Calculating a Pension Bonus 065-07030010

The reporting requirements of the customer are considered before paying the bonus.

• For customers who continue working and who are stimulus reporters, the Pension Bonus cannot be calculated until reporting requirements are met for the first entitlement period. When these customers report, an activity will be produced to prompt consideration of the PBP claim
• When the customer reports, the system will check to see if the rate of Age Pension payable is sufficient for the customer to attract a Pension Bonus Payment
• If Age Pension is to be granted, but the rate is so low that a PBP will not be payable, an error will display when the customer reports and a Service Officer will need to discuss with the customer the possibility of withdrawing their claim for Age Pension and lodging a new claim when a Pension Bonus may be payable. Select the error message to see details about how to complete the activity
• If the customer wishes to examine the options available to them, offer them a Financial Information Services (FIS) referral
• If the customer is a Defence Force Income Support Allowance (DFISA) customer and the DFISA pension bonus amount is to be sent, this will not be sent until any reporting requirements are met and the calculation of the Centrelink pension bonus amount has occurred. A DFISA pension bonus amount of zero will be sent until the actual calculation is done. The DFISA pension bonus amount will then be recalculated and resent once the customer has reported
• If there are no reporting requirements for the first entitlement period the Pension Bonus can be calculated at the time of grant of Age Pension. In these cases the Service Officer should consider a person's Pension Bonus entitlement before finalising the grant of Age pension
• If a person's Age Pension entitlement on the start day does not attract any basic rate of Age Pension or Pension Supplement Component for Pension Bonus (PSCPB), no PBP is payable. The customer may elect to withdraw their claim for Age Pension and lodge a new claim when a Pension Bonus may be payable. If employment income for longer than one entitlement period (LOP) is paid in the first entitlement period and precludes payment, check if the Age Pension start date can be moved.
  After moving the start date and taking the claim to AR, check if the assessment has changed on EAN and the start date needs to be changed again.
  If a LOP payment is paid in the first entitlement period and spreads 13 weeks or more, it may stop the system calculation of a top-up payment. These cases must be referred to the Retirements Helpdesk
• If the customer wants to examine their options, offer a FIS referral

Has the customer's marital status remained unchanged during the bonus period?

• Yes, go to Step 3
• No, see Step 1 in Table 2

Work out the customer's annual pension rate at the start day (date of grant) plus the PSCPB, previously known as the GST Supplement. Do not include add-ons such as rent assistance or the Pension Supplement. See Online estimator options.

If the customer has applied for an exemption from the income and assets tests for their superannuation investment the amount of the Pension Bonus will still be calculated on their rate of Age Pension at the start day (date of grant). If the application is successful, then a of Pension Bonus Top-up may be payable. A Top-up will only be payable if the date of effect of the superannuation exemption is no later than the end date of the Pension Bonus Top-up period. For more information, see Exempting superannuation investments.

If no Pension Bonus was payable due to the initial assessment of a superannuation investment that is later exempted from the Age Pension start day, reconsider the original decision based on the revised income and asset assessment.

From 7 December 2020, if no Pension Bonus is payable due to the customer or partner being paid employment income for longer than one entitlement period (LOP) in the first entitlement period, consider if the Age Pension start date can be moved. If Age Pension can be granted, the system will calculate Pension Bonus. Refer the claim to the Retirements Helpdesk if the start date cannot be moved, or if the LOP payment is assessed for 13 weeks or more after the start date.

Note: employment income and regular or lump sum compensation payments are not used when calculating the Pension Bonus for Pension Bonus Bereavement Payment (PBBP) purposes as PBBP employment income has a special meaning under the legislation.

Work out the overall qualifying period (the total period of accruing membership).

The number of full years plus (the number of days in any part year divided by 365), to 3 decimal places. If greater than 5 years. only the last 5 (full year) bonus periods of accruing membership are used. Note: round to 3 decimal places. If the number has a fourth decimal place, round up numbers of 5 or more. For example, 4.2576 becomes 4.258.

The Resources page contains examples of this calculation.

Work out the pension multiple by multiplying the overall qualifying period (calculated in Step 4) by 0.094.

The Resources page contains examples of this calculation.

• Multiply the customer's annual pension rate at the start day (date of grant) by the pension multiple (calculated at Step 5)
• Then multiply again by the Overall Qualifying Period (calculated at Step 4)

Round the final dollar amount to the nearest 10 cents. For example, 1-4 cents is rounded down and 5-9 cents is rounded up.

The Resources page contains examples of this calculation.

For more examples, see References for a link to the Guide to Social Security Law in Policy.

Procedure ends here.

Two calculations are needed to determine the bonus payable. One reflects the deferment period while single. The other reflects the deferment period while partnered.

Single period

For the single part, the period of time when the customer was single during the bonus period is used with a single rate of pension (the actual rate at the start day (date of grant) if the customer is single at the start day (date of grant), otherwise a 'notional' rate).

Partnered period

For the partnered part, the period of time when the customer was partnered is used with a partnered rate of pension (the actual rate at the start day (date of grant) if the customer is partnered at the start day (date of grant), otherwise a 'notional' rate).

Calculate the customer's actual annual rate, including the PSCPB, at time of the start day (date of grant). This is the rate payable after the means test has been applied not including add-ons.

