Editors --- "Pension bonus scheme: receipt of age pension nullified by re-payment" [2007] SocSecRpr 35; (2007) 9(3) Social Security Reporter, Article 9

• RODHAM and SECRETARY TO THE DFACSIA
• The issue
• Background
• Discussion
• Formal decision

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Pension bonus scheme: receipt of age pension nullified by re-payment

RODHAM and SECRETARY TO THE DFACSIA

(2007/1331)

Decided: 17th May 2006 by N. Isenberg

The issue

The issue was whether Rodham was precluded from payment under the pension bonus scheme(PBS) because he had previously received an age pension.

Background

In February 2003, Rodham enquired at Centrelink about the PBS. He spoke to a Centrelink officer who was unfamiliar with the PBS scheme but who gave him an application for age pension. He was told that his claim for the pension bonus would be assessed after Centrelink had all his particulars. Rodham, who had no intention of claiming an age pension as he was still working, completed the form and lodged it with Centrelink.

Rodham was paid age pension from March 2003. In November 2003 Centrelink advised Rodham that his pension was cancelled because of his combined income being above the allowable limit and an overpayment had also been raised. Between March and November 2003 Rodham received $403.65 but had been entitled to$302.87 in age pension.

On 8 February 2005 Rodham lodged a registration for the PBS and advised Centrelink that he had been in receipt of an age pension previously. Centrelink advised that he may not be eligible for the pension bonus as he had previously been paid an age pension but was registered as an accruing member of the PBS from the date he lodged his registration. On 8 March2005he was notified that he could not be registered for the PBS as he had previously received an age pension.

Rodham requested a review of that decision and both Centrelink and the SSAT affirmed the matter. He lodged an application for Compensation for Detriment caused by Defective Administration (CDDA).

Centrelink conceded by letter to Rodham that it had breached its duty of care as he had received wrongful advice in 2003. His registration date with the PBS was backdated to March 2003, however he was also advised that although he was registered under the scheme, he was not eligible for the pension bonus as he was still working. He was also informed that when he ultimately did cease work and applied for the pension bonus his claim would be rejected because he had previously been paid the age pension.

Discussion

Centrelink’s position was that as Rodham had been paid age pension between March and November 2003 he was precluded from payment of the pension bonus by virtue of s.92C(b) of the Social Security Act 1991 (the Act).

Rodham submitted that the payment of age pension was as a result of Centrelink error because at no time did he intend to apply for an age pension.

The AAT considered a number of cases including Re Shipman and Secretary, Department of Family and Community Services (2004) AATA 287 where an elderly farmer received age pension for nearly two years before he registered for the PBS. As a result he was not eligible for the pension bonus. In Brutnell and Secretary, Department of Family and Community Services (2002) AATA 436the applicant sought Centrelink benefits during periods of illness when she was unable to work. It was Centrelink’s decision that she be paid age pension (and widow’s pension). Later she applied for pension bonus but was precluded because of having previously received age pension.

The AAT considered that the present case differed because in each of the previous cases the applicant had sought Centrelink benefits. It was only later that entitlement to pension bonus was contemplated. In this matter, Rodham enquired about pension bonus, and for reasons known only to Centrelink, he was erroneously paid age pension.

The AAT considered that Rodham’s case was more akin to Brignell and Secretary, Department of Family and Community Services [2003] AATA 177; (2003) 73 ALD 302.The Tribunal in Brignell effectively accepted that repayment of the age pension could nullify Mr Brignell’s receipt of age pension. Centrelink’s position in that matter was effectively the same as in the present matter: once age pension was paid to the applicant he was forevermore precluded from the pension bonus under the legislation.

It was argued that in Brignell, Mr Brignell had no entitlement at all to the age pension, but Rodham had an entitlement to age pension, albeit to only about $300 over a period of several months. He was ‘entitled to it by virtue of the then existing circumstances. It could not be suggested that payment was at that time illegal or not in accordance with law’. The AAT however, considered that Rodham had not sought age pension and accepted that it was paid to him in error.

Rodham offered to repay the age pension he had received however the advocate had refused that offer because Centrelink would not know how to accept a payment. The Tribunal accepted that payments to Centrelink (other than in response to a claim by Centrelink of overpayment of benefit) would be rare indeed and noted that it did not know if Rodham had since attempted to make that payment.

The AAT also referred to the following commentary by the Tribunal in Brignell:

The Tribunal’s decision should not be construed as meaning that there are no circumstances in which a payment actually received will be deemed not to have been received. The Tribunal washer dealing with a payment which was legally made at the time although it subsequently became repayable. The Tribunal stressed this point. The Tribunal seems to have left to one side the issue of whether a payment, which was illegal at the time it was made, could be deemed to have been received within the meaning of the Act.

The AAT noted that the Tribunal in Brignell took into account that the purpose of the pension bonus scheme is ‘to encourage people to remain in the workforce, defer retirement and receipt of the age pension. The applicant’s actions mark him as a person intended to benefit from the pension bonus scheme’.

The AAT considered that Rodham was also such a person who remained in the workforce, and was entitled to the pension bonus to do so. The AAT noted that it was bizarre to suggest that because Rodham was erroneously paid approximately $300 which was characterised as age pension that he should be precluded from pension bonus in an amount the Centrelink advocate conceded may be in the vicinity of $45,000.

The AAT adopted the approach in Brignell and found that, subject to payment to Centrelink of $302.87, Rodham was not precluded from payment under the PBS.

Formal decision

The Tribunal set aside the decision under review and decided that subject to payment to Centrelink of$302.87, Rodham was not precluded from payment under the PBS, by virtue of having previously received that amount from Centrelink.

[S.P.]