Social Security (Pension Bonus Scheme - Non-accruing Members - Major Disaster) Declaration 2006

Administered by Department of Social Services

Legislation au F2006L02804 Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

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

Summary

 

Under Part 2.2A of the Social Security Act 1991 (the Act) customers may register for a single lump sum bonus, provided they satisfy the qualification requirements for Age Pension.

 

The Pension Bonus Scheme (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 bonus is calculated as a multiple of the rate of Age Pension payable at the time the person claims Age Pension, and depends on the person's rate of Age Pension on the date of claim and the length of time over which his or her bonus has accrued.  The maximum bonus payment accrues where a person has worked for a total of five years past age pension age and has deferred claiming Age Pension.  To qualify for a bonus, a person must, among other things, not have received a social security pension or benefit after qualifying for Age Pension and must engage in gainful work of at least 960 hours a year.

 

It has become apparent that, as a result of some major disasters, such as Cyclone Larry in March 2006, some people who are registered in the scheme may become unemployed or have their hours of employment reduced, which may result in them failing the scheme’s work test.  Generally, a person must claim Age Pension and their Pension Bonus within 13 weeks of failing the pension bonus work test.  People affected by a major disaster may, therefore, have to claim Age Pension and their bonus earlier than they would otherwise have done, resulting in a reduced bonus (or no bonus).

 

The intention of the Declaration is to enable people registered with the scheme who are affected by a major disaster, to be non-accruing members of the scheme for a maximum period of 13 weeks after a loss, or reduction, of employment as a result of the major disaster.  The making of this Declaration will mean that these customers are not required to pass the work test for that period.  This means, in effect, that the period in which they are required to pass the work test is extended by the period (of up to 13 weeks) in which they have been disadvantaged by the Major Disaster. 

 

Scheme members benefiting from this declaration will include those who cannot return to their workplace due to a major disaster.  The members may not necessarily be involved in disaster recovery efforts but may, for example, have signed up as a volunteer with a charitable, community or welfare organisation to help with disaster recovery efforts.  This declaration will give them extra time in which to look for further work, rather than claiming Age Pension and their bonus.  Scheme members will also have the time to decide whether to work or, alternatively, claim Age Pension and their bonus.

Section 1 sets out that the name of the declaration is the Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006 (the 2006 Declaration).

Section 2 provides that the 2006 Declaration commences on the day after it is registered in accordance with the Legislative Instruments Act 2003. 

Subsection 92Q(1) of the Act requires that a declaration be made by written notice published in the Gazette.  Section 56 of the Legislative Instruments Act 2003 provides that this requirement under subsection 92Q(1) is satisfied if the instrument is registered on the Federal Register of Legislative Instruments.

Section 3 contains interpretation provisions. 

Section 4 provides that a member of the Pension Bonus Scheme is a non‑accruing member (as provided by Subdivision B, Division 3, Part 2.2A of the Act) if that person is a member, for the period specified in section 6, of any of the following: 

  • a member, whose amount of gainful work has been reduced by a major disaster (subsection 4(a)); or
  • a member, whose partner is a scheme member, and the person’s partner’s period of gainful work has been reduced by a major disaster (paragraph 4(b)(i)); or 
  • a member, whose partner is a member of the corresponding scheme under Part IIIAB of the Veterans’ Entitlements Act 1986, and the person’s partner’s period of gainful work has been reduced by a major disaster (paragraph 4(b)(ii)).

Although a member’s bonus does not continue to accrue during any period of non-accruing membership, this period may give the member more time to find work before having to make a decision about claiming Age Pension and the pension bonus.

Section 5 provides for members of the Pension Bonus Scheme to request that this Declaration does not to apply to them for all, or part, of the period.  For example, some members may have their working hours reduced by a major disaster but not to the extent that, at the end of the full-year, or part-year, period the member will be unable to pass the work test.  In these circumstances, members may wish to continue to be an accruing member of the scheme.

Section 6 provides that members of the Pension Bonus Scheme, or a member’s registered partner, whose period of gainful work has been reduced due to a major disaster can be taken to be non‑accruing members of the scheme for a period up to a maximum of 13 weeks from the date the Major Disaster occurred. 

Consultation

 

Consultation was undertaken with the Department of Veterans’ Affairs.

 

This instrument is beneficial to customers and, accordingly, public consultation was seen as unnecessary.

 

Retrospectivity

 

None.

Overview

The Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006 was enacted to address the issue faced by members of the Pension Bonus Scheme who may become unemployed or have their working hours reduced due to a major disaster, such as the aftermath of Cyclone Larry in March 2006. This situation could result in these individuals failing the work test required to continue accruing the pension bonus, leading to an earlier than planned claim of Age Pension and a reduced or null bonus. The Declaration was made by the Parliament of Australia under section 92Q of the Social Security Act 1991, aiming to provide relief to those affected by a major disaster by allowing them to be non-accruing members of the scheme for up to 13 weeks. This effectively extends the period during which they are required to pass the work test, helping them to find further work or make an informed decision about claiming Age Pension and their pension bonus. The Declaration provides flexibility for members of the Pension Bonus Scheme who are adversely affected by a major disaster, ensuring that they are not disadvantaged due to circumstances beyond their control. By allowing them to be non-accruing members for up to 13 weeks, the Declaration aims to alleviate some of the immediate pressures these individuals may face in the aftermath of a disaster, ultimately supporting their financial stability and wellbeing.

Scope and Application

The Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006 applies to individuals who are registered members of the Pension Bonus Scheme under the Social Security Act 1991, specifically those whose employment or their partners’ employment is adversely affected by major disasters. This includes individuals whose working hours have been reduced or who have become unemployed due to events such as natural disasters, allowing them to be considered non-accruing members of the scheme for up to 13 weeks from the date of the disaster. This declaration aims to provide flexibility and additional time for these individuals to seek alternative employment or to decide whether to claim their Age Pension and the associated bonus. The geographic reach of this legislation is national, as it pertains to the Social Security Act, which operates across Australia. The declaration does not apply to members who choose not to be considered non-accruing members, allowing them to continue accruing their pension bonus if they meet the work test despite the impact of a major disaster.

Key Provisions

The Social Security (Pension Bonus Scheme – Non-accruing Members – Major Disaster) Declaration 2006, outlined in Section 1, is designed to provide relief to members of the Pension Bonus Scheme who have been affected by major disasters. The Declaration, which comes into effect on the day after it is registered under the Legislative Instruments Act 2003 (Section 2), aims to allow these individuals a non-accruing membership status for up to 13 weeks following a loss or reduction of employment due to a major disaster. This means that these individuals do not need to pass the work test during this period (Section 4). The definition of terms and the application of the Declaration are further elaborated in Section 3 and Section 5, respectively. The obligations under this Declaration require members of the Pension Bonus Scheme to be designated as non-accruing members if they, or their partner, have had their gainful work reduced due to a major disaster (Section 4). This status allows for the extension of the period in which the member is required to pass the work test, providing them with more time to find employment before having to claim their Age Pension and Pension Bonus. Members can also request that the Declaration does not apply to them if they do not wish to be non-accruing members for all, or part, of the specified period (Section 5). Under this Declaration, there are no explicit offences or penalties for non-compliance, as it is primarily designed to provide relief and flexibility to those affected by major disasters. However, members who do not qualify for non-accruing membership status may face a reduction in their Pension Bonus if they are unable to meet the work test requirements. It is important for affected individuals to understand their rights and options under this Declaration to ensure they receive the appropriate support and benefits available to them during times of hardship.

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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.