3.4.7.50 Non-accruing membership of PBS

Summary

Non-accruing membership (1.1.N.90) of the scheme occurs during any period that the member is subject to:

• a disposal preclusion period (1.1.D.230), or
• a compensation preclusion period (1.1.C.260), or
• a carer preclusion period (1.1.C.50), or
• a period of non-accruing membership, or
• Secretary's discretion.

This topic explains these provisions.

Disposal preclusion period

For gifts made on or before 30 June 2002, a disposal preclusion period applies when a PBS member or their partner gifts more than $10,000 of assets in a designated year. A designated year ends on the anniversary of the member's qualification for Age. If more than $10,000 is given away during a designated year the member is precluded from accruing bonus periods for 5 years from the date the gift exceeds the allowable limit.

The $10,000 can be made up of either a lump sum or the aggregate of smaller amounts during the 12 months of the designated year. The gifting may have occurred up to 5 years before deferment and still affect the bonus accrual.

For gifts made on or after 1 July 2002, the disposal preclusion period applies when a PBS member or their partner gifts more than $10,000 in a financial year (i.e. 1 July to 30 June) or gifts more than $30,000 in a 5-year period. The preclusion period is 5 years starting from the date the gift exceeds the allowable limit.

If a decision is made that a gift has been returned under 4.1.1, the disposal preclusion period ceases from the date of return of the gift.

Compensation preclusion period

The compensation preclusion period applies when a member receives:

• regular payments of compensation, or
• a compensation lump sum that would preclude pension if the member lodged a claim.

In this case the member is precluded from accruing bonus periods until the compensation or the preclusion period ceases.

Carer preclusion period

The carer preclusion period applies when a member receives CP. In this case, the member is precluded from accruing bonus periods for the period that CP is paid.

Non-accruing membership

A person's membership of the scheme is always non-accruing if the person:

• is a participant in the CDEP, OR
• is in prison, OR
• is in psychiatric confinement because they have been charged with committing an offence.

Prior to 20 September 2009, a scheme member could be considered non-accruing if the member's partner was working but not a member of the scheme, and intended to become a member. From 20 September 2009, this provision is no longer applicable. In those circumstances the scheme member should be encouraged to claim Age and their bonus or become accruing in their own right if they wish to remain in the scheme.

A person's membership of the scheme can also be non-accruing if the member would OTHERWISE FAIL THE WORK TEST because of the following circumstances:

• if the person's partner dies. A maximum period of 13 weeks as a non-accruing member applies, OR
• if, prior to 1 January 2008, the person takes a continuous period of sick leave of at least 4 weeks, up to a maximum of 26 weeks duration, OR
• if, on or after 1 January 2008, the person takes any paid leave or unpaid leave from employment (or any combination of leave types) for up to a maximum of 26 weeks duration. See further information on 'leave from employment' later in this topic, OR
• if, on or after 25 August 2006, the person suffered a reduction in the amount of gainful work they performed because of a major disaster as defined in SSAct section 23. A maximum period of 13 weeks as a non-accruing member applies, OR
• if, on or after 1 March 2006, the member suffered a reduction in the amount of gainful work performed because of Cyclone Larry that hit the Australian mainland on 20 March 2006. A maximum period of 13 weeks as a non-accruing member applies, OR
• if, between 30 March 2020 and 31 March 2021, the member could not meet the work test due to the impact of the COVID-19 pandemic.

Secretary's discretion

The Secretary has the discretion to specify a kind of non-accruing member by legislative instrument.

Leave from employment taken on or after 1 January 2008

For the purposes of non-accruing membership, 'sick leave' means paid sick leave. Any unpaid sick leave or unpaid leave due to illness or injury is considered to be unpaid leave (rather than sick leave).

Sick leave taken on or after 1 January 2008 is treated the same as all other types of leave - i.e. there is no requirement that the member take more than 4 weeks of sick leave in order to be eligible to be made non-accruing during that leave.

A PBS member who takes any type of paid leave (such as recreation leave, sick leave, long service leave, carer's leave, special leave, personal leave, etc.) or unpaid leave starting on or after 1 January 2008 can be considered non-accruing members for up to 26 weeks at a time. (They would NOT be considered non-accruing members if they could meet the PBS work test despite their periods of leave).

A member cannot take rolling periods of leave if they need to be non-accruing during these periods of leave. A member can only take up to 26 weeks leave in total (sick leave or other leave or a combination of different types of leave). They must have a period of accruing membership between any periods of leave that are non-accruing if they do not wish to exit the scheme.

Leave from employment covers all paid and unpaid leave where the PBS member's employment is not terminated and a return to the same employer is expected after their period of leave, or where the person's employment does not terminate until after the leave is taken. This includes self-employed members who will return to self-employment after their leave.

A reduction in working hours is not considered to be leave.

Concession for members on leave as at 1 January 2008

A concession applies for people on leave as at 1 January 2008. A member can have up to 26 weeks as a non-accruing member, starting from the date their leave commenced even if that date is earlier than 1 January 2008. (The non-accruing period will only apply if the member cannot meet the work test requirements without counting all or part of the leave as non-accruing.) To be eligible for this concession, the non-accruing period must include 1 January 2008.

Non-accruing periods for members over 75 years of age

Once a member turns 75 years of age they can no longer accrue further bonus periods under ANY circumstances. Members aged over 75 years of age can remain members provided they continue to meet the work test. Registered partners of members over 75 years of age can use the work performed by their partner to accrue bonus periods.

All 'non-accruing' declarations made under SSAct section 92Q may apply to post 75 members in the same way they apply to younger members. (This includes provisions relating to Cyclone Larry, the COVID-19 pandemic, major disasters, CDEP, prison, psychiatric confinement, bereavement and all types of leave from employment). Post 75 members DO NOT need to meet the work test during these periods of non-accruing membership.

Compensation preclusion periods, carer preclusion periods and disposal preclusion periods also apply to post 75 members. Post 75 members DO NOT need to meet the work test during these periods EXCEPT during a disposal preclusion period. (The legislation operates differently for pre and post 75 year old members in regard to disposal preclusion periods).