Commonwealth Numbered Acts

SOCIAL SECURITY AND VETERANS' AFFAIRS LEGISLATION AMENDMENT ACT 1995 No. 1, 1996 - SCHEDULE 17

                          SCHEDULE 17                 Section 3

AMENDMENTS OF THE VETERANS' ENTITLEMENTS ACT 1986 RELATING TO
THE PENSION LOANS SCHEME 1. Section 5 (Index of definitions): Omit:

"dispose 5L(1)
  "PLS assets    5L(1)".
2. Section 5 (Index of definitions): Insert in their respective appropriate
alphabetical positions (determined on a letter-by-letter basis):
  "adjusted income reduced rate      52ZAAA(1)".

  "assets reduced rate               52ZAAA(1)".

  "dispose of assets                 52E

  "dispose of real assets            52ZAAA(1)".

  "guaranteed amount                 52ZAAA(1)".

  "income reduced rate               52ZAAA(1)".

  "maximum payment rate              52ZAAA(1)".


"participating in the pension
   loans scheme                      52ZAAA(3)".

  "real assets                       52ZAAA(1)".
3. Subsection 5L(1) (definition of PLS assets): Omit the definition and the
Note immediately following the definition. 4. Subsection 5L(1) (definition of
dispose): Omit the definition, substitute:

"dispose of assets has the meaning given by section 52E.". 5. Section 41
(Service Pension Rate Calculator Where There Are No Dependent Children-Module
A-point 41-A1): Omit from Note 1 all words following "provisions", substitute
"dealing with financial hardship (sections 52Y and 52Z).". 6. Section 41
(Service Pension Rate Calculator Where There Are No Dependent Children-Module
A-point 41-A1): After Note 1, insert:

"Note 1A: If a person's rate is, or is to be, an income reduced rate or an
assets reduced rate, and at least one of those reduced rates is not a nil
rate, the person may be able to take advantage of provisions dealing with the
pension loans scheme (sections 52ZAAA to 52ZM).". 7. Section 42 (Service
Pension Rate Calculator Where There Are Dependent Children-Module A-point
42-A1): Omit from Note 1 all words following "provisions", substitute "dealing
with financial hardship (sections 52Y and 52Z).". 8. Section 42 (Service
Pension Rate Calculator Where There Are Dependent Children-Module A-point
42-A1): After Note 1, insert:

"Note 1A: If a person's rate is, or is to be, an income reduced rate or an
assets reduced rate, and at least one of those reduced rates is not a nil
rate, the person may be able to take advantage of provisions dealing with the
pension loans scheme (sections 52ZAAA to 52ZM).". 9. Section 45X (Income
Support Supplement Rate Calculator Where There Are No Dependent
Children-Module B-point 45X-B1): Omit from Note 2 all words following
"provisions", substitute "dealing with financial hardship (sections 52Y and
52Z).". 10. Section 45X (Income Support Supplement Rate Calculator Where There
Are No Dependent Children-Module B-point 45X-B1): After Note 2, insert:

"Note 2A: If a person's rate is, or is to be, an adjusted income reduced rate
or an assets reduced rate, and at least one of those reduced rates is not a
nil rate, the person may be able to take advantage of provisions dealing with
the pension loans scheme (sections 52ZAAA to 52ZM).". 11. Section 45Y (Income
Support Supplement Rate Calculator Where There Are Dependent Children-Module
B-point 45Y-B1): Omit from Note 1 all words following "provisions", substitute
"dealing with financial hardship (sections 52Y and 52Z).". 12. Section 45Y
(Income Support Supplement Rate Calculator Where There Are Dependent
Children-Module B-point 45Y-B1): After Note 1, insert:

"Note 1A: If a person's rate is, or is to be, an adjusted income reduced rate
or an assets reduced rate, and at least one of those reduced rates is not a
nil rate, the person may be able to take advantage of provisions dealing with
the pension loans scheme (sections 52ZAAA to 52ZM).". 13. Subsection 52(1):
Omit "and 52H", substitute ", 52H, 52ZA and 52ZCA". 14. Before section 52ZA:
Insert in Subdivision E of Division 11 of Part IIIB: Pension loans scheme
definitions

