Week 7 Flashcards
What is social security?
Social security represents decisions taken by communities to care for those in need.
Social security benefits include
unemployment benefits (NewStart Allowance)
aged pension
disability benefits (Disability Support Pension)
Family benefits (baby bonus, Paid Parental Leave)
A system whereby the government supports certain disadvantaged groups - financially (with income support) and other ways.
Provides a minimum standard of living for all Australians.
Social Security system comes under the Department of Human Services DHS and administered under Centrelink
Centrelink
First established in 1997 (formerly known as the “social security department”)
Centrelink is responsible for integrated service delivery to Australian public.
Virtually the sole provider of social security programs.
Incorporated into Federal Budget policy
Social security and welfare (including health) is $166 billion and represents 35% of all government expenditure
Of this $46.2b was spent on income support for seniors, $18.4b on the family tax benefit, and unemployed $10.4b
Government Retirement Policy – 3 Pillars
Compulsory super 9.5% increasing to 12%
Government pensions (means tested, income and assets tests)
Voluntary super & retirement products (tax incentives)
Government Retirement Savings initiatives
Compulsory SG employer contribution
Encourage voluntary savings – spouse rebate, etc
Superannuation Government Co-contribution
Superannuation contributions splitting – 85% of Conc Contributions (married / defacto / same sex)
Tax concessions to encourage contributions (15% or 0%)
Encourage people to rollover their superannuation to income streams – self fund retirement – tax concessions
Strict Preservation rules - Limit time when people can access retirement money
The Range Of Social Security Benefits
For people raising children – Paid Parental Leave etc.
For people who are unemployed – Newstart Allowance
For people who are retired – Age Pension
For people who are ill, injured or disabled - DSP
For people caring for others – Carers Allowance
For students – Austudy, Youth Allowance
DHS pays pensions, allowances and benefits:
a pension is …. Long term regular payment
an allowance is …. Short term regular payment
Concessions (circumstance based):
eligible pensioners and allowees may be entitled to concessions (pensioner concession card, Health care card, pharmaceutical allowance, telephone allowances)
Unemployment Benefits
Youth allowance
Designed to cater for young people engaged in full-time study or full-time job search.
Must satisfy
Eligibility requirements - age (16-24) / study / apprenticeship
Activity test – actively seeking employment
Newstart allowance
Unemployment assistance for aged 22 or more.
Must satisfy activity test – actively seeking employment.
Means test – income / assets
Means tests which apply to unemployment benefits
Assets / Income test for allowances (thresholds – single / couple)
Rates of payment (updated quarterly)
Mutual obligation test
Once people have assistance for 6 months, they are asked to meet additional activity test requirements – they must undertake Activities / Training offered to them by DHS
Liquid assets waiting period (LAWP) - Allowances
Applies to applicants for Newstart, Sickness, Youth and Austudy allowances. BEFORE being paid initially
Standard one week Ordinary waiting period (OWP) before payment is made
Additional 13 weeks if exceed LAWP test.
Dependant on how much case person has access to / single or couple
Income maintenance period (IMP) – Allowances
AFTER receiving initial payment this is the period of time where leave & redundancy payments received are treated as income. (single versus couple)
Waiting Period can be unlimited based on the value of the persons payment and their weekly income. Eg. 10 week redundancy payment = 10 week wait.
Liquid Asset Waiting Period
Liquid asset are financial instruments that can be easily converted to cash to fund cost of living.
Assets include cash, Term Deposit, managed funds and debentures and lump sum termination payments.
LAWP applies after mandatory 1 week Waiting Period
Centrelink works out the LAWP using the following formulae:
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Disability Support Pension
Support services for people with disabilities and to carers of people with severe disability.
Qualification criteria
over 16 but & under age pension age (male / female)
unable to work or be re-trained to work
have a physical, intellectual or psychiatric impairment or be permanently blind
Australian resident
meet income and asset tests for pensions
Non taxable (TAX FREE payment) up to age pension age
Age Pension
Australia became a world leader in early 1900s with provision of social security support for the aged.
Relative cost of age pensions has increased due to:
Increase in population
Increase in longevity.
Eligibility for Age Pension
Reach pension age
Currently 65.5 years old for men and women
Qualify age to increase by 6 months every 2 years to Age 67 yrs on 1 July 2023.
Refer to next slide for Age Pension eligibility
Satisfy means tests
asset and income tests thresholds
Satisfy residential status
need to meet Australian residency qualifications
be in Australia at the time of applying (live in Australia)
have been an Australian resident for more than 10 years with at least 5 years continuance residency
Waived if person has refugee status.`
Eligibility- Age Pension Age
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Basic pension rates and method of paymentEffective at January 2019
Rates generally indexed each 6 months
Maximum pension rates (no dependant children):
single pension: $834.40 (per fortnight)
+ Pension Supplements Full Pension- $67.80 or $36.30 for partial
+ Energy Supplement $14.10
Total Max= $916.30 (per fortnight)
married couple: $1,258.00 (per fortnight)
+ Pension Supplements Full Pension- $102.20 or $54.80 for partial
+ Energy Supplement $21.20
Total Max= $1,381.40 (per fortnight)
Satisfying the means test
An applicant for age pension is assessed under two
means tests:
1 Assets test
2 Income test
Pensioner will be entitled to an age pension
based on the test that provides the LOWEST payout.
If LOWEST payment = $0 – then no Age Pension is payable.
Method of Assessment
Criteria:
Satisfy the age limit and other criteria
apply ASSETS test
apply INCOME test
COMPARE the two tests
which gives the lower payment
Satisfying the asset test
Definition of an asset An asset is considered to be any property or possession owned partly or wholly by a person This includes: assets held outside Australia Debts owed to person Gifts given (last 5 years) Valuation net market value is used reduced by any loan against the asset
