Waiting for pay day

Age pension applicants are waiting up to six months for their claims to be processed as the number of Australians reaching retirement age surges and government looks for savings across the budget.

Frustrated applicants say inefficiencies in the system, including inactive claims going undetected for weeks, oversights in the handling of documents, and a workforce under pressure from the sheer volume of claims, are contributing to the delays.

They also feel they are being put under the microscope as part of the Federal Government’s attempt to cut welfare spending, which, for age pensioners, will amount to $45.4 billion this financial year and balloon to $52.3 billion in four years.

The soaring cost to the national purse is being driven by almost 200,000 age pension claims each year as the baby boomer generation – born between 1946 and 1964, and making up one in five Australians – reaches retirement age.

Demographers and social policy experts warn that this shift by boomers from work (and tax contribution) to the pension (and a drain on the national purse) will have profound implications for the national accounts.

They also say a sceptical younger generation may resent supporting retirees into old age.    

The Department of Human Services did not specifically comment on the six-month processing times, but front-line staff make no secret of the fact when pension applicants complain about the delay.

A spokesman for the department said processing times varied depending on the complexity of an individual case, and how many claims the department was handling at any one time.

In 2016-17, the median number of days to finalise an age pension claim was 36 days.

He said the department was committed to processing claims in the shortest possible time, and that there were now fewer age pension claims on hand than at any time in the past three years.

But with the Department of Social Services (DSS) expecting the number of age pension recipients in Australia to grow by 265,000 over the next four years – from 2.502 million in June 2017 to 2.765 million in June 2021, a growth rate of 10.5 per cent – it’s unlikely the workload, or processing times, will reduce.

Your Time spoke to many pensioners and claimants still going through the process to gauge their experiences and observations, to get an understanding of the situation.

Our investigation found the elderly were sympathetic to the huge logistical challenge faced by department staff, and praised the attitude of front-line staff in particular, who they described as caring and quick to enquire if claimants were facing imminent financial difficulties.

Others are suspicious and don’t like the long wait, even though pensions are back paid to the time a claim is lodged, fearing there is another agenda aimed at depriving them of their entitlements. 

Calls for welfare reforms by politicians over recent years have not been missed by Baby Boomers.  In answering questions, a DSS spokesman referred to the 2015 Intergenerational Report.

It stated that if no changes were made to the current system, age and service pension payments would increase from 2.9 per cent of GDP in 2014-15 to 3.6 per cent by 2054-55.

He said reforms were essential to ensure Australia had a sustainable welfare system for future generations.

Pensioners revealed a number of problem areas they had encountered in processing their applications.

Being assured over the helpline that a claim was progressing was no guarantee everything done up to that point was in order and satisfactory, said one disgruntled pensioner whose claim took almost six months to approve.

 “About three months in, the girl on the helpline discovered my claim was inactive, it was just sitting there going nowhere,” he said.

“She couldn’t tell me why that might be the case but she did say it was unusual. She was apologetic and kickstarted it again, but about a month later it went inactive again.

 “Much later I learned the sticking point was a piece of paper I should have given them at the outset months earlier.

“But nothing had been said all the way through; the counter bloke didn’t spot the oversight, and subsequent front-line staff were none the wiser either. The cogs of the machine weren’t all in synch.”

A woman described how she had received a one-sentence letter stating her claim had been rejected because she hadn’t responded to an earlier letter from the department.

“I was really puzzled because I hadn’t had any previous mail from the department,” she said.

 “I rang in a bit of a panic and asked ‘what letter, I haven’t received any letter’.

 “The problem was eventually traced to my very first contact with them two months earlier, when I gave them my documents.

One piece of paper was missing, a fact not picked up by the man on the front desk. It was an error on my part, but also his too.”

Pension applicants admit front-line staff are overwhelmed by the sheer volume of applications.

 “How many staff do you need to handle 200,000 pension applications a year,” asked a retired Brisbane electrician.

 “Even if you had 5000 staff working flat out it would be a hell of a job. You’ve got to expect human error, fatigue, and, dare I say, boredom to creep in.”

People in my bracket haven’t really had a lifetime’s work contributing to super because, at the outset, the contributions from both sides were modest, and only relatively recently did salary sacrifice allow us laggards to ramp up contributions.

My son has more super than me, a situation that is probably experienced by many Boomers. The next generation will be in a much better position to care for themselves in retirement.

The Centrelink crew, by the way, are doing a great job against overwhelming odds. I heard no criticism of them.

• The number of Age Pension recipients at June 2017 was 2.502 million and is projected to increase by approximately 10.5 per cent to 2.765 million by June 2021.

• In 2017–18, the projected expenditure for Age Pension is $45.382 billion and is projected to increase to $52.311 billion in 2020-21.                                                           

• According to the 2015 Intergenerational Report, if the Australian Government made no changes, it was estimated that payments made through the age and service pensions would increase from 2.9 per cent of Gross Domestic Product in 2014-15 to 3.6 per cent by 2054-55.

• Reform is essential to ensure Australia has a welfare system that remains financially sustainable for future generations.

The Government is streamlining the Age Pension claim process, making it quicker and easier for older Australians, and improving the user experience for those who claim Age Pension online.

