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This topic explains how to calculate the pension or benefit rate when hardship provisions apply. It discusses:
The following table shows the information required to calculate the pension or benefit rate when hardship provisions apply AND shows the relevant chapter or topic from the SS Guide.
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Identify... |
Guide chapter or topic |
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unrealisable assets (section 11(1)-'unrealisable asset') |
SS Guide 4.6.7.50 Unrealisable Assets - Unable or Unreasonable to Sell or Borrow Against |
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exempt assets (section 11(1)-'exempt assets') Explanation: The VALUE of exempt assets is disregarded, but INCOME is included. |
4.6 Assets |
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the value of OTHER assets and DIVIDE by $250 |
4.6.6 Determining the Value of an Asset |
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personal income (section 8(1)-'income') earned, received or derived |
4.3.1 Income Rates & Definitions |
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assessment of superannuation under DVA Military Rehabilitation & Compensation Act (MRCA).
Excluded income amounts (section 8(8)).
Application of financial hardship rules (section 1130, section 1130C and section 1132). |
Amounts of superannuation excluded under the SSAct income test (because they have already been used to reduce the rate of Special Rate Disability Pension paid under the MRCA) ARE counted as income when determining hardship under the SSAct. 4.3.5.60 About DVA Compensation Payments |
Act reference: SSAct section 11(1)-'unrealisable asset', section 11(1)-'exempt assets', section 8(1)-'income', section 8(8) Excluded amounts-general, section 1130 Application of financial hardship rules-pensions, section 1130C Application of financial hardship rules-pension PP (single), section 1132 Application of financial hardship rules-benefits
The following table shows the rate calculation for pension and benefit recipients when hardship provisions apply.
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Step |
Action |
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1 |
Calculate the person's annual rate of ordinary income (other than income from assets). |
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2 |
Calculate any income received from assets that are not assets tested (exempt assets). |
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3 |
For each unrealisable asset, calculate the GREATER of: - the annual rate of income actually received, OR - the annual rate of notional ordinary income (4.6.7.80). |
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4 |
Calculate the deductions for assets that are NOT unrealisable and NOT exempt. This is: - the assets value รท $250. - round this figure down to the nearest $250, then - for PENSION applicants/recipients MULTIPLY by:
- for BENEFIT applicants/recipients MULTIPLY by:
*Note: Prior to 20 September 2007, this figure was $19.50 per annum or 75 cents pf. |
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5 |
From the MAXIMUM annual rate of pension SUBTRACT: - ordinary income (other than income from assets) (Step 1), AND - income received from assets that are not assets tested (exempt assets) (Step 2), AND - the GREATER of the annual rate of income actually received or the annual rate of notional ordinary from each unrealisable asset (Step 3), AND - deductions for assets that are NOT unrealisable and NOT exempt (Step 4). The result is the rate of pension payable under the assets test hardship provisions, SUBJECT to the rate check at Step 6. |
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6 |
Rate check. ADD the rate payable under the assets test hardship provisions (calculated at Step 5) and the person's annual rate of ordinary income. IF: - the total is less than or equal to the MAXIMUM annual rate of pension, the amount calculated at Step 5 is the amount payable under the assets test hardship provisions. - the total exceeds the MAXIMUM annual rate of pension, SUBTRACT the excess from the amount calculated at Step 5. This is the amount payable under the assets test hardship provisions. |
Act reference: SSAct section 1129 Access to financial hardship rules-pensions, section 1130B Access to financial hardship rules-pension PP (single), section 1131 Access to financial hardship rules-benefits
Policy reference: SS Guide 4.6.7.10 General Provisions for Hardship, 4.6.7.80 Notional Ordinary Income - Overview
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Last reviewed: 20 September 2007
