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Adding or updating a life expectancy income stream 108-05060040

This document outlines how to assess and code life expectancy income stream products.

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Adding or updating a life expectancy income stream

Coding a new income stream

Additional Event Date(s) needed for a new income stream

Adding or updating a life expectancy income stream

Table 1

Step	Action
1	Check updates required If the customer has purchased a new income stream using funds from selling their principal home and they intend to use some or all the funds to purchase a new home, see Sale of principal home. If the customer has supplied a physical copy of an income stream schedule to a Service Centre, upload a copy of the schedule to the customer’s record. Is the customer contacting to add or update a life expectancy income stream? Yes, go to Step 3 No, go to Step 2
2	Discuss updates with customer Discuss all of the income and assets updates the customer would like to make during their contact (for example income stream, shares, foreign income). Only proceed with the coding if all updates required can be completed. If there are concerns with the legitimacy of the customer's information, see Coding income and assets for Centrelink payments and services. This table describes information needed to update the income stream. Can the customer provide all the other information required? Yes, go to Step 3 No: further information or documents will be needed before the updates can be done check if additional information for the income stream update is also needed go to Step 3
3	Who can complete these updates? All appropriately skill-tagged Service Officers can process new and existing life expectancy income streams at the point of contact for all payment types. Do not add new income streams without an income stream schedule. Documentation to request: For existing life expectancy income streams, a Details of income stream product (SA330) or similar schedule completed by the provider is required for any partial commutations For new income streams, a Details of income stream product (SA330) or similar schedule completed by the provider is required A provider can issue their own schedule with similar questions that appear on the SA330 and this can be accepted Historical Event Date Additional coding will be needed where the income stream is being added to the customer record and the Event Date is historical: For asset reassessment historical means: more than 6 months in the past if the payment frequency is less than annual, or more than 12 months in the past if the payment frequency is annual, or the Event Date is before the date the income stream is added to the customer’s record For income assessment historical means: the payment is indexed, and the Event Date is more than 12 months in the past Some of the coding can be done without additional information from the customer. The customer must provide the gross income amount for each period of 12 months from the anniversary of the purchase date where: the indexation method is CPI (Consumer Price Index), and they or their partner received an income support payment or a Low Income Health Care Card (LIC) at any time since the date of purchase Is the customer able to provide everything needed? Yes, go to Step 5 No, go to Step 4
4	Request documents Tell the customer all information is required before any change can be made to make sure they receive correct entitlement. Tell the customer all the information they must provide. See Requesting information (CLK) Use Mail Forms if a form is to be sent Ask for the information to be returned within 14 days Note: where the customer or partner is unable, or unwilling, to provide information due to Family and Domestic Violence (FDV), escalate to AISR support. AISR support will escalate to arrange the request of the information directly from the provider. Procedure ends here until documents returned.
5	Income stream paid from a self-managed superannuation fund (SMSF) or small APRA fund (SAF) Most SMSFs and SAFs can be identified by their name. The name of the SMSF may include the customer's or their partner's family name: Question 9 on the Details of income stream product (SA330) will also help identify if the income stream is paid from an SMSF or SAF If needed, contact the Financial Investment and Network Support (FINS) Helpdesk via the Level 2 Policy Help Desks Online Query Form. See the Resources page for a link Is the income stream from an SMSF or SAF? Yes: See Assessing income streams paid from a self-managed superannuation fund (SMSF) or small APRA fund (SAF) Procedure ends here No, go to Step 6
6	Starting the update If the product was a jointly owned income stream but one member has passed away the product will need to be coded off and recoded with the full purchase price and income. While the income amount paid is often 100% of the amount paid to both owners, some products only allow for a reduced portion to be payable to the surviving member for example 80% or 50% etc. The date of event will need to be the day after date of death of the other member. Once that is coded any other changes per below can then be factored. If the customer or their partner is: Providing information as part of a review, see Income stream indexation review. Procedure ends here Advising a change to the gross income from an existing income stream or expiry of the income stream at the end of the product term, go to Step 7 Advising new income stream details, see Table 2 > Step 1