"52ZAAA.(1) In this Subdivision, unless the contrary intention appears:
adjusted income reduced rate means the rate worked out at the relevant Step of
the Method statement in Module B of the relevant Income Support Supplement
Rate Calculator. assets reduced rate means the rate worked out at the relevant
Step of the Method statement in Module A or B (as the case may be) of the
relevant Service Pension or Income Support Supplement Rate Calculator. dispose
of real assets has its ordinary meaning. guaranteed amount means the amount
(if any) specified under paragraph 52ZD(1A)(b) or subsection 52ZE(1) (as the
case may be). income reduced rate means the rate worked out at the relevant
Step of the Method statement in Module A of the relevant Service Pension Rate
Calculator. maximum payment rate means the rate worked out at the relevant
Step of the Method statement in Module A or B (as the case may be) of the
relevant Service Pension or Income Support Supplement Rate Calculator. real
assets, in relation to a person or couple, means the real property (including
the principal home) of the person or couple in Australia, but does not include
any real property specified under paragraph 52ZD(1A)(a).

"(2) For the purposes of this Subdivision, a reference to a charge under
section 52ZF includes a reference to a charge continued in force by subsection
52ZF(3) or paragraph 52ZG(2A)(b).

"(3) For the purposes of this Subdivision, a person is participating in the
pension loans scheme if:

   (a)  the person has made a request to participate in the scheme under
        section 52ZD; and

   (b)  because of the request, the rate of the pension payable to the person
        is:

        (i)    the maximum payment rate; or

        (ii)   some other rate nominated by the person; whichever is the
               lower; and

   (c)  the person owes a debt to the Commonwealth under section 52ZC.". 15.
        Paragraph 52ZA(1)(a): Omit "to receive", substitute "for". 16.
        Paragraph 52ZA(1)(c): Omit the paragraph, substitute:

"(c) the pension or income support supplement rate is, or is to be:

        (i)    an income reduced rate or an adjusted income reduced rate (as
               the case may be); or

        (ii)   an assets reduced rate; and at least one of those reduced rates
               is not a nil rate; and". 17. Paragraphs 52ZA(1)(e) and (f):
               Omit the paragraphs, substitute:

"(e) the value of the person's real assets (after deduction of any guaranteed
amount) is sufficient to secure the payment of any debt that may become
payable to the Commonwealth under this Subdivision.". 18. Subsection 52ZA(1)
(Notes 1 to 3 (inclusive)): Omit the Notes, substitute:

"Note 1: For income reduced rate or adjusted income reduced rate and assets
reduced rate see subsection 52ZAAA(1). Note 2: For real assets see subsection
52ZAAA(1). Note 3: For guaranteed amount see subsection 52ZAAA(1).". 19.
Paragraph 52ZA(2)(a): Omit "to receive", substitute "for". 20. Paragraph
52ZA(2)(c): Omit the paragraph, substitute:

"(c) the pension or income support supplement rate is, or is to be:

        (i)    an income reduced rate or an adjusted income reduced rate (as
               the case may be); or

        (ii)   an assets reduced rate; and at least one of those reduced rates
               is not a nil rate; and". 21. Paragraphs 52ZA(2)(e) and (f):
               Omit the paragraphs, substitute:

"(e) the value of the couple's real assets (after deduction of any guaranteed
amount) is sufficient to secure the payment of any debt that may become
payable to the Commonwealth under this Subdivision.". 22. Subsection 52ZA(2)
(Notes): Omit the Notes, substitute:

"Note 1: For income reduced rate or adjusted income reduced rate and assets
reduced rate see subsection 52ZAAA(1). Note 2: For real assets see subsection
52ZAAA(1). Note 3: For guaranteed amount see subsection 52ZAAA(1). Note 4: For
pension age see section 5QA.". 23. Paragraph 52ZB(1)(c): Omit the paragraph.
24. Paragraph 52ZB(1)(d): Omit "Division", substitute "Subdivision". 25.
Paragraphs 52ZB(1)(e) and (f): Omit the paragraphs, substitute:

"(e) the rate of the pension payable to the person by operation of the scheme
is to be:

        (i)    the maximum payment rate; or

        (ii)   some other rate nominated by the person; whichever is the
               lower. Note: For maximum payment rate see subsection
               52ZAAA(1).". 26. Subsection 52ZB(1) (Note): Omit the Note. 27.
               Subsections 52ZB(2) and (3): Omit the subsections, substitute:

"(2) The pension at the rate payable by operation of the scheme is to be paid
on and after the first pension payday after the request is lodged.

