3.4.7.100 Amount of PBS bonus
Summary
The amount of pension bonus is a multiple of the member's annual rate of basic Age payable when the pension is granted. Supplementary payments such as PhA, RA and RAA are NOT included. However, the pension supplement component for pension bonus (formerly the pension supplement component introduced to compensate pensioners for the affect of the GST), is included in the rate. This topic explains the formula for calculating the bonus.
Policy reference: SS Guide 3.4.7.110 Sample PBS Calculations
How is the bonus calculated?
The formula used to calculate the bonus payable reflects the amount of Age the member is entitled to at grant and the length of the deferment. If the member's couple status changes during the deferment period, then a separate formula is used to take account of the proportions of the bonus accrued while the member was single and partnered.
If the member has more than 5 bonus periods accrued, then the couple status during the last 5 bonus periods is used.
Act reference: SSAct section 93E(6) … a person has accrued more than 5 bonus periods …, section 93J Amount of pension bonus, section 93J(2) Change in couple status during overall qualifying period
Policy reference: SS Guide 3.4.7.30 Bonus Periods for PBS
Pension supplement component for the pension bonus (PSCPB)
The PSCPB, formerly the pension supplement introduced to compensate pensioners for the affect of the GST, is a payment amount used in calculating a person's pension bonus amount. The amount of pension bonus is calculated using notional base rate pension and the PSCPB. The PSCPB is indexed to the CPI each March and September.
Act reference: SSAct section 93H(4) Amount for paragraphs (2)(b) and (3)(b)
Calculation when couple status has not changed
The following table explains the steps in calculating the bonus payable to a member whose couple status has not changed during the deferral period. This includes couples who have only been separated due to illness:
Step | Description |
---|---|
1 | Work out the member's annual pension rate, i.e. basic plus PSCPB after application of the means tests. |
2 | Work out the overall qualifying period, i.e. the total period of accruing membership:
This figure CANNOT be greater than 5 years and if greater than 5 years only the last 5 years of accruing membership are used. Note: If the number has a 4th decimal place, numbers of 5 or more are rounded up. |
3 | Work out the pension multiple by multiplying the overall qualifying period by 0.094. |
4 | Multiply the member's annual pension rate by the pension multiple. |
5 | Multiply again by the overall qualifying period. |
6 | Round the final dollar amount to the nearest 10 cents, with 5 cents being rounded up. |
Act reference: SSAct section 93D How to calculate the amount of pension bonus, section 93E Qualifying bonus periods, section 93F Overall qualifying period, section 93G Pension multiple, section 93J(1) No change in couple status during overall qualifying period, section 93J(7) Rounding up, section 93J(8) Rounding up, section 93H Annual pension rate
Policy reference: SS Guide 3.4.7.110 Sample PBS Calculations
Calculation when couple status has changed
In situations where a change in couple status has occurred during the bonus period, a 'notional single pension rate' and a 'notional partnered pension rate' are used to calculate their bonus.
Notional annual pension rate
At the time of claim, a person's annual rate of Age is based on their couple status. The annual rate is a percentage of the maximum annual rate payable.
Example: A member whose pension is not reduced after applying the means tests receives 100% of the maximum rate payable.
People who have had a change in couple status will use the annual rate of pension that applies to their couple status at grant as their notional rate for the proportion of the time their bonus was accrued as that couple status.
Example: The notional single pension rate of a person who is single when they claim Age will be their annual pension rate, i.e. basic plus PSCPB.
When the bonus was accrued for the period that the person had a different status (from that at grant of Age), the notional rate for that couple status is worked out by multiplying the maximum basic plus PSCPB by the adjusted percentage.
Example 1: Eric is single at the time of his claim. His basic rate plus PSCPB (after application of the means test) equals 80% of the maximum annual basic rate plus PSCPB payable to a single person. Eric had a partner for some of the overall qualifying period. His annual notional partnered rate is 80% of the maximum annual basic partnered rate plus PSCPB per person for the period he was partnered.
Example 2: Mary is partnered at the time of claim and is entitled to maximum Age. Mary was single for part of the overall qualifying period. Her annual notional single pension rate is the maximum annual single rate at time of claim for the period she was single.
