Revised Explanatory Memorandum
(Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP)Schedule 2 - Cessation of Widow B Pension
Summary
This Schedule will cease Widow B Pension from 20 March 2020.
Background
Widow B Pension is a payment for certain older widows who have lost the financial support of their partner, and have limited means of support, who do not otherwise qualify for parenting payment. Widow B Pensions were closed to new applicants on 20 March 1997 and this Schedule will close Widow B Pensions entirely from 20 March 2020.
To qualify for Widow B Pension, a woman must have either been receiving a widow's pension as a class B widow prior to 1 July 1987 or have turned 45 on or before 1 July 1987 and be receiving a supporting parent's benefit or a widow's pension as a class A widow on or after that day, or was receiving a sole parent's pension after 1 March 1989.
Alternatively, if a woman turned 50 on or before 1 July 1987 and met the residency requirements, was not a member of another couple and was not otherwise qualified for parenting payment, she might also have qualified for Widow B Pension if, in addition to meeting these requirements: her husband had died, she was a dependent female for the purposes of the social security law, she was divorced from her husband, she was legally married but deserted by her husband without just cause for at least six months, she was married to a man who was in gaol for at least six months or she was party to a purported marriage that was void and her purported husband deserted her without just cause for a period of at least six months.
A woman might not need to meet the residency requirements to be eligible for Widow B Pension, if she was not in Australia at the time of her husband's death and prior to his death, she was receiving a partner service pension or a Wife Pension because her husband was receiving: an Age Pension, an invalid pension or a disability support pension, a special needs Age Pension or a special needs invalid pension or a special needs disability support pension.
All women in receipt of Widow B Pension immediately before 20 March 2020 will be of Age Pension age by the time the Widow B Pension ceases. A woman who is in receipt of Widow B Pension or the special needs Widow B Pension will be automatically transferred to the Age Pension without the need to apply.
Explanation of the changes
This Schedule ceases Widow B Pension from 20 March 2020. Item 15 repeals Part 2.8 of the Social Security Act, which provides for the qualification of and payability for Widow B Pension and item 32 repeals Part 3.4, which provides the pension rate calculator C.
Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997
Items 1 and 2 make necessary consequential amendments to remove references to Widow B Pension from the Income Tax Assessment Act 1936.
Items 3 to 6 make necessary consequential amendments to remove reference to Widow B Pension from the Income Tax Assessment Act 1997.
Social Security Act
Items 7 to 13 make consequential amendments as a result of the repeal of Part 2.8 of the Social Security Act, to remove redundant references to Widow B Pension from repealed sections.
Item 14 amends section 43, which provides the qualification for Age Pension. New subsection 43(4) provides that a woman is qualified for Age Pension if she was receiving a special needs Widow B Pension immediately before 20 March 2020 and is not otherwise qualified for Age Pension.
Items 16 to 60 make necessary consequential amendments to remove references to Widow B Pension from various provisions of the Social Security Act.
All Widow B Pension recipients are over Age Pension age and will be automatically transferred to Age Pension as a result of this Schedule. However, the majority of Widow B Pension recipients reside overseas and may not meet the Age Pension residence requirements.
Items 61 to 63 amend the current proportional portability rules in section 1220A so that recipients of Widow B Pension and special needs Widow B Pension who are currently exempt from proportionality rules will also be exempt from proportional portability when they are transferred to Age Pension. Proportional portability refers to the rate of pension to be paid after a pensioner has been absent from Australia for a continuous period of 26 weeks. It usually means that the pension rate overseas is based on the person's Australian Working Life Residence (Australian Working Life Residence refers to periods a person was an Australian Resident between the ages of 16 years to Age Pension age).
For recipients of Widow B Pension who are not exempt from proportional portability, when calculating the rate of Age Pension a former Widow B Pension recipient will receive, item 64 provides that if her Australian working life residence is less than that of her partner's (immediately before that partner's death), the former Widow B Pension recipient's Australian working life residence will be taken to be equal to that of her partner's Australian working life residence prior to her partner's death. This will ensure that a former Widow B Pension recipient's rate of payment will remain unchanged as a result of the transition from Widow B Pension to Age Pension.
Items 65 to 71 make necessary consequential amendments to remove references to Widow B Pension from various provisions of the Social Security Act.
Social Security Administration Act
Items 72 to 75 make necessary consequential amendments to remove references to Widow B Pension from various provisions of the Social Security Administration Act.
International Agreements Act
Items 76 and 77 make necessary consequential amendments to remove references to Widow B Pension from various provisions of the International Agreements Act.
Veterans' Entitlements Act
Items 78 to 81 make necessary consequential amendments to remove references to Widow B Pension from various provisions of the Veterans' Entitlements Act.
Saving and transitional provisions
Item 82 is a savings provision.
Subitem 82(1) ensures that former Part 2.8 and Part 3.4 of, and clauses 128A and 146 of Schedule 1A to, the Social Security Act continue to apply after commencement despite their repeal, to allow the qualification or rate of Widow B Pension to be worked out for days before commencement.
Subitem 82(2) provides that if a person was receiving Widow B Pension and dies before commencement, then section 407 of the Social Security Act will continue to apply on or after commencement.
Subitem 82(3) makes clear that no payment of Widow B Pension is to be made on or after commencement in relation to a day on or after commencement.
Subitem 82(4) ensures that Part 2.16 of the Social Security Act will continue to apply on and after commencement in relation to working out the qualification or rate of special needs Widow B Pension to be worked out for days before commencement.
Subitem 82(5) provides that if a person was receiving special needs Widow B Pension and dies before commencement, then section 830 of the Social Security Act will continue to apply on or after commencement.
Subitem 82(6) makes clear that no payment of special needs Widow B Pension is to be made on or after commencement in relation to a day on or after commencement.
Items 83 and 84 are savings provisions in relation to maintaining the tax treatment of Widow B Pension payments, despite the repeal of the relevant provisions of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997.
Item 85 is a savings provision which ensures that the provisions for determining Australian residency, special residence and residents and the provision relating to working out whether a person is in severe financial hardship in the days prior to commencement will continue to apply after commencement in relation to Widow B Pension, despite the repeal of the relevant provisions.
Item 86 is a savings provision which maintains the effect of qualification provisions in respect of days before commencement, despite the repeal of the relevant provisions.
Item 87 is a savings provision which maintains the effect of rate provisions in respect of the days before commencement, despite the repeal of the relevant provisions.
Item 88 is a savings provision which maintains the effect of various advance payment provisions in respect of days before commencement, despite the repeal of the relevant provisions.
Item 89 is a savings provision which maintains the effect of the pension loans scheme in respect of days before commencement, despite the repeal of the relevant provisions.
Item 90 is a savings provision which maintains the effect of various means testing and debt provisions in respect of days before commencement, despite the repeal of the relevant provisions.
Item 91 is a savings provision which maintains the effect of various administration provisions after commencement of this Schedule in respect of days before commencement, despite the repeal of the relevant provisions.
Item 92 is a savings provision which maintains the effect of the Australian working life residence qualification provision of the International Agreements Act after commencement of this Schedule, in respect of days before commencement, despite the amendments made by this Schedule.
Item 93 is a savings provision which maintains the effect of rate provisions after the commencement of this Schedule in respect of days occurring before, on or after that commencement, despite the repeal of the relevant provisions in the Veterans' Entitlements Act.