Nick Bruining: A silver lining in woeful Centrelink pension processing delays that hurt those who need it most

Late last year, Your Money broke the news that significant delays at Centrelink were causing chaos for would-be pensioners. Sources inside Services Australia — the department responsible for Centrelink’s operations — at the time told us the delays were affecting about 34,000 new age pension claims. In a Senate estimates hearing last week, the chief executive of Services Australia David Hazelhurst admitted that on December 31 last year, 1.1 millions claims across Centrelink were yet to be processed. In the same hearing, Mr Hazelhurst said he hoped to have the backlog down to between 400,00 and 500,000 thanks to the addition of 3000 new positions. That was the same message Your Money received to queries about new pension claims in November last year. “I would expect that by the middle of the year, particularly in relations to new claims on hand, we’d expect to see things back more towards what we would expect to be a reasonable standard,” he said. To be fair, that backlog is not just age pensions and concession card applications. It includes Jobseeker, Youth Allowance, parenting and a suite of other benefits and concession cards. Pension claims, however, sit at the top of a decidedly rotten pile. The average processing time for an age pension application is now 78 days. For a disability pension, it’s 82. Jobseeker applicants have to wait about 27 days and parenting payments are at less than 14 days. And while each benefit application undoubtedly involves a story of hardship and anxiety, we should not forget the significance of pension applications. Jobseeker and other allowance payment are regarded as a type of temporary payment that’s paid while an individual is not working. Underpinning this arrangement is that, eventually, the recipient will return to the workforce to earn an income. By definition, pensions are paid to those Australians who are not able to participate in the workforce. Indeed, these are permanent payment arrangements for those who can’t or are not expected to work again. In the past two weeks, local ABC talkback radio has dealt with delays surrounding pension applications. These included age and disability pensions. Dozens of callers had tales of real financial distress. Seniors are having to raid their savings, borrow from family members and cut back on their already basic lifestyles to make ends meet. Disability support pensioners deserve special mention because they often have nothing to fall back on. The very nature of their claim usually means a small part-time employment gig is out of the question and they often have no super or other resources to draw on. The response from Services Australia’s general manager Hank Jongen was one of empathy. He quite rightly pointed out that it wasn’t the fault of Centrelink’s staff and that Centrelink would prioritise urgent claims. But here’s the problem. Thanks to the delays, many of those that were originally not urgent applications have now become so. You get the distinct sense that piling more “urgents” onto an already long list of urgent applications might mean that your non-urgent pension finally gets granted when you’ve . . . well, let’s just say no longer in need of a pension.. According to Mr Jongen, the good news is that the delays shouldn’t see you out-of-pocket. One concern has been where an unprocessed update on financial circumstances provided by a customer results in a higher payment. The customer potentially incurs a debt for the overpayments, even if it takes months for Centrelink to process the changes. Customers are required to notify Centrelink of a significant change in their financial circumstances within 14 days. “In some circumstances, a significant delay in processing may be considered an administrative error,” Mr Jongen said. “Services Australia may waive debts where the debt is due solely to administrative error and a person has received the money in good faith. This means that although there is a legally recoverable debt, the agency will not recover that debt.” And for those waiting for a new pension or an increase, the back payment will date from the time of lodgment or when they became eligible. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association