Schramm and Secretary, Department of Social Services (Social services second review) [2016] AATA 102 (25 February 2016)

Last Updated: 26 February 2016

Schramm and Secretary, Department of Social Services (Social services second review) [2016] AATA 102 (25 February 2016)

Division	GENERAL DIVISION
File Number(s)	2015/1480
Re	Vilma Schramm
	APPLICANT
And	Secretary, Department of Social Services
	RESPONDENT

DECISION

Tribunal	Ms N Isenberg, Senior Member
Date	25 February 2016
Place	Sydney

The decision under review is affirmed.

.......................[sgd].................................................

Ms N Isenberg, Senior Member

SOCIAL SECURITY – pension bonus – registration – late applications – power to extend period within which applications for registration may be made – categories of membership of scheme – whether post 75 members are within non accruing member category –whether applicant non accruing member for all of the pre-application period – found post 75 membership separate from accruing and non accruing membership – decision under review affirmed

LEGISLATION

Age Discrimination Act 2004 s 41(1)(g)

Social Security Act 1991 ss 92H, 92N, 92Q, 92S, 92U

CASES

Hurburgh and Secretary, Department of Families, Housing and Community Services [2002] AATA 442

Platt and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 912

SECONDARY MATERIALS

Guide to Social Security Law

Social Security (Pension Bonus Scheme-Non-accruing Members) Declaration 2007

REASONS FOR DECISION

Ms N Isenberg, Senior Member


25 February 2016

BACKGROUND

1. Mrs Schramm turned 60 on 27 August 1990 and qualified for the age pension, but she did not claim it. She turned 75 years old on 27 August 2005.
2. Her husband, Mr Schramm, was born on 15 December 1941. He reached age pension age on 15 December 2006, but continued to work until 22 November 2013, when he was 72 years old.
3. Mrs and Mr Schramm applied for, and began receiving, age pension from 17 January 2014. On the same date Mr Schramm successfully applied for registration in the Pensioner Bonus Scheme (PBS), which Centrelink backdated to 15 December 2006.
4. Mrs Schramm also lodged an application to register for the PBS. Centrelink rejected her application on the basis that it was out of time. That decision was affirmed on internal review and by the SSAT. Mrs Schramm now seeks review by this Tribunal.

ISSUE

5. Can Mrs Schramm’s application for registration in the PBS be backdated?

Legislative scheme

6. The PBS was introduced in July 1998 to encourage older Australians to remain in the workforce and defer claiming age pension. It provided a financial incentive by way of a tax-free lump sum to members when they eventually received age pension. A person was required to register to participate in the scheme. The PBS closed to new entrants whose date of qualification for age pension occurred on or after 20 September 2009 and the scheme was closed to new registrations from 1 July 2014.
7. The relevant law is contained in the Social Security Act 1991 (“the Act”) and the Social Security (Pension Bonus Scheme-Non-accruing Members) Declaration 2007 (“the Declaration”) made under s 92Q(1) in Part 2.2A of the Act.
8. As I discussed at the hearing, the relevant law is convoluted.

Applying to join the PBS

9. Section 92H of the Act (as it was at the date of Mrs Schramm’s application) sets out the requirements for the timing of applications to join the scheme. Relevantly, it provides:

92H Timing of application and registration
Age pension qualification date before 1 July 1998
(2) If a person's date of qualification for the age pension occurs before 1 July 1998:
(a) the person must lodge an application during the period that begins on the commencement of this section and ends 13 weeks after 1 July 1998; and
...
Late applications
(3) The Secretary may extend the period within which a person must lodge an application...
(4) The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre-application period:

(a) the person would have been a non-accruing member for all of the pre-application period; or
(b) both:
(i) the person would have been an accruing member for some or all of the pre-application period; and
(ii) the person would have passed the work test for each test period that is applicable to the person.
(5) For the purposes of this section, the pre-application period is the period beginning on:
(a) ...
(b) in the case of a person whose date of qualification for the age pension occurs before 1 July 1998 —1 July 1998;
and ending on the date on which the person lodged the application.
(Tribunal emphasis)

10. As Mrs Schramm's age pension qualification date was before 1 July 1998, she was required to lodge her application within 13 weeks of 1 July 1998: s 92H(2)(a) of the Act. However, Mrs Schramm did not lodge her application to register for the PBS until 2014. Under s 92H(3) of the Act the Secretary, and the Tribunal on review, may extend time for registration in the PBS provided certain conditions were met: s 92H(4).

Was Mrs Schramm a non-accruing member for all of the pre-application period? : s 92H(4)(a)

11. Mrs Schramm said that she had lodged her application for the PBS at the same time as her husband, namely on 17 January 2014, but it was not processed. Mrs Schramm mentioned to a Centrelink staff member she had heard on late-night radio that the PBS was to be closed and recommended that older Australians register as soon as possible. She said that the staff member suggested that Mrs Schramm apply, and this occurred on 12 May 2014. For the reasons which are discussed below, it is immaterial whether her application was on 17 January or 12 May 2014.
12. Mrs Schramm's pre-application period was 1 July 1998 to 17 January (or 12 May) 2014: s 92H(5)(b) of the Act.
13. Section 92Q of the Act provides for a discretion to declare specified kinds of member of the PBS to be non-accruing members. Section 92Q relevantly provides:

92Q Non-accruing membership—Secretary's discretion
(1) The Secretary may, by legislative instrument, declare that, for the purposes of this Part, a specified kind of member of the pension bonus scheme is a non-accruing member throughout a period ascertained in accordance with the declaration.
(2) The kinds of members that may be specified under subsection (1) include (but are not limited to):
...
(d) a member who is not a participant in the workforce, but whose partner:
(i) is a participant in the workforce; and
(ii) is not a registered member of the pension bonus scheme ...; and
(iii) intends to become a registered member of the pension bonus scheme .; and...

