who are members of the Scheme and find themselves in specific circumstances that impede their ability to pass the work test required to accrue a pension bonus. These circumstances include being participants in the Community Development Employment Projects (CDEP), being in gaol or undergoing psychiatric confinement, having partners who are in the workforce but not registered members of the Scheme, being on paid or unpaid leave, undergoing bereavement, or being impacted by a major disaster such as Cyclone Larry. The Declaration specifies that these members are considered non-accruing members during the specified period and are exempt from the work test, though they do not accrue a bonus during this time. The Declaration also revokes previous declarations from 1998 and 2006, replacing them with this new one, which includes two additional categories of non-accruing members. This instrument is of Commonwealth scope, applying across Australia and operates in conjunction with subordinate instruments that may further define or extend its application.

Key Provisions

The Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007 (section 1) provides a framework under the Social Security Act 1991 (section 92Q) to declare specific members of the Pension Bonus Scheme as non-accruing members, meaning they do not accrue pension bonuses during certain periods. The Declaration came into effect on 1 January 2008 (section 2). It replaced two earlier declarations (sections 3(a) and (b)), namely the Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration (No 1) 1998 and the Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006, with additional provisions for members affected by Cyclone Larry and those on paid or unpaid leave. Members of the Scheme are designated as non-accruing members if they fall into any of the categories specified in section 5, including CDEP participants, those in gaol, undergoing psychiatric confinement, or whose partners are in the workforce but not registered members of the Scheme. Additionally, members on leave who would not pass the work test, those in bereavement, and those affected by major disasters like Cyclone Larry, are also included. The non-accruing status applies throughout the period specified in section 6, which varies depending on the circumstances, with a maximum period of 26 weeks for leave-related cases and 13 weeks for bereavement and major disaster-related cases. The obligations imposed by the Declaration on the parties it governs include ensuring that the defined categories of members are identified and appropriately classified as non-accruing members during the specified periods. This involves verifying the eligibility criteria for each category, maintaining records, and ensuring compliance with the provisions outlined in sections 5 and 6. The Department of Families, Housing, Community Services and Indigenous Affairs is responsible for implementing these provisions and ensuring that members receive the benefits they are entitled to under the Scheme. Failure to comply with the requirements of this Declaration can result in civil or criminal consequences. Although the specific penalties are not detailed in the text, breaches of provisions under the Social Security Act 1991 can typically lead to fines or other penalties as determined by the relevant authorities. It is essential for all parties involved to adhere to the regulations to avoid any adverse legal repercussions.

Legal classification tags

Area of Law
Social Security Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Regulatory Standards
Transitional Provisions

Interactions

Authorises

All Versions

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.