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Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009

Schedule 2 Indexation using the Pensioner and Beneficiary Living Cost Index

   

Social Security Act 1991

1  Point 1064-B1 (at the end of note 2)

Add “See also sections 1196 to 1198 (about Pensioner and Beneficiary Living Cost Index indexation).”.

2  Point 1065-B1 (at the end of note 2)

Add “See also sections 1196 to 1198 (about Pensioner and Beneficiary Living Cost Index indexation).”.

3  Point 1066-B1 (at the end of the note)

Add “See also sections 1196 to 1198 (about Pensioner and Beneficiary Living Cost Index indexation).”.

4  After paragraph 1189(a)

Insert:

                    (aa)  the indexation of the maximum basic rates for certain social security pensions using the Pensioner and Beneficiary Living Cost Index; and

5  Subsection 1192(2) (method statement, step 4)

After “amount:”, insert “subject to Division 3,”.

6  Subsection 1192(2) (method statement, step 4)

After “(The indexed amount”, insert “(including one replaced under Division 3)”.

7  After Division 2 of Part 3.16

Insert:

Division 3 Social security pension indexation using Pensioner and Beneficiary Living Cost Index

1196   Social security pension indexation using Pensioner and Beneficiary Living Cost Index

             (1)  This section applies to the amount (the starting amount ) referred to in column 2 of item 1 of the table in subsection 1191(1), except to the extent that it covers the maximum basic rate for pension PP (single).

             (2)  If the indexed amount for the starting amount, worked out under section 1192 on an indexation day and disregarding section 1195 and this Division, is less than the living cost amount worked out on that indexation day using the following method statement, then that indexed amount is taken to be an amount equal to that living cost amount:

Method statement

Step 1.    Use section 1197 to work out the living cost indexation factor on that indexation day.

Step 2.    Work out the current figure for the starting amount immediately before that indexation day.

Note:          For current figure see subsection 20(1).

Step 3.    Multiply the current figure by the living cost indexation factor: the result is the provisional living cost amount .

Step 4.    Use section 1198 to round off the provisional living cost amount: the result is the living cost amount .

Note:          If the indexed amount for the starting amount, worked out under section 1192, is taken to be an amount equal to that living cost amount, there may be a further increase of that replaced indexed amount under section 1195.

1197   Living cost indexation factor

             (1)  Subject to subsections (5) and (6), the living cost indexation factor on an indexation day is:

worked out to 3 decimal places.

Definitions

             (2)  For the purposes of this section, the living cost index number , in relation to a quarter, is the All Groups Pensioner and Beneficiary Living Cost Index number that is the weighted average of the 8 capital cities and is published by the Australian Statistician in respect of that quarter.

             (3)  For the purposes of this section, the reference quarter is:

                     (a)  if the indexation day is a 20 March—the most recent December quarter before the indexation day; and

                     (b)  if the indexation day is a 20 September—the most recent June quarter before the indexation day.

             (4)  For the purposes of this section, the base quarter is the June or December quarter that:

                     (a)  is a quarter before the reference quarter; and

                     (b)  has the highest living cost index number.

Rounding

             (5)  If a living cost indexation factor worked out under subsection (1) would, if it were worked out to 4 decimal places, end in a number that is greater than 4, that indexation factor is to be increased by 0.001.

             (6)  If a living cost indexation factor worked out under subsections (1) and (5) would be less than 1, that indexation factor is to be increased to 1.

Publication of substituted living cost index numbers

             (7)  Subject to subsection (8), if at any time (whether before or after the commencement of this section) the Australian Statistician publishes a living cost index number for a quarter in substitution for a living cost index number previously published by the Australian Statistician for that quarter, the publication of the later living cost index number is to be disregarded for the purposes of this section.

Change to reference base

             (8)  If at any time (whether before or after the commencement of this section) the Australian Statistician changes the reference base for the Pensioner and Beneficiary Living Cost Index, regard is to be had, for the purposes of applying this section after the change takes place, only to living cost index numbers published in terms of the new reference base.

1198   Rounding off amounts

             (1)  If a provisional living cost amount is a multiple of $2.60, the provisional living cost amount becomes the living cost amount.

             (2)  Subject to subsection (3), if a provisional living cost amount is not a multiple of $2.60, the living cost amount is the provisional living cost amount rounded up or down to the nearest multiple of $2.60.

             (3)  If a provisional living cost amount is not a multiple of $2.60 but is a multiple of $1.30, the living cost amount is the provisional living cost amount rounded up to the nearest multiple of $2.60.