EXPLANATORY STATEMENT
Social Security (Top up of Pension Bonus — Specified Circumstances) Determination 2007
Summary
Subsection 93L(6) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs to, by legislative instrument, specify circumstances in which a person’s rate of age pension is increased for the purpose of enabling the Secretary to increase the amount of a person’s pension bonus.
This determination specifies the following circumstance: a person’s rate of age pension is increased with effect from a day that is more than 13 weeks after the day the person receives pension bonus (the start day) because of a decrease in value of the person’s assets, income or both and the determination is made because, within 13 weeks of the start day, incorrect information had been used to determine the person’s rate of age pension either due to an error by the Secretary or due to the provision of incorrect information to the Secretary by the person.
The effect of the determination is that, if the circumstance applies to a person, the Secretary is able to determine that the person’s pension bonus can be increased to an amount limited by subsection 93L(3) of the Act.
This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Background
The Families, Community Services and Indigenous Affairs Legislation Amendment (Further 2007 Budget Measures) Act 2007 inserted into the Act two new provisions allowing the Secretary to determine that a person’s pension bonus is to be increased or ‘topped up’.
The pension bonus amount is calculated on the basis of the amount of age pension on the person’s start day for the bonus. New section 93K provides that a person’s pension bonus can be topped up if a determination is made to increase the person’s age pension and that determination takes effect within the 13 weeks following the start day for the person’s pension bonus. Under that provision, a top up can only be made if the rate determination is made because of increase in the value of the person’s income, assets or both.
The purpose of new section 93L is to allow for top ups of pension bonus to be made in other specified circumstances. This instrument specifies the circumstance where a person’s age pension rate is increased after 13 weeks from the start day (a top up under section 93K is therefore not possible) because of an error in the Secretary’s calculation of the person’s age pension rate or because of the person providing incorrect information in the 13 week period following the start day which leads to an incorrect determination of their age pension rate.
The effect is that, if this circumstance is satisfied, the Secretary is able to make a top up increasing the amount of the person’s pension bonus to an amount that is not greater than the difference between the amount of pension bonus the person received on the start day and the amount that would have been payable to the person as a pension bonus if the error by the Secretary or by the person had not been made.
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 this circumstance: a rate determination for age pension is made and that determination has effect due to the operation of the date of effect provisions in Part 3, Division 9 of the Social Security (Administration) Act 1999 on a day that is more than 13 weeks after the start day of the person’s pension bonus and that determination is made due to a reduction in the value of the person’s income, assets or both and due to:
- an administrative error by the Secretary that was made within 13 weeks of the start day of the person’s pension bonus; or
- because the person, within 13 weeks following the start day of the person’s pension bonus, gave the Secretary incorrect information about the value of the person’s income, assets or both.
Consultation
The Department of Veterans’ Affairs was consulted during the preparation of this instrument. This was done to ensure a co-ordinated and consistent approach to the treatment of calculating increases in pension bonus amounts payable to persons under both the social security law and the Veterans’ Entitlements Act 1986.
This instrument can only have a beneficial or neutral impact on persons who are members of the pension bonus scheme. 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 as a result of the effect of this instrument.