Initial contact to claim Pension Bonus Payment (PBP) 065-01010030

Arthur registered for PBS at 65 years old on 26 May 2004 and worked until 26 November 2007 having accrued 3.5 bonus years. Arthur has 13 weeks from 26 November 2007 to lodge a claim for PBP. Arthur, a single person, applied for the Age Pension on 27 November 2007 and proceeded to see a financial planner to invest the accumulated superannuation of $200,000.

The financial planner restructured investments with effect from mid-December to enable Arthur to receive the full rate of Age Pension. Arthur was granted Age Pension from 27 November 2007 at a reduced rate of $210.15 per fortnight (per fortnight). This was increased to $435.20 per fortnight from 16 December 2007 due to John's new financial arrangements.

Arthur was paid a bonus of $6,291. If Arthur had deferred the claim for Age Pension and PBP until 16 December 2007, the bonus would have been $13,029. Arthur could have sacrificed $285.20 in pension for the period by claiming later, and gained an additional $6,738 in bonus.

From 1 January 2008 only - a member who was granted Age Pension and their bonus on or after 1 January 2008 may be entitled to a Pension Bonus Top-up payment (PBTP) if their Age Pension entitlement changes to a higher rate within 13 weeks of being granted the Age Pension. This only applies from grants of Age Pension and PBP after 1 January 2008. The change of Age Pension rate does not include Consumer Price Index (CPI) increases or changes to the income and assets limits.

In the example above, if Arthur's start day (date of grant) had been 27 November 2008, the top-up bonus amount of $6,738 would have been payable because the reduction in income occurred within 13 weeks of the start day (date of grant) and was due to a reduction in the assessment of income and assets.

When staff discuss Pension Bonus and the timing of claim with claimants, the claimant needs to ensure any increase in rate due to settlement of finances will occur within 13 weeks of the start day (date of grant) of Age Pension.

Martha registered for PBS at 61.5 years of age on 21 February 2005 and planned to cease work on 20 December 2007 having accrued 2.8 bonus years. Martha was earning $1,000 p/f and decided to take the last month as annual leave.

Martha contacted Centrelink to claim Age Pension and PBP on 12 December 2007 and promptly returned the completed claim forms. Martha's Age Pension claim was duly recorded as lodged on 12 December 2007. Age Pension was granted from 12 December 2007 at the rate of $81.60 p/f (due to earnings) and increased to the maximum rate of $435.20 from 21 December 2007 when the paid leave ceased.

Martha was paid a bonus of $1,562 based on 2.8 years to 11 December 2007. If Martha had waited until 21 December 2007 (day after retirement) to claim Age Pension and PBP, the bonus would have been $8,332.

This should have been identified as an issue and Martha referred to a FIS officer who would have recommended that Martha delay claiming pension and the bonus until work had actually ceased.

From 1 January 2008 only - a member who has received a PBP may be entitled to a Pension Bonus Top-up payment (PBTP) if their Age Pension entitlement changes to a higher rate within 13 weeks of the start day (date of grant) of their Age Pension. This only applies from grants of PBP after 1 January 2008. The change of Age Pension rate does not include the normal Consumer Price Index (CPI) changes.

In the example above, if Martha's start day (date of grant) had been 12 December 2008, the top-up bonus amount of $8,332 would have been payable because the reduction of income occurred within 13 weeks of the start day (date of grant).

When staff discuss Pension Bonus and the timing of claim with claimants, the claimant needs to ensure any increase in rate due to settlement of finances will occur within 13 weeks of the start day (date of grant) of Age Pension.

John is registered for PBS at 65 years of age (1 April 2004). On 31 March 2007 John has accrued 3 bonus years. John works a 35 hour week. By 14 October 2007 John had worked in excess of 960 hours. John ceases work 14 October 2007. John has accrued the required work test hours for a bonus year.

Assuming there are no non-accruing periods, John's bonus period does not end until the anniversary of the registration date, 31 March 2008. If John delays claiming Age Pension until the next anniversary date (1 April 2008) an extra 5 ½ months will be counted in the PBP entitlement. John then has 13 weeks from 31 March 2008 to claim Age Pension and PBP. If these claims are lodged between 1 April 2008 and 30 June 2008, the bonus period for PBP is 4 full years.

