Editors --- "Pension bonus scheme: work test; non-accruingmembership; special circumstances" [2012] SocSecRpr 2; (2012) 14(1) Social Security Reporter, Article 2

• MELZER and SECRETARY TO THE DFHCSIA
• Background
• The issues
• Discussion
• Formal decision

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Pension bonus scheme: work test; non-accruing membership; special circumstances

MELZER and SECRETARY TO THE DFHCSIA

(2012/68)

Decided: 7th February 2012 by S.M. Bell

Background

Melzer registered for the pension bonus scheme (the scheme) from 1 July 1998 and satisfied the work test of 960 hours per year in 1998/9, 1999/2000, 2000/01and 2001/02. She did not work 960 hours again until 2008/09. Melzer claimed age pension and the pension bonus on 25November 2010 more than seven years after she first ceased to meet the work test.

Melzer sought that her pension bonus be calculated on the basis of all pension bonus periods accrued since her registration.

The issues

1. Was Melzer a non-accruing member of the scheme from 2002/03to 2007/8 inclusive, within the meaning of s.92 Q of the Social Security Act 1991 (the Act)?

2. If not, did Melzer lodge her claim for pension bonus in the13 weeks immediately after she failed the work test?

3. If not, did special circumstances justify an out of time claim?

Discussion

The scheme provides that a person accrues pension bonus periods for each year after registration if they satisfy the work test of 960 hours per year. Melzer failed the work test in 2003.

A person has 13 weeks to apply for the pension bonus after failing the work test unless they are classed as a non-accruing member under s.92 Q of the Act. Melzer did not meet the requirements to be a non-accruing member. Accordingly, Melzer’s claim for the pension bonus was out of time.

Under s.21 (2) of the Social Security (Administration) Act 1999(the Administration Act), the time to make a claim can be extended in special circumstances. Melzer reduced her hours of work in 2003 to help her daughter who suffered from post natal depression and during this time her daughter’s stepdaughter died tragically. The pharmacy where Melzer worked employed someone to replace her and she did not regain her normal hours of above 960until 2009.

In 2010, Melzer’s other daughter was diagnosed with cancer and so Melzer reduced her hours again. In 2011 her daughter died and Melzer retired soon after. At the time of the hearing she suffered from reactive depression.

Throughout the period of her lowered earnings, Melzer supported herself by drawing down on a $60,000 inheritance and her superannuation. Melzer was aware that she might have qualified for a carer’s payment while her daughters were ill, but there was too much happening for her to claim.

During this time, Melzer also received a number of letters from Centrelink warning about the need to claim within 13 weeks of no longer meeting the work test and she was invited to confirm that she was ‘still on track’ with the scheme. The AAT found that the letters did not explain what it meant to be ‘on track’ with the scheme and that they would not have been compelling under Melzer’s circumstances.

The AAT, noting that the discretion under s.21(2) of the Administration Act was unfettered, also had regard to the policy contained in the Guide to the Social Security Law about the exercise of discretion. The AAT found that Melzer’s circumstances reflected at least two of the ‘reasons for acceptance’ in the Guide being deaths and illness in the family.

The Secretary urged that the discretion not be exercised in Melzer’s case because an advantage had been created resulting in her rate of pension, and hence also the pension bonus, being higher than it otherwise would have been. The AAT distinguished between Melzer’s case and one where a person had ‘engineered’ a delay in the claim in order to maximise their pension and bonus. Given that Melzer did not claim the carer’s payment because there was ‘too much happening’, the AAT found that it was likely also the reason why she did not safeguard her pension bonus and that the language in Centrelink’s letters had not assisted. Melzer also continued to work to minimise her drawings on her funds and to avoid dependence on social security.

The AAT was mindful that seven years was a substantial delay. However, the work test failure was found to be due completely to her special circumstances. The failure to claim was due in part to her special circumstances. ‘The delay was caused in part by her inattention to her interests under the scheme and that was due in part to her special circumstances’ (Reasons, para. 22).

Formal decision

The AAT set aside the decision under review and decided that Melzer’s 2010 claim for pension bonus should be accepted out of time. The pension bonus periods accrued until her first failure to meet the work test should be taken into account in the calculation of her pension bonus.

[M. O’H.]