7	Change to gross income or expiry of product term - check for an existing record Go to the Pension/Annuities Summary (SUPS) screen on the income stream owner's record. The product type code will be LIE, ANN, ARS, or ART. Note: the following codes are obsolete but can used for assessment purposes. They have never converted and are for products purchased before 20 September 2007. ANN (Ordinary money annuity term) ARS (Rollover money annuity term) ART (ETP superannuation pension term) The assessment is not affected, however any product with an obsolete product type must be updated to current product codes to prevent manual handoffs as part of the Automation of Income Stream Reviews process. Refer to Table 2 > Step 1 in Income stream reviews – coding accuracy. Are there details for the income stream/s already entered on the SUPS screen? Yes, for change to gross income, go to Step 8 for expiry of product term, go to Step 11 No, go to Step 11
8	Update gross income Indexation method is: FIX: An amount is automatically calculated annually using the indexation percentage Do not update the gross income The system will auto increase the income amount by the percentage coded in the Indexation %: field on the date specified in the Next Indexation Date: field. The Indexation date will also auto update Go to Step 10 CPI: 'S'elect the appropriate product from the SUPS screen and select Continue Check details on the Pension/Annuities Identification (SUPI) screen are correct and select Continue The Pension/ Annuities Details Variable (SUPV) screen will be presented Event Date: date of change Gross Income: field - code new gross income amount Income Frequency: field - code the frequency of the payment (if changed) If there is an existing deduction figure code due to a family law split coded under ‘Other Ded Amt (income)’ field, this amount may need to be adjusted. If it is a set amount then it can remain, if it is a percentage of the gross then it needs to be adjusted when the gross is adjusted. Note: this field needs to be based on the frequency coded for the income, e.g. if monthly coded then this figure must represent the monthly amount allowed as a deduction. Go to Step 9
9	Update SUPV screen Next Indexation Date: field for CPI indexed income streams: Check the indexation date For CPI indexed income streams, this is usually the anniversary of the purchase date. It is not 1 year from the Event Date (date of receipt of requested information) or the date when the income is updated Input the date as included in the schedule. Note: if the income stream is from a SMSF or SAF and the indexation date reported is 1 July, it can be accepted If this date is blank in the schedule, input the next anniversary of the purchase date Go to Step 10
10	Finalise the update Source: DOR: and Action: fields Select Continue Check the SUPS screen displays the updated income stream details Complete the activity on the Assessment Results (AR) screen Check if there is an indexation review for this product on the FAL screen and make sure it is finalised to prevent a reminder letter being sent or payment being suspended Record details on a DOC Procedure ends here
11	Expire (cancel) income stream Make sure the product is a life expectancy income stream and not a lifetime income stream that has been coded incorrectly. Lifetime income streams do not expire, they are paid for the customer’s lifetime or their partner’s lifetime if the partner is a reversionary beneficiary. To update manually: Select the relevant income stream from the Pension/Annuities Summary (SUPS) screen On the Pension/Annuities Identification (SUPI) screen, code: Product Cancellation Reason: field - 'EXP' Action: field (system will not accept I) - 'C' Select Continue to go to the Pension/Annuities Details Variable (SUPV) screen On the SUPV screen, the system will automatically set the relevant fields to 0 or blank. Leave the Indexation Method, Next Indexation Date and Indexation % fields blank Update: Event Date: field - Date of expiry. Note: this is the end of the product term and is based on the purchase date and the term or relevant number Action: field - 'I' Record the details of the circumstances of the cancellation on a DOC.
12	Documents have been provided for each income stream they own An SA330, or similar schedule, providing details for each income stream. The schedule should be completed by the: Income stream provider for income streams purchased from a retail provider Trustee for income streams paid from a self-managed superannuation fund (SMSF) or small APRA fund (SAF). Note: some SMSFs may have a retail provider as their administrator. For example AXA, MLC, who may complete the form A provider can issue their own schedule with similar questions that appear on the SA330, and this can be accepted Has the customer provided an SA330 or similar schedule for each income stream they (and their partner) own? Yes, see Table 2 > Step 1 No: Request SA330 or similar schedule issued by their provider using Request Documents in Process Direct. The enhanced workflow creates a standalone RFI and updates to a CoC using a Task Selector Record what the customer has been asked for on a DOC Select Information to be supplied within 14 Days + Delivery Procedure ends here until documents are received