"(3) For the purposes of section 53A (fringe benefits), if but for the
operation of the scheme the person would not have received a service pension
or income support supplement, the person is to be taken to be a person who is
not receiving a service pension or income support supplement.

"(4) For the purposes of Subdivision C of Division 12 (treatment benefits), if
but for the operation of the scheme the person would not have received a
service pension or income support supplement, the person is to be taken to be
a person who is not receiving an age or invalidity service pension.". 28.
Subsection 52ZB(3) (Note): Omit the Note. 29. Subsection 52ZC(1): Omit the
subsection, substitute:

"(1) If the rate of the pension payable by operation of the pension loans
scheme is more than the rate that would have been received by the person but
for the operation of the scheme, the person owes a debt to the Commonwealth.".
30. Subsection 52ZC(2): Omit the subsection and the Notes. 31. Subsection
52ZC(3) (Method statement-Step 1): Omit "income reduced amount", substitute
"primary loan amount". 32. Subsection 52ZC(3) (Method statement-Step 2): Omit
"income reduced amount", substitute "primary loan amount". 33. Subsection
52ZC(3) (Method statement-Step 2): Omit "if the value of assets had not been
disregarded under section 52ZB", substitute "but for the operation of the
scheme". 34. Subsection 52ZC(3) (Method statement-Step 3): Omit "amount of
interest payable is worked out under subsection (4)", substitute "interest
payable is compound interest at the rate fixed under subsection (4) and
compounding fortnightly". 35. Subsection 52ZC(3) (Method statement-Step 4):
Omit "subject to subsection (2),". 36. Subsection 52ZC(4): Omit the
subsection, substitute:

"(4) The rate at which compound interest is payable under subsection (3) is
the rate fixed from time to time by the Minister for Social Security by
determination in writing.

"(5) A determination made under subsection (4) is a disallowable instrument
for the purposes of section 46A of the Acts Interpretation  Act 1901 .". 37.
After section 52ZC: Insert: Effect of participation in pension loans
scheme-maximum loan available

"52ZCA.(1) The maximum loan available to a person under the pension loans
scheme is the amount worked out using the formula:
    age component amount   x   value of real assets

10,000 where: age component amount means the amount specified in column 2 of
the Table in subsection (3), in relation to:

   (a)  if the person is not a member of a couple-the age the person turned on
        his or her last birthday; or

   (b)  if the person is a member of a couple-the age the younger member of
        the couple turned on his or her last birthday. value of real assets
        means the value of the real assets (after deduction of any guaranteed
        amount). Note 1: For real assets see subsection 52ZAAA(1). Note 2: For
        guaranteed amount see subsection 52ZAAA(1).

"(2) For the purposes of subsection (1), the following provisions have effect:

   (a)  if, but for this paragraph, the value of real assets would be an
        amount that exceeds $10,000 but is not a multiple of $10,000, the
        value is to be taken to be the next lower amount that is a multiple of
        $10,000;

   (b)  if, but for this paragraph, the value of real assets would be less
        than $10,000, the value is to be taken to be nil.

"(3) The following is the Table referred to in subsection (1):
AGE COMPONENT AMOUNT TABLE
column 1     column 2

age          age component
55, and each
earlier year    $1,710.00

56              $1,780.00

57              $1,850.00

58              $1,920.00

59              $2,000.00

60              $2,080.00

61              $2,160.00

62              $2,250.00

63              $2,340.00

64              $2,430.00

65              $2,530.00

66              $2,630.00

67              $2,740.00

68              $2,850.00

69              $2,960.00

70              $3,080.00

71              $3,200.00

72              $3,330.00

73              $3,460.00

74              $3,600.00

75              $3,750.00

76              $3,900.00

77              $4,050.00

78              $4,210.00

79              $4,380.00

80              $4,560.00

81              $4,740.00

82              $4,930.00

83              $5,130.00

84              $5,330.00

85              $5,550.00

86              $5,770.00

87              $6,000.00

88              $6,240.00

89              $6,490.00
90, and each
later year      $6,750.00   ".
38. After subsection 52ZD(1): Insert:

"(1A) A request under subsection (1) must:

   (a)  specify any real property that is not to be included in working out
        the value of real assets for the purposes of sections 52ZA and 52ZCA,
        or that is not to be subject to a charge under section 52ZF; and

