Editors --- "Pension bonus scheme: late registration" [2006] SocSecRpr 7; (2006) 8(1) Social Security Reporter, Article 7

• KONDOS and SECRETARY TO THE DFaCS
• Background
• The law
• Formal decision

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Pension bonus scheme: late registration

KONDOS and SECRETARY TO THE DFaCS

(2005/1229)

Decided: 14th December 2005 by S. Webb

Background

Kondos worked four years beyond retirement age but applied for the pension bonus scheme (PBS) after he claimed the age pension. He was not informed of the PBS when he applied for the age pension in June 2004 but became aware of it later and made enquiries. English was not his first language. In 2003 he had disposed of a significant asset without adequate consideration from his daughter.

A registration form for PBS was lodged in March 2005. In April 2005 he was advised that he could not be paid PBS because he had not registered and had already been paid age pension.

The law

In order to be eligible for a pension bonus a person must register for membership of the PBS within the prescribed time (s.92H of the Social Security Act 1991 (the Act)) and must satisfy the qualification criteria (s.92C). However, there is discretion in the Secretary to extend the period within which the person must lodge an application for registration (s.92H(3)). The discretion is restricted by s.92H(4)(b) which relevantly provides that the extension can only be granted if the applicant is an accruing member (s.92N) for part of the pre-application period and would have satisfied the work test for those periods (defined in ss.92U and 92V).

The effect of the disposal of an asset without adequate consideration

The disposal of Kondos’ asset to his daughter in June 2003 meant that he was subject to a ‘disposal preclusion period’(s.93U and s.93UA) and consequently he was a non-accruing member for the period June 2003 until March 2005 when he lodged his registration form. Conversely, Kondos was found to be an accruing member for the period January 2000 (when he first qualified for age pension) until June 2003 and he was able to satisfy the work test for the relevant test periods (s.92H(6)).

Consequently the Tribunal found that both subparagraphs ofs.92H(4)(b)(i) and (ii) were satisfied and the fetters on the discretion to extend the registration time contained in s.92H(4) did not apply for the period when Kondos was not subject to the disposal preclusion period.

Grounds for exercising the discretion to extend the time for lodgement

It was necessary to then determine if there was a persuasive case for the discretion to be exercised to extend the time limit for lodgement of an application for PBS registration.

The Tribunal took into account a range of factors that were based on the appellant’s language difficulties, his reliance on Centrelink to tell him of his entitlements and that he acted as soon as he became aware of the problem.

The Secretary argued that because Kondos had indicated in his age pension claim form (completed by an interpreter) that he did not wish to claim PBS the appeal was futile because Centrelink had acted on his express statement, and paid him age pension. Section 92C of the Act sets out the qualification criteria for PBS and states that the person must start to receive an age pension at or after the time when a person makes a claim for PBS and must not have received an age pension at any time before making such a claim. Those criteria are reflected in the special requirements attaching to claims for PBS set out at s.17 of the Social Security (Administration) Act 1999 (the Administration Act), whereby a claim for Pension Bonus must be attached to and lodged with a proper claim for Age Pension by the person or must be made in accordance with an invitation by the Secretary.

However, the Tribunal found that the requirement for a ‘proper claim’ for age pension to be lodged when PBS was claimed had been compromised by incorrect or inadequate information given to the appellant causing him to mistakenly answer questions about claiming PBS. Although Kondos needed to accept some responsibility, it was also true that Centrelink bore responsibility for failing to give ready and timely access to information that would enable highly significant sections of a claim to be properly completed. There was no evidence that such information had been provided. It was accepted that the appellant had acted in a timely manner when he became aware of the problem and that had he been aware of the nature and significance of his responses to the claim form questions he would have answered differently.

The Tribunal considered that it was open to a decision maker to decide that the age pension claim was not a proper claim, or that the appellant should be permitted to amend his age pension claim to properly reflect his intentions in relation to the PBS. Both alternatives would allow for a potentially favourable determination of a PBS claim. The Secretary’s technical argument that the basic requirements for PBS [ss.92C and 92H] could not be satisfied because registration was being attempted after the grant of age pension was rejected because of the inadequacy of the claim process.

The Tribunal found that Kondos had a reasonable explanation for the delay in making his application for registration under the PBS that had merit and that there was no significant prejudice to the respondent from granting Kondos an extension of time in which to apply for PBS registration. Any change of practices flowing from the decision would improve the administration of the PBS by preventing the problems the appellant had encountered. It was reasonable and appropriate to exercise the discretion under s.93H(3) and extend the time for registration to the date of lodgement.

Finally, the Tribunal was critical of the respondent’s attempted reliance on highly technical points to deny the appellant access to the PBS. It was recommended that if it was finally decided that Mr Kondos could not access the scheme it would be appropriate for the Secretary to reconsider a previously refused claim for defective administration.

Formal decision

The decision under review was set aside and the period in which Kondos must lodge an application for registration under the PBS was extended to 31 March 2005. His registration under the Scheme took effect from 9 January 2000. The matter was remitted to the Secretary to determine lodgement of a claim and payability issues.

[J.D.]