If the customer has applied for an exemption from the income and assets tests for their superannuation investment the amount of the Pension Bonus will still be calculated on their rate of Age Pension at the start day (date of grant). If the application is successful, then a Pension Bonus Top-up may be payable. A Top-up will only be payable if the date of effect of the superannuation exemption is no later than the end date of the Pension Bonus Top-up period. For more information, see Exempting superannuation investments.

If no Pension Bonus was payable due to the initial assessment of a superannuation investment that is later exempted from the Age Pension start day, reconsider the original decision based on the revised income and asset assessment.

From 7 December 2020, if no Pension Bonus is payable due to the customer or partner being paid employment income for longer than one entitlement period (LOP) in the first entitlement period, consider if the Age Pension start date can be moved. If Age Pension can be granted, the system will calculate Pension Bonus. Refer the claim to the Retirements Helpdesk if the start date cannot be moved, or if the LOP payment is assessed for 13 weeks or more after the start date.

Note: employment income and regular or lump sum compensation payments are not used when calculating the Pension Bonus for PBBP purposes as PBBP employment income is exempt.

Establish the maximum annual basic rate including the PSCPB payable to a person based on the customer's marital status at the start day (date of grant). Note: this is the maximum rate a customer would be entitled to including the PSCPB, if they had no income or assets. Do not apply the means test. Do not include add-ons.

Divide the actual rate (from Step 2) by the maximum rate (from Step 3), then multiply by 100 to obtain a percentage. Round this percentage to 3 decimal places.

The Resources page contains examples of this calculation.

Establish the maximum annual rate including the Pension Supplement Component for Pension Bonus (PSCB) payable to a person who is single if the customer is partnered, or partnered if the customer is single at the start day (date of grant). Do not apply the means test. Do not include add ons.

Multiply this pension rate by the percentage obtained in Step 4.

Use this amount as the 'notional' pension rate.

To complete the Pension Bonus calculation, see Step 1 in Table 3.

Work out the overall qualifying bonus period (total period of accruing membership). The number of years plus (number of days in any part year divided by 365) to 3 decimal places.

This figure cannot be greater than 5 years and if greater than 5 years, only the last 5 full year bonus periods of accruing membership are used. Note: if the number has a fourth decimal place, round up numbers of 5 or more. For example, 4.2576 becomes 4.258.

The Resources page contains an example of this calculation.

Divide the overall qualifying period into 2 parts to reflect the period the customer was single and the period the customer was partnered.

The Resources page contains an example of this calculation.

Work out the pension multiple by multiplying the overall qualifying period (calculated at Step 1) by 0.094. This figure will be used for calculations of the bonus for the single and partnered periods.

The Resources page contains an example of this calculation.

What is the customer's marital status at time of claim for bonus?

• Single:
• multiply actual basic rate plus the PSCPB by pension multiple from Step 3
• then multiply by the qualifying period as a single person from Step 2
• this will give the entitlement for the time the customer was single
• the Resources page contains an example of this calculation
• go to Step 5
• Partnered:
• multiply the notional rate, from Step 5 in the Marital status changed in the qualifying bonus period table, by the pension multiple from Step 3
• then multiply by the qualifying period as a single customer from Step 2
• this will give the entitlement for the time the customer was single
• go to Step 5

What is the customer's marital status at time of claim for bonus?

• Single:
• multiply the notional rate from Step 5 in the Calculating actual and notional basic pension rates based on marital status table by the pension multiple from Step 3
• then multiply by the qualifying period as a partnered customer from Step 2
• this will give the entitlement for the time the customer was partnered
• Partnered:
• multiply the actual basic rate plus the PSCPB by pension multiple from Step 3
• then multiply by the qualifying period as a partnered customer from Step 2
• this will give the entitlement for the time the customer was partnered
• the Resources page contains an example of this calculation

Add the single and the partnered bonus amounts to arrive at the total bonus payable. Add the results of Step 4 and Step 5.

The Resources page contains an example of this calculation.

Round the final dollar amount, (calculated at Step 6) to the nearest 10 cents, for example, 1-4 cents is rounded down and 5-9 cents being rounded up.

The Resources page contains an example of this calculation.

For more examples, see References page for a link to the Guide.

Nil entitlement to Pension Bonus

If Age Pension is to be granted but the customer's rate at the start day (date of grant) is so low there is no entitlement to the bonus, the customer must be informed and offered the option of withdrawing their claim if no Age Pension instalment has been paid. This may mean they can claim Age Pension and a Pension Bonus later.

Service Officers must recommend to customers in these circumstances to contact the Financial Information Service (FIS).

From 7 December 2020, if no Pension Bonus is payable due to the customer or partner being paid employment income for longer than one entitlement period (LOP) in the first entitlement period, consider if the Age Pension start date can be moved. If Age Pension can be granted, the system will calculate Pension Bonus. Refer the claim to the Retirements Helpdesk if the start date cannot be moved, or if the LOP payment is assessed for 13 weeks or more after the start date.

If a customer's income precludes Age Pension for the first entitlement period (other than CZR due to DFISA and/or CZR due to New Zealand payments), reject the Age Pension claim.