   (b)  specify the minimum amount (if any) that the person is to be entitled
        to retain out of the proceeds of the enforcement of a charge under
        section 52ZF; and

   (c)  specify the rate of the pension (if any) nominated by the person for
        the purposes of subparagraph 52ZB(1)(e)(ii).". 39. Subsection 52ZD(2):
        Omit "A request under subsection (1)", substitute "The request". 40.
        Subsection 52ZD(2): Omit "and", substitute "or". 41. Section 52ZE:
        Repeal the section and the Notes, substitute: Need for a request to
        later nominate or change guaranteed amount or rate of pension

"52ZE.(1) A person who is participating in the pension loans scheme and who
wants to:

   (a)  nominate a minimum amount that the person is to be entitled to retain
        out of the proceeds of the enforcement of the charge under section
        52ZF; or

   (b)  nominate a rate of pension for the purposes of subparagraph
        52ZB(1)(e)(ii); or

   (c)  change the guaranteed amount earlier specified; or

   (d)  change the rate of the pension earlier specified; must make a request
        that specifies the nomination or change (as the case may be).

"(2) A request under subsection (1) must be signed:

   (a)  if the person is not a member of a couple-by the person; or

   (b)  if the person is a member of a couple-by both members of the couple.

"(3) The request must:

   (a)  be in writing; and

   (b)  be lodged at an office of the Department in Australia.". 42. Section
        52ZF: Omit "assets" (wherever occurring), substitute "real assets".
        43. Subsection 52ZF(1): Add at the end:

"Note: If there is a guaranteed amount, the charge is enforceable only to the
extent that the value of the real assets exceeds the guaranteed amount (see
subsection 52ZM(2)).". 44. Subsection 52ZF(2): Add at the end:

"Note: If there is a guaranteed amount, the charge is enforceable only to the
extent that the value of the real assets exceeds the guaranteed amount (see
subsection 52ZM(2)).". 45. Section 52ZF: Add at the end:

"(3) If:

   (a)  the pension loans scheme ceases to operate in relation to a person
        because of the effect of section 52ZJ or 52ZK; and

   (b)  at the time the scheme ceases to operate, the person owes a debt to
        the Commonwealth because of the person's participation in the scheme;
        any charge in favour of the Commonwealth under subsection (1) or (2)
        of this section continues in relation to the real assets until the
        debt is repaid or recovered. Note 1: Section 52ZJ provides that a
        person ceases to participate in the scheme if the debt owed by the
        person exceeds the maximum loan available. Note 2: Section 52ZK
        provides for a person to withdraw from the scheme. Note 3: If there is
        a guaranteed amount, the charge is enforceable only to the extent that
        the value of the real assets exceeds the guaranteed amount (see
        subsection 52ZM(2)).". 46. After subsection 52ZG(2): Insert:

"(2A) In relation to the period between the person's death and the time of
recovery of the debt by the Commonwealth:

   (a)  compound interest continues to accrue, and forms part of the debt, in
        accordance with Step 3 of the Method statement in subsection 52ZC(3);
        and

   (b)  the charge in favour of the Commonwealth under section 52ZF continues
        in relation to the real assets until the debt is recovered. Note: If
        there is a guaranteed amount, the charge is enforceable only to the
        extent that the value of the real assets exceeds the guaranteed amount
        (see subsection 52ZM(2)).". 47. Subsection 52ZG(3): Omit "sections",
        substitute "section". 48. Subsection 52ZG(3): Omit "and 52ZK
        (automatic termination of participation in pension loans scheme)". 49.
        Section 52ZH: Omit "assets" (wherever occurring), substitute "real
        assets". 50. Subsection 52ZH(1): After "those proceeds" insert "but
        after deduction of any guaranteed amount". 51. Sections 52ZJ and 52ZK:
        Repeal the sections and the Notes, substitute: Person ceases to
        participate in pension loans scheme if debt exceeds maximum loan
        available

"52ZJ. If:

   (a)  a person is participating in the pension loans scheme; and

   (b)  the debt owed by the person under section 52ZC exceeds the maximum
        loan available to the person under the scheme; the scheme ceases to
        operate in relation to the person on the first pension payday after
        the debt exceeds the maximum loan available. Note 1: The maximum loan
        available is worked out by using the formula set out in subsection
        52ZCA(1). Note 2: For repayment or recovery of the debt owed by the
        person see section 52ZKA and section 52ZG. Person withdraws from
        pension loans scheme

"52ZK.(1) If a person who is participating in the pension loans scheme makes a
request to withdraw from the scheme, the scheme ceases to operate in relation
to the person on the first pension payday after the request is lodged.

