EXPLANATORY STATEMENT
Veterans' Entitlements (Pension Bonus Scheme – Non Accruing Member – Major Disaster) Declaration 2006 (Instrument 2006 No.R19)
EMPOWERING PROVISION
Section 45TO of the Veterans’ Entitlements Act 1986 (VEA).
PURPOSE
To declare that a member of the Pension Bonus Scheme (Scheme) whose amount of gainful work has been reduced or whose partner’s amount of gainful work has been reduced (the partner being a member of the Scheme or a member of the corresponding scheme under the Social Security Act 1991 (SSA)) because of a major disaster is a non-accruing member of the Scheme for a maximum period of 13 weeks. This ensures that a period of unemployment/reduced employment up to 13 weeks will not disadvantage the member under the Scheme because they or their partner have had their amount of gainful work reduced.
BACKGROUND
Under Part IIIAB of the VEA clients may register for a single lump sum pension bonus, provided they are qualified for the pension bonus and the bonus is payable.
The Pension Bonus Scheme allows people of pension qualifying 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 the Pension.
The bonus is calculated as a multiple of the rate of Age Pension payable at the time the person eventually claims Age Pension, and depends on the person's rate of Age Pension and the length of time over which his or her bonus has accrued.
The maximum bonus payment accrues where a person has worked for five years past pension qualifying age and deferred claiming Age Pension. To qualify for a bonus, a person must not have received a pension, or benefit, referred to in paragraph 45TC(1)(e) of the VEA after qualifying for Age Pension and must engage in gainful work for at least 960 hours a year.
As a result of Cyclone Larry in March 2006 and the destroyed businesses left in its wake, some clients registered in the Scheme have become unemployed or have reduced hours of employment. Generally, a person must claim Age Pension and their Pension Bonus immediately (within 13 weeks of the reduction in their amount of gainful work).
The intention of the Declaration is to enable clients, registered in the Pension Bonus Scheme, to continue in the Scheme for up to a maximum period of 13 weeks after a loss, or lessening, of employment as a result of a major disaster. This will allow clients a period of grace in which they can make a decision whether or not to continue working and defer claiming Age Pension and their bonus. Members benefiting from this declaration will include those who cannot return to their workplace due to a major disaster. The members may not be involved in disaster recovery efforts or may have signed up as a volunteer with a charitable, community or welfare organisation to help with disaster recovery efforts.
RETROSPECTIVITY
Subsection 12(2) of the Legislative Instruments Act 2003 (LIA) provides (as paraphrased) that retrospective legislative instruments that negatively affect citizens are of no effect.
The attached instrument does not have retrospective effect. It commences on the day after registration on the Federal Register of Legislative Instruments.
CONSULTATION
Section 17 LIA requires a Rule-Maker to be satisfied, before making a legislative instrument, that any consultation the Rule-Maker considered appropriate, had been undertaken. If no consultation occurs the Explanatory Statement for the instrument must cite the reason (see: definition of “explanatory statement” in section 4 LIA).
The Rule-Maker (Repatriation Commission) decided that consultation with clients in respect of the attached instrument was not necessary because the instrument was beneficial in nature. However there was consultation with the Department of Families, Community Services and Indigenous Affairs.
DOCUMENTS INCORPORATED BY REFERENCE
The definition of “explanatory statement” in subsection 4(1) LIA provides that an explanatory statement for a legislative instrument must describe any document incorporated-by-reference in the Instrument and indicate how the document may be obtained.
No documents are incorporated-by-reference in the Instrument.
FURTHER INFORMATION
Attachment A.
ATTACHMENT A
Section 1 sets out the name of the Declaration.
Section 2 provides that the Declaration commences on the day after it is registered under the Legislative Instruments Act 2003.
Subsection 45TO(1) of the VEA requires that a Declaration be made by written notice published in the Gazette. However section 56 of the Legislative Instruments Act 2003 provides that this type of requirement is satisfied if the instrument is registered on the Federal Register of Legislative Instruments.
Section 3 contains definitions. In particular, the term major disaster means a “major disaster” declared under section 36 of the Social Security Act 1991 in force from time to time. The term is intended to be flexible enough to pick up the proposed changes to the definition of “major disaster” in the Social Security Act 1991 by the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006.
Section 4 provides that a member of the Pension Bonus Scheme is a non‑accruing member (as provided by Subdivision B, Division 3, Part IIIAB of the VEA) if that person is a member, for the period specified in section 6, of any of the following kinds of members:
(a) a member whose amount of gainful work (under Division 5 of Part IIIAB of the VEA) has been reduced by a major disaster; or
(b) a member whose partner is a scheme member, and whose amount of gainful work has been reduced by a major disaster; or
(c) a member whose partner is a member of the corresponding Pension Bonus Scheme under Subdivision B, Division 3, Part 2.2A of Chapter 2 of the SSA (in force from time to time) and who is unable to pass the work test as the partner’s period of gainful work has been reduced by a major disaster.
Although a member’s bonus, while remaining in the Scheme, does not continue to accrue during any period of non-accruing membership, this period will give the member more time to find work before having to make a decision about claiming Age Pension and the bonus.
Section 5 enables a member of the Scheme to request that the Declaration not apply to the member for all, or part, of the specified period. This will enable members, whose working hours may have been reduced by the disaster but not to the extent that they will be unable to pass the work test, to continue to be an accruing member of the scheme.
Section 6 provides that a member of the Scheme who is covered by section 4 is a non‑accruing member of the scheme, while the member is covered by section 4, and for a period up to a maximum of 13 weeks on and from the date the major disaster occurred.