4.6.7.10 General provisions for hardship
Summary
Hardship provisions ensure a social security pension recipient, or social security benefit recipient who is in severe financial hardship (1.1.S.120) is able to get additional assistance, irrespective of the normal application of the assets test.
This topic discusses, for pension and benefit recipients only, the:
- rationale for hardship provisions
- eligible people
- basic eligibility criteria
- steps for assessing the eligibility of pension and benefit recipients
- review procedures, and
- action a person can take if they do not qualify for hardship assistance.
Act reference: SSAct section 23(1)-'social security benefit', section 23(1)-'social security pension'
Rationale for hardship provisions
The assets test presumes pension and benefit recipients with substantial assets (1.1.A.290), apart from their principal home, use those assets to produce income for their own support. If substantial assets are held, but they produce little or no income, a person is expected to rearrange their financial affairs before calling on taxpayer-funded income support through the social security system.
Sometimes a pension or benefit recipient is unable, or in the case of a pensioner could not reasonably be expected, to rearrange their financial affairs. Hardship provisions may mean that these people are able to have certain assets disregarded when calculating their pension or benefit rate. Assets which are disregarded for hardship purposes are called 'unrealisable assets' in the SSAct.
Act reference: SSAct section 11A(1) Principal home, section 8(1)-'income', section 11(1)-'unrealisable asset'
Eligible people
Hardship provisions can only apply to a person who is qualified for a:
- social security pension, or
- social security benefit.
Exception: A benefit recipient who qualifies for alternative Commonwealth assistance is not eligible for hardship provisions.
Eligibility criteria for hardship
To qualify for hardship provisions a pension or benefit recipient must be:
- in severe financial hardship
- unable to sell or borrow against an asset (or in the case of a pensioner it is unreasonable to expect the person to sell or borrow against an asset), and
- an assets tested person.
Assessing pension & benefit recipients
The following table shows the steps to be taken when assessing hardship for pension and benefit recipients.
| Step | Assessment questions | Action if yes | Action if no |
|---|---|---|---|
| 1 | Is the person's pension or benefit assets tested? | Hardship provisions may apply. Go to step 2. | Hardship provisions do not apply. Reject the claim. |
| 2 | Has the person disposed of assets or income? | The hardship provisions may apply if the person has disposed of assets and/or income and the person's severe financial hardship is not a direct result of the disposal. SS Guide 4.6.7.20 Effect of deprivation on eligibility & rate.
SS Guide 4.1 Deprivation of income & assets.
| - If the person is a pensioner, go to step 3. - If the person is a benefit recipient go to step 5. |
| 3 | Is it unreasonable for the person to sell assets? | Go to step 4. | Hardship provisions do not apply. Reject the claim. |
| 4 | Is it unreasonable for the person to borrow against assets? | Go to step 5. | Hardship provisions do not apply. Reject the claim. |
| 5 | Is the asset on the market? | Go to step 6. | Not eligible for hardship in most circumstances unless there is a legal impediment to putting on the market. |
| 6 | Is the person in severe financial hardship? | Go to step 7. | Hardship provisions do not apply. Reject claim. |
| 7 | Is a farm operated by a family member an unrealisable asset? | A hardship pension or benefit may be payable. | A hardship pension or benefit may be payable. |
Review procedures
Hardship cases are reviewed annually. Temporary hardship cases (1.1.P.205) are reviewed at 3 monthly intervals.
Policy reference: SS Guide Part 6 Reviews, debts & payment recovery
Action an ineligible person can take
A delegate must advise a person who is of age pension age (1.1.P.129) or whose partner (1.1.P.85) is of age pension age that they may be able to participate in the HEAS (formerly PLS) if they do not qualify for hardship assistance. A delegate must also advise the person that HEAS and hardship assistance are mutually exclusive.
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 3.4.5 HEAS - qualification & payability, 4.1 Deprivation of income & assets