"(2) A request under subsection (1) must be signed:

   (a)  if the person is not a member of a couple-by the person; or

   (b)  if the person is a member of a couple-by both members of the couple.

"(3) The request must:

   (a)  be in writing; and

   (b)  be lodged at an office of the Department in Australia. Repayment or
        recovery of debt after pension loans scheme ceases to operate because
        debt exceeds maximum loan available or person withdraws

"52ZKA.(1) The debt owed by a person under section 52ZC, at the time the
pension loans scheme ceases to operate in relation to the person by operation
of section 52ZJ or 52ZK, may be repaid by the person at any time. Note 1:
Section 52ZJ provides that a person ceases to participate in the scheme if the
debt owed by the person exceeds the maximum loan available. Note 2: Section
52ZK provides for a person to withdraw from the scheme.

"(2) If the debt owed by the person is not repaid by the person at the time
the scheme ceases to operate in relation to the person, compound interest
continues to accrue, and forms part of the debt, in accordance with Step 3 of
the Method statement in subsection 52ZC(3), until the debt is repaid or
recovered.

"(3) If the debt is not repaid under subsection (1) of this section, subject
to section 52ZG the Commonwealth is entitled to recover the debt. Note:
Section 52ZG provides that a debt cannot be recovered from a person until
after the person's death.". 52. Section 52ZL: Omit "assets" (wherever
occurring), substitute "real assets". 53. Subsection 52ZL(2): Omit "a bill of
sale or". 54. Section 52ZM: Omit "assets" (wherever occurring), substitute
"real assets". 55. Section 52ZM: After "may" insert ", subject to subsection
(2),". 56. Section 52ZM: Add at the end:

"(2) If there is a guaranteed amount, the charge is enforceable only to the
extent that the value of the real assets exceeds the guaranteed amount.". 57.
Schedule 5: Add at the end: Transitional and saving provisions applicable to
the amendments relating to the pension loans scheme

"6.(1) If:

   (a)  a person has made a request to participate in the previous pension
        loans scheme; and

   (b)  Schedule 17 to the Amending Act commences before the first pension
        payday after the lodging of the request; for the purposes of this
        clause, the person is to be treated as a person who is participating
        in the previous pension loans scheme.

"(2) Subject to subclause (3), in relation to a person who is participating in
the previous pension loans scheme, subsections 5L(1) and 52(1) and Subdivision
E of Division 11 of Part IIIB of this Act, as in force immediately before the
commencement of Schedule 17 to the Amending Act, continue to have effect as if
the Amending Act had not been enacted.

"(3) If a person who is participating in the previous pension loans scheme:

   (a)  is eligible to participate in the current pension loans scheme; and

   (b)  makes a request to participate in the current scheme; and the
        Commission is satisfied that the amount of any debt that would become
        payable by the person to the Commonwealth under the current scheme
        would be readily recoverable, the current scheme applies to the person
        on and after the first pension payday after the request is lodged.

"(4) The debt owed by a person who was participating in the previous pension
loans scheme and who is participating in the current pension loans scheme by
operation of subclause (3) is, for the purposes of working out the debt owed
by the person under the current scheme, to be added to the basic amount of
debt accrued under the current scheme.

"(5) In this clause: Amending Act means the
Social Security and Veterans' Affairs  Legislation Amendment Act 1995 .
current pension loans scheme means the pension loans scheme in operation under
the provisions of this Act, as amended by the Amending Act. participating in
the pension loans scheme has the same meaning as in subsection 52ZAAA(3).
previous pension loans scheme means the pension loans scheme in operation
under the provisions of this Act, as in force immediately before the
commencement of Schedule 17 to the Amending Act.".

NOTES ABOUT SECTION HEADINGS 1. On the commencement of Part 2 of Schedule 1 to
this Act, the heading to section 9 of the Social Security Act 1991 is omitted
and the following heading is substituted:

"Financial assets, retirement funds and annuities definitions". 2. On the
commencement of Part 2 of Schedule 16 to this Act, the heading to section 5J
of the Veterans' Entitlements Act 1986 is omitted and the following heading is
substituted:

"Financial assets, retirement funds and annuities definitions".