The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

3.4.7.120 Top ups to PBS

Summary

Top ups may apply to PBS claims where the pension bonus start day is on or after 1 January 2008. They allow some PBS members to receive an extra amount on top of the pension bonus they originally received. This top up is not a second bonus payment - it is a recalculation of the original bonus amount.

A top up is NOT payable where no pension bonus was originally paid.

Top ups are designed to help people who claim Age and pension bonus before their finances are settled and who receive a lower amount of pension bonus because of this.

Example: A person may claim Age and pension bonus just prior to purchasing an income stream or prior to the cessation of their leave entitlements from work.

Qualification for a PBS top up

A person's pension bonus is calculated on the base rate of Age plus the pension supplement component for pension bonus (PSCPB) at the start day (date of grant). From 1 January 2008, ex-PBS members whose pension rate increases within 13 weeks of their pension bonus start day may be eligible for a top up of their pension bonus. The top up is payable if the increase in calculated rate occurs because of a reduction in assessed income and/or assets. Centrelink assesses a person's income and assets to determine the rate of Age payable.

For a top up qualifying event to occur, there must have been a reduction in the assessed value of the person's income and/or assets within the 13 weeks since the PBS start day that caused an increase in pension rate. This could be an active change or a passive change to income/assets that results from an automatic process.

Example: Where an exchange rate on a foreign pension changes, resulting in a person receiving an increase in Age within 13 weeks of the start day, a top up would be payable.

The reduction of a person's assessed income as a result of the work bonus DOES count as a qualifying event for pension bonus top up purposes.

A top up is NOT payable where the pension rate increases only because of indexation of pension rates or indexation of allowable income and asset limits, a change in home ownership status, or a change in pension rate due only to a change in couple status (without a change to income/assets at the same time).

Example: If members of a couple have combined income of $20,000 per annum, their assessed share of the income is $10,000 each. If the couple separates and both continue to have $10,000 each in income per annum, no top up is payable, despite any increases in pension rate when they switch to single rate. This is because the increase in pension rate was due ONLY to a change in couple status and did not involve a reduction in the income/assets being assessed for each person.

Act reference: SSAct section 93K Top up of pension bonus for increased rate of Age

Social Security (Top Up of Pension Bonus - Specified Circumstances) Determination 2018

Calculation of top up

The amount of top up is the difference between the amount of pension bonus paid on the start day and the amount of pension bonus that would have been payable on the start day using the highest rate of base Age and PSCPB calculated within the 13 weeks after the PBS start day that was not due to the indexation of rates/thresholds. This rate can occur at any calculation point during the 13 week period.

Decreases in calculated rate do not disqualify a person from a top up.

Example: John's rate of calculated Age and PSCPB increases in both week 4 and then again in week 10 (due to decreases in assessed income/assets). His Age then decreases from week 11 onwards. John's top up is calculated using the rate of Age and PSCPB at week 10. John's reduction in calculated rate at week 11 is ignored. The top up amount is the difference between the amount of pension bonus paid originally and the amount of PBShe would have received on his PBS start day if their calculated rate had been based on his assessed income/assets as at week 10.

If a person's pension is cancelled within 13 weeks of the PBS start day, the PBS top up is calculated. PBS top ups are to be paid only in respect of periods where any reporting requirements have been satisfied.

Further examples of top up calculations are in 3.4.7.130.

Rounding

Round top up amounts to the nearest 10 cents. If the top up amount is more than nil, but less than one dollar, pay a whole dollar.

When are top ups paid?

Top ups are generally paid after the 13 week period from when the PBS start day has passed to ensure that a top up doesn't need to be recalculated if the rate of Age increases more than once.

A top up that is being paid after the death of the person can be paid earlier than 13 weeks from the PBS start day.

Recalculation of top ups

If a determination is made (after the top up is paid) that changes the top up amount payable, the top up can be recalculated and any arrears paid.

Example: Joan receives a top up based on the highest calculated rate attributed to her in the 13 weeks from the start day. On appeal, it was later determined that Joan should have had an even higher calculated rate at some stage during the 13 weeks after the PBS start day. The amount of top up can be recalculated using the difference between the amount of top up already paid and the amount that would have been paid on the day Joan received a top up, using the new (higher) calculated rate.

Top ups where there has been a change in couple status in the 13 weeks from the start day

Because changes in couple status involve the splitting (or joining) of Centrelink records for different people and changes to pension rates and applicable income/asset thresholds, it can be difficult to determine whether a qualifying event has occurred and the calculation of a top up. There are specific rules to calculate top ups in this situation. See 3.4.7.130 for details.

Top ups of PBS after death

A top up is payable to the estate of the person, if a person:

  • is paid a pension bonus and Age
  • has an increase in calculated rate due to a reduction in income and/or assets within 13 weeks of the PBS start day, AND
  • dies after the event that caused the calculated rate increase but before the top up is paid.

Act reference: SSAct section 93K Top up of pension bonus for increased rate of Age

SS(Admin)Act section 59 Payment of pension bonus or pension bonus bereavement payment after death

Top ups do not apply to PBBP

Top ups do not apply to PBBP.

Explanation: PBBP is based on the deceased's accrued bonus and there is no ongoing pension rate for the deceased person.

Top ups due to non-backdating of pension rate increase

The Secretary has the power to determine other circumstances that qualify a person for a top up. A top up will apply if a person would have been eligible for a top up except for the date of effect rules that limit arrears of pension.

Example: Mike claims Age and PBS on 2 January. On 8 June, Mike advises that an incorrect amount of income had been recorded on his Centrelink record since the Age and PBS start day which has reduced his rate calculation and pension bonus. Because the error was not advised within 13 weeks from the start day, the date of effect is the day of notification and no arrears of pension are paid. Mike can, however, receive a top up of PBS, based on the difference between the PBS amount paid and what would have been paid on the start day if Mike's calculated rate had been correct on that day.

Act reference: SSAct section 93L Top up of pension bonus in specified circumstances

SS(Admin)Act section 109 Date of effect of favourable determination resulting from review

Policy reference: SS Guide 8.6.1 Date of effect of determinations - summary of legislation

DVA top ups

DVA have their own PBS. DVA will pay top ups to pension bonus payments made by them.

Act reference: Veterans' Entitlement Act 1986 section 45UIB Top up of pension for increased rate of designated pension, section 45UIC Top up of pension bonus in specified circumstances

Policy reference: SS Guide 4.3.5.72 DFISA bonus & DFISA bonus bereavement payment & the PBS prior to 1 January 2022

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