EXPLANATORY STATEMENT

Veterans’ Entitlements (Pension Bonus Scheme  —  Non-accruing Members) Declaration 2007

Summary

Section 45TO of the Veterans’ Entitlements Act 1986 (the Act) allows the Repatriation Commission (the Commission) 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 IIIAB of the Act, the Scheme allows people of pension/qualifying age to choose to continue working and defer claiming age service pension, partner service pension or income support supplement in return for a tax free lump sum bonus payable when they eventually claim and receive 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 clients 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 specified in the Declaration in relation to that particular circumstance.  A person does not, however, during a period of non-accruing membership accrue a bonus.

The Veterans’ Entitlements (Pension Bonus Scheme – Non-Accruing Members – Major Disaster) Declaration 2006 No.R19 declared several types of members to be non-accruing members (former Disaster Declaration). The former Disaster Declaration has been being revoked by the attached Declaration which covers the kinds of members in the former Disaster Declaration together with new types of non-accruing members.  The new types of non-accruing members, which include kinds of non-accruing members in the Act, are:

• member of the Community Development Employment Project (CDEP);
• member in gaol or psychiatric confinement;
• non working member whose working partner intends to participate in a Scheme;
• member (or member’s partner) who is on leave from gainful work and does not pass the work test for the Scheme;
• a member undergoing a period of bereavement;
• a member who has received compensation and is unable to pass the work test for the Scheme.

A declaration under section 45TO is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Explanation of the provisions

Section 1 states the name of the Declaration: the Veterans’ Entitlements (Pension Bonus Scheme – Non-accruing Members) Declaration 2007.

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

Section 3 revokes the Veterans’ Entitlements (Pension Bonus Scheme – Non-Accruing Members – Major Disaster) Declaration 2006 No.R19.

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

‘Act’ means the Veterans’ Entitlements Act 1986.

‘designated pension’ has the meaning given by section 45TA of the Act and means:

• age service pension;
• partner service pension; or
• income support supplement.

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

(a)   sections 45TS and 45TT of the Act for a member of the Scheme.

(b)   sections 92U and 92V of the Social Security Act 1991 for the partner of a member of the Scheme who is a member of the corresponding Scheme under Part 2.2A of the Social Security Act 1991.

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

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 (Community Development Employment Project) participant within the meaning of section 23 of the Social Security Act 1991;

(b)   a member who is in gaol, within the meaning of subsection 55(4) of the Act;

(c)   a member who is undergoing psychiatric confinement, within the meaning of subsections 55(5) and (6) 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 2.2A of the Social Security Act 1991; and

(iii)            intends to become a registered member of the Scheme or the corresponding Scheme under Part 2.2A of the Social Security Act 1991.

(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.  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 those 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 2.2A of the Social Security Act 1991; 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.

(j) a member who has received compensation and who would not have been paid a designated pension during the compensation period if the member had not reached pension/qualifying age and the pension was a compensation affected pension, and who is unable to pass the work test for a bonus period during which the compensation period occurs. 

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, is a non-accruing member for a maximum period as provided in the table.  Item 1 specifies that the maximum period applicable to paragraphs 5(e) and 5(f) is 26 weeks.  Item 2 specifies that the maximum period applicable to paragraphs 5(g), 5(h) and 5(i) is 13 weeks. 

The note to section 6 makes it clear that a kind of member in paragraph 5(j)

(compensation-recipient) is a non-accruing member during the whole or part of the compensation period during which the member is unable to pass the work test for the Scheme.

Section 7 provides for members of the Scheme who were affected by Cyclone Larry.  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 a member or the corresponding Scheme under Part 2.2A of the Social Security Act 1991; 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 Families, Housing, Community Services and Indigenous 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 Scheme 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.