Coding a new income stream

Table 2

Step	Action
1	Record a new income stream Before starting the update, check where the money came from to buy the income stream. For example, the customer used money in a savings account or a superannuation account recorded on the Managed Investments Summary (MIS) screen. If so, update these other assets in the same activity. To update Pension/Annuities Identification (SUPI) screen manually: Product Type Code: field: 'LIE' (life expectancy income stream) As of 20 September 2007, this code must not be used for a new income stream which does not comply with section 9B If the product is a fixed term product and does not comply with section 9B, the correct product type is TIS. See Adding or Updating a Term income stream Income stream from SMSF/SAF?: field: 'Y'es or 'N'o whether the income stream is paid from a self-managed superannuation fund (SMSF) or small APRA fund (SAF). Refer to question 9 in the SA330 for this information Provider or SMSF/SAF Name: For SMSF/SAF only: enter the name of the self-managed superannuation fund manually. Do not code the names of financial planners or accountants For non-SMSF: select the appropriate Provider name from the drop-down list. Beginning to type part of the name will reduce the options. Note: the provider name may not be an exact match to the schedule. If a fund does not appear in the provider/fund name list in the first instance, please refer to FINS Bulletin page Successor Fund Transfer (SFT) page. If still unable to locate, refer to LPS for support as per normal BAU processes Provider or SMSF/SAF ABN: For SMSF/SAF only: enter the fund’s Australian Business Number. For non-SMSF/SAF: this will auto-populate. Note: the ABN may not match the schedule Product Name: field: The name of the income stream product as stated on the schedule Product Reference Number: field: The product reference number is unique to each income stream and may be shown as the product reference number, account number or policy number on the schedule Make sure the correct product reference number is recorded exactly as it appears on the schedule Do not code the provider ABN or product name as the product reference number Purchase Date: field: The purchase date of the income stream as stated on the schedule Commencement Date: field: The same as purchase date Term or Relevant Number: field - as stated on the schedule This is the length of time for which the income stream is payable If not provided on the SA330 or is incorrect, contact the provider to obtain the correct number or request customer to obtain correctly completed schedule from provider. See Requesting information (CLK) The relevant number is the fixed term of the product and must be a whole number It must always be the number that applied at the commencement date and must not be changed following reversion to a reversionary partner or beneficiary
2	(SUPI) screen - continued Section 9A/B/BA Compliant Indicator: field Code 'Y'es or 'N'o whether or not the income stream meets requirements under section 9B of the Social Security Act 1991. Note: new life expectancy income streams cannot be purchased on or after 20 September 2007 unless it was purchased from the commutation of a section 9B compliant income stream purchased before 20 September 2007 and provided the conditions are met for retention of the assets-test exemption For more information, see the References page If a product loses its ATE status, it must be cancelled and recoded as non-complying Start Date Original Commuted Product: field: This is only coded if the purchase date is on or after 20 September 2007 and the product meets conditions for retention of the ATE status as above Contact FINS Helpdesk before coding a date in this field. See the Resources page for a link to the Online Query Form If the date is not provided on the schedule, this field must be left blank and the Section 9A/B/BA Compliant Indicator: field coded as 'N' Product Cancellation Reason: field: Leave blank when adding a new income stream If the product is fully commuted, cancel the income stream. Do not delete. If the product is cancelled, it stops to be assessed under income and assets tests. If cancelled due to a full commutation and it complies with section 9B, check if it is an allowable commutation. If the product is being cancelled, use 'C'orrect in the Action: field and code the cancellation reason. The SUPV screen will display so the Event Date: field can be coded Complete Source: DOR: and Action: fields and select Continue