14. The Respondent agreed that Mrs Schramm was not a participant in the workforce when the PBS commenced on 1 July 1998, but Mr Schramm was such a participant, and that Mrs Schramm could be declared to be a non-accruing member under s 92Q(2) of the Act on the basis that Mr Schramm intended to register as a member of the PBS.
15. However, on 27 August 2005, Mrs Schramm turned 75 years of age. This requires consideration of s 92S, which provides:

92S Post-75 membership
A person's membership of the pension bonus scheme is post-75 at all times after the person reaches age 75.

16. The Respondent submitted that the SSAT was correct in finding that Mrs Schramm could not have been a non-accruing member for all of her pre-application period in accordance with s 92H(4)(a) of the Act, because she could not be a non-accruing member from 27 August 2005, when she turned 75, as this is a separate category; she cannot be a non-accruing member and a post-75 member at the same time. Mr Schramm contended on his wife’s behalf that ‘post-75’ was not a separate category to accruing/non-accruing but was, effectively, a subset.
17. Mr Schramm referred to the Guide to Social Security Law which he contended did not state that “non-accruing” and “over 75” were mutually exclusive. I do not agree. While they may be included in some declarations made under s 92Q, generally “once a member turns 75 years of age they cannot longer accrue further bonus periods under ANY circumstances”.
18. Further, s 92N of the Act provides that

... a person's membership of the pension bonus scheme at a particular time is accruing unless the person's membership is non-accruing or post-75 at that time. (Tribunal’s emphasis)

19. It appears clear to me that on the plain reading of s 92N of the Act, three clear categories of members are identified: accruing, non-accruing and post-75. In particular, the section clearly differentiates between non-accruing and post-75.
20. In Platt and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 912 SM Britton said:

By the operation of s 92N, once Mr Platt’s membership was “post-75”, or, to employ the English language rather than the jargon of the Act, once he had turned 75 years of age, his membership of the scheme was not accruing.

21. I do not understand that the Tribunal regarded turning 75 as a mere trigger to change accruing membership to non-accruing, but was of the view that there are three classes of membership.
22. The effect is that Mrs Schramm was a non-accruing member for some of the relevant period, but only up until she turned 75. Consequently, she was not a non-accruing member for all of her pre-application period.

Was Mrs Schramm an accruing member for some or all of the pre-application period, and would she have passed the work test? : s 92H(4)(b).

23. Section 92H(4)(b) of the Act refers to a person being an accruing member for some or all of the pre-application period and passing the "work test" for each test period that is applicable to the person.
24. Again, the definition of accruing membership set out in s 92N differentiates between non-accruing and post-75 membership. Therefore, once Mrs Schramm turned 75, she could no longer be an accruing member, because she would have become a ‘post-75’ member. When read with s 92S, this meant that she could not become an accruing member after that time.
25. The Respondent conceded that Mrs Schramm met the work test through Mr Schramm’s work. However, once she turned 75, she could no longer be an accruing member, because she would have become a ‘post-75 member’. I observe that the reference to "a post-75 member" in s 92U(b)(i) is, relevantly, a reference to Mr Schramm, not to Mrs Schramm. Mr Schramm has been a member of the PBS since 15 December 2006. However, Mrs Schramm's nominal post-75 membership from 27 August 2005 means that she cannot satisfy the satisfy the work test through Mr Schramm in accordance with s 92U(b)(i) from 15 December 2006.
26. By the time Mr Schramm could accrue pension bonus periods (under s 92T of the Act), Mrs Schramm was unable to do so because she had already turned 75. Therefore Mrs Schramm cannot be an accruing member for part of her pre-application period under s 92H(4)(b) of the Act, because she cannot satisfy s 92H(4)(b)(ii).

Discrimination against older Australians?

27. Mr Schramm also contended that if Centrelink’s interpretation were correct, it was discriminatory against older Australians; however, I note s 41(1)(g) of the Age Discrimination Act 2004 which specifically excludes pension issues from the application of that Act.

CONCLUSION

28. As the SSAT noted, even if Mrs Schramm were entitled to become registered as a member of the PBS, she would not be qualified for the PBS because of the combined effect of sections 92N and 92S of the Act. I was referred to Hurburgh and Secretary, Department of Families, Housing and Community Services [2002] AATA 422 where the Tribunal found that because of sections 92N and 92S of the Act, entitlement to pension bonus cannot accrue during any period after the person is 75 years old. When s 92N and s 92S of the Act are read together, the effect is that a person can only accrue entitlement towards a pension bonus up until age 75. As a result, Mrs Schramm would not have met the qualification requirements for the pension bonus even if the discretion for a late registration could have been exercised in her favour.

DECISION

29. The decision under review is affirmed.

I certify that the preceding 29 (twenty -nine) paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member

..........................[sgd]..............................................
Associate

Dated 25 February 2016

Date(s) of hearing	18 January 2016
Advocate for the Applicant	Mr Schramm
Solicitors for the Respondent	Department of Human Services