Act reference: SSAct section 93J Amount of pension bonus, section 1064 Rate of age, disability support, wife pensions and CP (people who are not blind), section 93H Annual pension rate
Calculating adjusted percentage
The adjusted percentage is used to work out the annual notional partnered and single pension rates. It is worked out as follows:
Step | Description |
---|---|
1 | Calculate the maximum annual basic rate plus PSCPB payable to a person (based on the person's couple status at claim). |
2 | Calculate the member's actual annual basic rate plus PSCPB after application of the means tests, at time of claim. |
3 | Divide the result of step 2 by the result of step 1. |
4 | Multiply by 100 to get a percentage (of the MBR plus PSCPB). |
5 | The percentage is rounded to 3 decimal places.
Note: If the number has a 4th decimal place, numbers of 5 or more are rounded up. |
In the following example, the rates used applied at 20 March 2007. Current rates can be obtained from the A guide to Australian Government payments booklet on the DHS website.
Example: Jim was partnered for a period during the last 5 years of the overall qualifying period and was single at the time of claiming Age and the bonus. His adjusted percentage is calculated as follows:
Assuming maximum annual basic (plus PSCPB) single rate is $13,652.60 per year, but the annual basic (plus PSCPB) single pension payable after means testing was $10,922.10. The percentage of the maximum pension payable is calculated as follows: by dividing $10,922.10 by $13,652.60 and multiplying the result by 100 - which results in 80%.
The adjusted percentage is used to calculate the annual notional partnered rate.
Assuming the annual maximum basic (plus PSCPB) partnered rate is $11,401.00 per year, per person, the notional annual partnered rate is worked out by multiplying $11,401.00 by 80 per cent - which gives $9,120.80.
Act reference: SSAct section 93J(5) Amount of pension bonus, section 93J(8) Amount of pension bonus, section 1064-B1 Maximum basic rate, section 93H(4) Amount for paragraphs (2)(b) and(3)(b)
Steps in calculating bonus - couple status changed
The following table explains the steps in calculating the bonus payable to a member whose couple status has changed during the deferral period:
Step | Description |
---|---|
1 | Work out the overall qualifying period (i.e. total period of accruing membership):
This figure CANNOT be greater than 5 years and if greater than 5 years, only the last 5 years of accruing membership are used. Note: If the number has a 4th decimal place, then numbers of 5 or more are rounded up. |
2 | Work out the pension multiple by multiplying the overall qualifying period by 0.094. |
3 | Work out the overall qualifying period as a single person. |
4 | Work out the member's adjusted percentage - based on basic pension plus PSCPB.
The percentage is rounded to 3 decimal places. Note: If the number has a 4th decimal place, numbers of 5 or more are rounded up. |
5 | Multiply the member's annual notional single pension rate (step 4 × maximum annual single rate) by the pension multiple (step 2). |
6 | Multiply result of step 5 by the result of step 3. This gives the amount of bonus payable in respect of the qualifying period as a single person. |
7 | Multiply the member's annual notional partnered rate (step 4 × maximum annual partnered rate − per person) by the pension multiple (from step 2). |
8 | Work out the qualifying period as a partnered person. (This must equal step 1 less step 3). |
9 | Multiply the result of step 7 by the result of step 8. This gives the amount of bonus payable in respect of the qualifying period as a partnered person. |
10 | Add the single and the partnered bonus amounts to arrive at the total bonus payable. (Add the results of step 6 and step 9). |
11 | Round the final dollar amount (step 10) to the nearest 10 cents, with 5 cents being rounded up. |
Act reference: SSAct section 93D How to calculate the amount of pension bonus, section 93E Qualifying bonus periods, section 93F Overall qualifying period, section 93G Pension multiple, section 93J(1) No change in couple status during overall qualifying period, section 93J(3) … annual notional single pension rate …, section 93J(4) … annual notional partnered pension rate …, section 93J(5) … adjusted percentage is …, section 93J(7) Rounding up, section 93J(8) Rounding up
Policy reference: SS Guide 3.4.7.110 Sample PBS Calculations
Calculating the bonus for blind pensioners
Although still affected by couple status, the basic rate for blind pensions is calculated in accordance with the relevant rate calculator.
Act reference: SSAct section 1065 Rate of age and disability support pension (blind people)