3	Code the Pension/Annuities Details Variable (SUPV) screen Select the date for the Event Date field using the following information. Note: an additional Event Date(s) may be needed for some new income streams. These will be added after the first page is complete. More information is provided later as it is needed. Reversionary beneficiary The Event Date is the day after the date of death of the primary beneficiary (deceased spouse or partner), which is the date the customer (reversionary) is entitled to the income stream payment Assessable income from the income stream includes: any lump sum arrears, and regular ongoing payments The income stream is assessed from this date even though other income and assets are assessed at the end of the 16 week bereavement review where the customer does not advise the changes before the review Waiver provisions effective from 9 May 2018: If the assessment of lump sum arrears results in a debt during the bereavement period for the surviving spouse, give consideration to waiver provisions contained under Class of Debt, Section 1237AB(1) of the Social Security Act 1991. See the References page for a link All conditions in the legislation must be met These waiver provisions cannot be used to waive debts outside the 14-week bereavement period, or debts which occurred before 9 May 2018 New claim The Event Date will be the: date the income stream was purchased where the: customer has a partner who is current on an income support payment, RCA or LIC before the purchase date, or income stream was purchased after the date of grant of the payment income stream was purchased after the lodgement of an early claim lodgement date for an early claim the commencement date of the 8-week assessment period for LIC payment grant date in all other cases Purchase of new income stream by existing customer The Event Date is the purchase date of the product
4	(SUPV) screen continued Channel Type: field: No update required The system displays whether income stream was updated by Services Australia staff (CSO) or auto bulk updated with data sent by the provider (ISP) Product Category: field. No update required. The system automatically displays either: 1 - Assets Test Exempt Income Stream 2 - Assets Tested (Long Term) Income Stream 6 - Partially Assets Test Exempt Income Stream SMSF/SAF Actuarial Cert Date: field: This date is only required for life expectancy income streams from SMSFs/SAFs that comply with section 9B commenced before 1 January 2007 Do not code until the Complex Assessment Officer (CAO) has checked the actuarial certificate and provided a recommendation to accept it Code the start date of the 'in force' period of the actuarial certificate. This must be 1 July of the current financial year. This is not the date the certificate was signed or issued If assessing a new income stream from SMSF/SAF, additional documents including actuarial certificate are required If reviewing actuarial certificate, recode this field when a new actuarial certificate is provided and accepted by CAO
5	SUPV Screen (continued) Gross Income Amount: field Code exactly as shown on the schedule (including cents, if stated) Do not convert to an annual amount unless specified on the schedule Income Frequency: field: Code the frequency of payment The system uses this field to make automatic updates to asset value for some income streams Residual Capital Value: field: Displays only if the Section 9A/B/BA Compliant Ind: field is N Code the amount that will be returned to the income stream owner as a lump sum at the end of the income stream term A product with a residual capital value cannot comply with section 9B Original Purchase Price: field: Code amount originally paid for the income stream, not reduced by any commutations Code exactly as stated on the schedule (including cents if stated) For existing products, if there is a whole dollar discrepancy, the product must be cancelled with cancellation reason ‘OTH’ and recoded Commutation Date: field: Code the date of the latest commutation This date is only for information and is not the date of effect Latest Commutation: field: Code the most recent commutation amount A life expectancy income stream that complies with section 9B is a non-commutable income stream, except in very limited circumstances Determine whether the commutation is allowable or not. If unsure, contact the FINS helpdesk before updating this field. Normal escalation procedures apply. See the Resources page for a link to the Online Query Form Prev Commutations: field: The system displays total commutations made up to the current date Purch Price - Commutations: field: The system displays original purchase price less total commutations made Oth Ded Amount method: field: Possible codes: Blank – use if no other deductions allowed ‘F’ – Family Law Split (FLS) ‘S’ – Special Rate Disability Pension (SRDP) – not applicable for LIE products so should not be selected ‘B’ – Code if customer has both SRDP and FLS reductions - not applicable for LIE products so should not be selected Other Ded Amt (income): field: This field must not be coded if ‘F’ is not coded in ‘Oth Ded Amount method’ field Family Law Split (FLS) Depending on the agreement or court order involved, it is possible the provider has split the income stream and is only paying the customer their remaining share. For those cases no additional reduction is required However, if the provider was unable to split the payment, then the amount the customer must legally pay to the other party can be coded under ‘other deduction amount’ to reduce the gross income assessed. The amount coded in this field must match the frequency used for the income coded e.g. if income is coded as a monthly figure this field must be coded with the monthly amount allowable. For example: it may be a set amount of $10,000 per year or could be 20% of the gross and if required needs to be converted to the frequency used for coding the income. See References for link to relevant instructions. This information needs to be included on the DOC when updates are finalised.