Applying through the new online claiming channel is faster and more efficient for claimants as it ensures all necessary information is submitted when lodging a claim.

Age Pension claims generally take longer to process than other claims, as the department has to assess often complex income and asset information and frequently go back to claimants to request additional information.

We strongly encourage people claiming Age Pension to make sure they have provided all the supporting paperwork required for their claim upfront, to avoid any delays in processing their claim.

The department routinely adjusts staffing arrangements to meet changing demand and government priorities, and the number of staff allocated to Age Pension processing generally increases during periods of peak demand, such as the end of financial year.

Improvements to technology and department systems are also speeding up the claims process.

From first-hand accounts, Your Time has learned problem areas in the processing system can include:
• Front-line staff don’t always spot inadequate or missing documentation in the early stages of the process, leading to long delays, sometimes months later, when the issue is discovered by senior department staff.
• Applications can fall into a black hole where they remain inactive; claims are supposed to either progress through the system or be rejected.
• Postal services don’t always operate efficiently. In one case, a rejection letter took more than three weeks to be delivered to a Caboolture applicant.
• Applicants not being fully aware of the processing procedure. If the department requires additional information it will ask for it within a fixed time; if, for instance, the applicant is off visiting relatives and misses the deadline, their claim will be rejected.
• Applicants not entirely comfortable with technology can struggle applying through the online system.
• Different helpline staff sometimes give conflicting advice.
The investigation also revealed that having few, or modest, assets does not mean your application will progress any faster. It all hangs on providing the right documentation within a set time.

Beverley Johnston was 66 and had handed in her notice at her workplace that she would retire at the end of March 2016.

This is her story:

“I knew there was a lot of paperwork involved to obtain a pension, so three weeks before I was due to finish, I went online and downloaded the forms. Also knowing that phone systems were difficult, I attended in person at my local Centrelink office to file it.

“I did the usual waiting around and finally saw somebody who copied all my paperwork and advised me that it was all in order, and they would be in contact.

“I really thought everything would be in place so that when I finished work I would get the pension straight away. That was my optimistic hope, at least.

“I was advised in a phone call from Centrelink that because I hadn’t physically left work and received a separation certificate, my application had been rejected, even though I was well over 65.

“I finished work and went through it all again. Back into the Centrelink office and more waiting only to be told it couldn’t be dealt with there and I would have to post the paperwork with my separation certificate. They assured me that within a week or two, someone would let me know how it was all going.

“I waited a moth and then called - and remember every time you phone it takes at least an hour, sometimes longer to get someone.

“I was on hold for over an hour and was then referred on – and on, and on.

“For five months, I called periodically and every time they would say that it was another department, it was being assessed, it wasn’t filed properly, it wasn’t progressing, you have to wait your turn, they would let me know … there was always an excuse.

“Basically, this stalling process went on for months. Because I still had a bit in super, which was below the assets test, I was told that until I had actually run out of money completely they couldn’t put me on a hardship list.

“They want you to spend every cent you have before you go on a hardship list and speed things up.

“I went through five months of these calls, collapsing in tears, enduring the to-ing and fro-ing, and being put off. I had to spend every cent I had, so there goes the medical emergency funds.

“They were also asking for my latest bank statements and super statements, so I was still regularly filing paperwork and still nothing would happen.

“In the end, after 75 minutes on a call, I rang my local federal member. The women in the office were very helpful and said they had a contact in the department. Within two days they had called me back and said it was moving.

“Within a week I had my pension plus I was backpaid.

“I met all the criteria. I was a year over the age requirement and well within the assets threshold.

“I can’t understand the stalling if they are going to backpay me anyway. It’s not like they saved anything.

“I have worked and paid taxes all my life and expected equal efficiency in getting my pension as I experienced in paying my taxes.

“Basically, it doesn’t pay to think ahead or expect it to run smoothly.  It doesn’t work to go into one of their offices, you just end up waiting there or using the phone there.

“I think they want you to die first, so they don’t have to pay it out.”

About 174,000 Age Pension claims were finalised in the 2016-17 financial year, compared to 156,000 claims in the previous financial year.
In 2016-17, the department rejected about a quarter of Age Pension claims processed.
• more than 60 per cent were because the applicant did not respond to the department’s request for further information, and
• almost a quarter (24 per cent) were because the applicant exceeded the income and assets test threshold.
Processing times can vary depending on the complexity of the individual case, and how many claims the department has at any one time. In 2016-17, the median number of days to finalise an Age Pension claim was 36 days.

A total of 174,000 age pension claims were finalised in 2016-17.  That’s equivalent to processing 3346 claims a week. Some workload. But that’s just for the age pension.

Add to it all the other types of pension and support claims provided by the Federal Government and the figure for annual transactions is in the hundreds of millions, according to the new Social Services Minister Dan Tehan.

The Department of Human Services’ first piece of advice to age pension applicants is to make sure they have provided all the supporting paperwork required for their claim upfront, to avoid any delays in processing their claim.

The Government is streamlining the claim process.

Applying through the new online claiming channel is faster and more efficient for claimants, as it ensures all necessary information is submitted when lodging a claim. Improvements to technology and department systems are also speeding up the claims process.