John will need to determine if it is better off to wait and claim PBP after the next anniversary period or when work finishes. This will depend on John's financial situation.

Jane has 3 full qualifying bonus periods from 1 July 2003 to 30 June 2006. Jane worked a 30 hour week from 1 July 2006 to 30 December 2006, a total of 780 hours.

An interview with a FIS officer would raise Jane's awareness of the main issue which would affect the bonus amount. That is, when did Jane fail to meet the work test and when is the best time to claim?

Jane claims PBP on 1 April 2007. Because of the 780 hours already worked in the period 1 July 2006 to 30 December 2006 Jane has actually met the work test for 42.4 weeks (297 days) of the 2006-07 bonus period. So when Jane claims on 1 April 2007 there will be an accumulated period of 3 years plus 39 weeks (1 July 2006 to 31 March 2007), for the bonus calculation. If Jane delayed the claim until 27 April 2007, being the date from which Jane's situation actually fails to meet the work test, this would give a bigger part year bonus period of a further 3.4 weeks.

The date Jane ceased to meet the work test is the date Jane needs to specify on the claim to maximise the bonus.

Tom registered for PBS within 13 weeks of reaching Age Pension age. Tom works full time for a further 7.5 years. Only the last 5 full year qualifying bonus periods can be used to determine Tom's PBP entitlements. However, the time frame in which a member must lodge their claim for the bonus depends on whether their last bonus period is a full year bonus period or a part year bonus period.

Final year a full bonus year period

Where Tom's last bonus year is a full bonus year period, the claim must be lodged within 13 weeks of the end of that bonus period.

Final year a part year bonus period

Where Tom's last bonus period is a part year bonus period, the Secretary has the discretion to extend the lodgement period for the claim beyond 13 weeks (regardless of years worked) provided the claim was not deliberately lodged late in order to get a higher bonus. However, any part year bonus periods are forfeited.

Qualifying bonus periods

The fact that a member can accrue more than 5 bonus year periods should not be confused with the fact that a member can only have a maximum of 5 'qualifying bonus periods'.

In such a situation, if Tom has accrued more than 5 bonus periods and the last 1 is a part year bonus period, Tom's 'overall qualifying period' can only be the last 5 full bonus years. In other words the recent part-year and the earlier full years are disregarded.

Kirby completes 4 full bonus year periods and ceases work and resigns. Kirby then takes a 6 month trip around Australia spending some of the eligible termination payments. If a claim for Age Pension and Pension Bonus is lodged more than 13 weeks after the end of the final full year bonus period, which it would be in this example, no bonus is payable, ever!

From 1 January 2008 only - If Kirby had not resigned but had taken 6 months long service leave and taken the trip around Australia then the 26 weeks of this trip could count as a non-accruing period. As long as Kirby claimed Age Pension and Pension Bonus within 13 weeks of the end of the 26-week period then it could be paid as a PBP.

The member's Age Pension qualification date and date of PBS registration is 1 April 2004. Their first bonus year commences on 1 April 2004 and ends on 31 March 2005.

The member does not work between 1 April 2006 and 30 June 2006. From 1 July 2006 until 31 December 2006 they works 960 hours. The member has met the work test until 31 March 2007 because they have worked the required number of hours for the year. The member has 13 weeks from 1 April 2007 to lodge a claim for Age Pension and PBP. They will be paid for 2 bonus years.

The member's bonus periods run from 1 April to 31 March each year:

• They accrue 3 full years bonus
• In the 4^th bonus period they work for 20 weeks at 18 hours 25 minutes per week
• Date last worked is 18 August 2008. They are then absent from work on recreation leave for 17 weeks (until 15 December)
• They decide not to return to work and resign from employment (16 December)

The member has 13 weeks from the end of the rec leave, which can be counted as a non-accruing period (until 16 March of the following year) to claim Age Pension and the bonus. They will be paid for a deferment period of 3 years and 20 weeks.