Income stream indexation review 110-02060030

An income stream is a regular series of payments, which may be made to a person (or their partner) over their life time or for a fixed term. Income stream payments may be subject to indexation, which is the percentage increase in the gross income each year. Types of income streams where payments may be indexed include:

• Lifetime income stream (LIS)
• Life Expectancy income stream (LIE)
• Term income stream (TIS)
• Lifetime pooled income stream - superannuation (LPS)
• Lifetime pooled income stream - non superannuation (LPO)
• Defined Benefit income stream
• Military invalidity pension

Note: before the system release in December 2024, military invalidity pension (MYP) income streams were coded as defined benefit (DEF) income streams.

The following income stream products are obsolete and could not be coded after 20 September 2004. These products were not converted to the new types. Customer records with these product types still exist on the system and may be indexed:

• Allocated Annuity (ALA)
• Allocated Pension (ALP)
• Ordinary Money Annuity Life (ANL)
• Ordinary Money Annuity Term (ANN)
• Rollover Money Annuity Life (ARL)
• ETP Superannuation Pension Life (ARP)
• Rollover Money Annuity Term (ARS)
• ETP Superannuation Pension Term (ART)
• Other Non-Defined Benefit Scheme (OTN)

The indexation may be a fixed rate such as 3% per annum or linked to the Consumer Price Index (CPI) or based on any other method.

• The indexation date is usually the anniversary of the purchase date
• The indexation method and date will be stated on the income stream schedule
• Indexation fields display when recording the income stream
• It is important for Service Officers to make sure that the indexation details are recorded if the income stream is indexed

If the indexation method is 'CPI', 'SAL' or 'OTH', the system will automatically issue a letter to the customer or their partner requesting the new gross income amount and frequency of payment. The product details are listed on the letter:

• product type
• product provider name, and
• product reference number

This will be based on product details available on the customer's or their partner's Centrelink record.

It is important that Service Officers make sure the indexation date is also advanced by one year when the new gross income is updated:

• care should be taken when advancing the date as it is normally based on the anniversary of the start date
• it is not one year from the event date or the date the customer advises the new gross income amount or the date the income is updated

Note: if the indexation method is 'FIX', the system will automatically increase the gross income amount by the indexation percentage on the indexation date. Staff must not update the gross income even if the customer contacts to advise the new income amount. Service Officers should tell the customer that their income stream will be updated automatically by the Centrelink system.

A letter is sent to the customer and/or their partner on the indexation date, if a customer has:

• an asset-test exempt lifetime or life expectancy income stream paid from a Self Managed Superannuation Fund (SMSF), or
• Small Australian Prudential Regulation Authority (APRA) Superannuation Funds (SAF), and
• the payments are subject to fixed indexation (Indexation Method is 'FIX')

This letter tells the customer about:

• the indexation rate used
• the adjusted gross annual income from the product, and
• informing Services Australia if the indexation rate has changed

The indexation fields will not display for defined benefit or military invalidity pension income streams. The CPI indexation date for each income stream provider will be held in the system.

For defined benefit or military superannuation fund providers that participate in the bulk electronic update, income is auto updated by using data supplied by them.

If an existing product is not updated or match to data from the provider 42 days after the indexation date, the system will automatically issue to the customer:

• a letter, and
• a defined benefit income stream schedule

The letter asks the customer to:

have the schedule completed by their income stream provider, or

• if the provider/super fund issues their own schedule, the customer is asked to attach this schedule to the covering letter, and
• return both in the reply paid envelope

The schedule will be pre-populated with the product’s provider name and product reference number as recorded on the customer's or their partner's record.

See Income stream customer reviews - defined benefit or military invalidity pension income streams for processing these customer based indexation reviews.

Customers and/or their partners have 21 days from the date of issue of the letter to provide Centrelink with the details. If there has been no response after 28 day, a reminder letter will automatically be sent. If the customer or their partner does not respond to the reminder letter within 28 days, their payments will be automatically suspended. Their payment will cancel after 13 weeks from the suspension date where there has been no reply or updates made.

When the requested details are updated on the system, the date of event (DOV) will be the date of receipt of the details.