6	SUPV screen (continued) If the income stream is not indexed, go to Step 8 In all other cases, if the Event Date is historical, additional Event Date(s) will be needed. The indexation fields are completed on the last (most recent) Event Date. For asset reassessment historical means: more than 6 months in the past if the payment frequency is less than annual, or more than12 months in the past if the payment frequency is annual, or the Event Date is before the date the income stream is added to the customer’s record For income assessment historical means: the payment is indexed, and the Event Date is more than 12 months in the past Is the Event Date historical? Yes: do not code the indexation fields at this point make a note additional Event Date(s) will be needed before the update can be finalised go to Step 8 No, go to Step 7
7	SUPV screen (continued) Indexation Method: field: The indexation method will be stated on the schedule If payment is indexed, indexation details must be coded for review of the gross income If 'FIX' the system will auto increase the income amount by the percentage coded in the Indexation %: field on the date specified in the Next Indexation Date: field If 'CPI' is coded, the system will send out a letter to the income stream owner requesting their new gross income and frequency of payment Next Indexation Date: field: For CPI indexed income streams, this is usually the anniversary of the purchase date. It is not 1 year from the Event Date (date of receipt of requested information) or the date when the income is updated Input the date as included in the schedule. Note: if the income stream is from a SMSF or SAF and the indexation date reported is 1 July, it can be accepted If this date is blank in the schedule, input the next anniversary of the purchase date It is necessary to make sure the annual reviews are correctly generated by the system and updated each year Must be coded with the next future review date when adding the income stream with an indexation method Indexation %: field Code only if Indexation Method: field is FIX If the indexation rate is greater than 5% the product cannot be section 9A/B/BA compliant
8	SUPV screen (continued) The system completes the remaining fields needed on the SUPV screen. Select Continue to return to the SUPS screen Select the product being added in this update to return to the SUPV screen Check the additional coding now appears: Deductible Amt (Assets): field: system calculated if Section 9A/B/BA Compliant Ind: field is N (product category 2) displays the deduction amount and is used with the term elapsed to determine the assessable asset amount not display for partially asset-test exempt income streams (product category 6) even though the amount is used to calculate the assessable asset amount Deductible Amt (Income): field: system calculates and displays the deduction amount by which the gross income amount from an income stream is reduced to determine assessable income Term Elapsed (Years): field: system displays the period elapsed since the commencement date this is used with the deductible amount (assets) to calculate the assessable asset amount for asset-tested (product category 2) and partially asset-test exempt (category 6) income streams if gross income frequency is annual, the term elapsed is calculated in increments of whole years. If not annual, the term elapsed is calculated in increments of 0.5 years Assessable Income Amount: field: system calculated: gross income amount - deductible amount (income) Assessable Asset Amount: field: system calculates and displays the assessable asset amount Select Continue to return to the SUPS screen for the next part of the update
9	Additional Event Dates will be needed for some new income streams Historical Event Date For asset reassessment historical means: more than 6 months in the past if the payment frequency is less than annual, or more than 12 months in the past if the payment frequency is annual, or the Event Date is before the date the income stream is added to the customer’s record For income assessment historical means: the payment is indexed, and the Event Date is more than 12 months in the past Is an additional Event Date(s) needed because the income stream is being added to the customer record and the Event Date is historical? Yes, go to Table 3 > Step 1 No, go to Step 10
10	Finalise activity Check details on the SUPS screen are correct Complete the activity on the Assessment Results (AR) screen Make sure the FAL screen is checked and any review for the return of the documentation completed Record details on a DOC

Additional Event Date(s) needed for a new income stream

Table 3

Step	Action
1	Historical Event Date Additional Event Date(s) may be needed for both the assets test and income test to work correctly when the income stream is being added with a historical Event Date: for asset reassessment historical means: more than 6 months in the past if the payment frequency is less than annual, or more than12 months in the past if the payment frequency is annual, or the Event Date is before the date the income stream is added to the customer’s record for income assessment historical means: the payment is indexed, and the Event Date is more than 12 months in the past Example: CPI indexed income stream so the income reassessment period is 12 months payments are monthly so the asset reassessment period is 6 months customer current on payment 1 January income stream Event Date is the previous 1 January but not coded in the claim today is 1 December an Event Date will be needed for: 1 January, (date of grant), for the asset reassessment including the gross annual income for the income reassessment 1 July and 'today', 1 December for the asset reassessment only Note: date of receipt will be important in working out if a debt exist or arrears are payable Determine the reassessment period for the income stream, 6 or 12 months, then: check if the customer or their partner was current on an income support payment or LIC at any time since the date of purchase of the income stream determine the additional Event Date(s) needed If the income stream is: not indexed, go to Step 2 indexed, go to Step 3
2	Income stream not indexed The income amount does not change. Only the asset value needs a reassessment. The Event date(s) will be the 6 or 12 month anniversary date(s) as needed. The last date, the one in the current period, will be today's date Within the same activity, select the product from the SUPS screen and select Continue: add the first Event Date. No other fields need to be changed select Continue to return to SUPS repeat for each Event Date needed the automatic reassessments will now work go to Step 8
3	Income Stream is indexed note the purchase date of the income stream payments to the customer change on the anniversary date of the purchase using the indexation percentage Is the current gross annual income already coded and the additional Event Date(s) is for a 6 monthly asset reassessment(s) only? Yes: select Continue to return to the SUPS screen select the product being added add an Event Date for each 6-month anniversary of the purchase date. The last date, the one in the current period, will be today's date no other fields need to be changed the automatic reassessments will now work the indexation method can now be added to the last (most recent) Event Date, go to Step 7 No, gross income amounts also needs to be added, go to Step 4
4	Gross annual income for indexed income streams An Event Date with the new gross annual income will be needed for each annual anniversary of the purchase date. FIX indexed income streams Work out the annual income by multiplying the previous year's annual income by the indexation percentage provided in the income stream schedule Go to Step 5 CPI indexed income streams The customer must provide the gross annual income as at each annual anniversary of the purchase date. Note: an SA330 or similar schedule is only needed if there has been a commutation. If the customer does not know the gross annual income, but knows the CPI percentage, it can be used to work out the gross annual income. Multiply the previous year's annual income by the CPI indexation percentage provided by the customer Is the customer able to provide the information needed? Yes, go to Step 5 No, go to Step 6
5	Adding gross annual income Event Date(s) an Event Date will be needed for each annual anniversary of the purchase. If a schedule has been provided with a different date, do not use that date. Only the anniversary date is to be used within the same activity, select the product from the SUPS screen add the first Event Date. Update the Gross Income: field repeat for each annual anniversary of the Event Date as needed Is an additional Event Date(s) for 6 monthly asset reassessment needed: Yes: select Continue to return to the SUPS screen select the product being added add an Event Date for each 6-month anniversary of the purchase date. The last date, the one in the current 6-month period, will be today's date no other fields need to be changed the automatic reassessments will now work the indexation fields can now be completed on the last (most recent) Event Date go to Step 7 No: the indexation field can now be completed on the last (most recent) Event Date go to Step 7
6	Information not provided Tell the customer all information is required before any change can be made to make sure they receive correct entitlement: Tell the customer all the information they must provide. See Requesting information (CLK) Use Mail Forms if a form needs to be sent Ask for the information to be returned within 14 days Procedure ends here until documents returned.
7	Adding indexation information The indexation fields are only updated for the most recent Event Date. Indexation Method: field: The indexation method will be stated on the schedule Indexation details must be coded for review of the gross income If 'FIX', the system will auto increase the income amount by the percentage coded in the Indexation %: field on the date specified in the Next Indexation Date: field If 'CPI' is coded, the system will send out a letter to the income stream owner requesting their new gross income and frequency of payment Next Indexation Date: field: For CPI indexed income streams, this is usually the anniversary of the purchase date. It is not 1 year from the Event Date (date of receipt of requested information) or the date when the income is updated Input the date as included in the schedule. Note: if the income stream is from a SMSF or SAF and the indexation date reported is 1 July, it can be accepted If this date is blank in the schedule, input the next anniversary of the purchase date It is necessary to make sure the annual reviews are correctly generated by the system and updated each year Must be coded with the next future review date when adding the income stream with an indexation method Indexation %: field: Code only if Indexation Method: field is FIX If the indexation rate is greater than 5% the product cannot be section 9A/B/BA compliant
8	Finalise activity Check details on the SUPS screen are correct Joint income streams owned by the customer and partner must be recorded separately on both records Complete the activity on the Assessment Results (AR) screen Make sure the FAL screen is checked and any review for the return of the documentation completed Record details on a DOC