6 Pension valuation factor — indexation of income stream.................2
7 Indexation factor — non-discretionary indexation of income stream...........2
8 Indexation factor — discretionary indexation of income stream.............2
Schedule 1—Repeals 4
Social Security (Pension Valuation Factor) Determination 1998
Schedule 2 - Pension valuation factors 5
1 Name
This instrument is the Social Security (Pension Valuation Factor) Determination 2018.
2 Commencement
(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information
Column 1 Column 2 Column 3
Provisions Commencement Date/Details
The whole of this instrument The day after this instrument is registered.
Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.
(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.
3 Authority
This instrument is made under subsection 1120(3) of the Social Security Act 1991.
4 Definitions
Note: A number of expressions used in this instrument are defined in section 23 of the Act, including the following:
(a) defined benefit income stream;
(b) governing rules.
In this instrument:
Act means the Social Security Act 1991.
relevant year means the 12 month period for which the value of a person’s income stream is being worked out for section 1120 of the Act.
5 Schedules
Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.
6 Pension valuation factor — indexation of income stream
If the indexation factor for a person’s defined benefit income stream for a relevant year is worked out in accordance with section 7 or 8, the pension valuation factor that applies to the person for that year is the pension valuation factor mentioned in Schedule 2 for:
(a) the age of the person on the person’s next birthday following the beginning of the relevant year; and
(b) the indexation factor for the person’s income stream.
7 Indexation factor — non-discretionary indexation of income stream
(1) For section 6, if, under the governing rules of the fund paying a person’s defined benefit income stream, the income stream is indexed in a non‑discretionary way, the indexation factor for the income stream is worked out in accordance with this section.
(2) If the income stream is indexed by reference to movements in salary, the indexation factor is taken to be a rate of at least 4% but less than 5%.
(3) If the income stream is indexed by reference to movements in a price index published by the Australian Statistician, the indexation factor is taken to be a rate of at least 2.5% but less than 3%.
(4) If the income stream is indexed in accordance with a rate set by the governing rules, the indexation factor is taken to be the range of rates set out in Schedule 2 that includes that rate.
(5) If the income stream is indexed by more than 8%, the indexation factor is taken to be a rate of 8%.
(6) For this section, an income stream is indexed in a non‑discretionary way if it is indexed otherwise than as described in subsection 8(1).
8 Indexation factor — discretionary indexation of income stream
(1) For section 6, if, under the governing rules of the fund paying a person’s defined benefit income stream, the income stream is indexed by discretionary determination of trustees of the fund, the indexation factor for the income stream is worked out in accordance with this section.
(2) Unless subsection (4) applies, the indexation factor is the average of the indexation factors determined for the person’s income stream for the 5 years immediately preceding the relevant year.
(3) The average of the indexation factors is the sum of the indexation factors determined for the person’s income stream, or for a class of income streams that includes the person’s income stream, for the 5 years, divided by 5.
(4) The indexation factor is taken to be the range of rates set out in Schedule 2 that includes the average of the indexation factors worked out under subsection (3).
(5) If the fund has been in existence, or making income stream payments to the person, for less than 5 years, the indexation factor is taken to be a rate of at least 2.5% but less than 3%.
(6) If the income stream is indexed by more than 8%, the indexation factor is taken to be a rate of 8%.
Schedule 1—Repeals
Social Security (Pension Valuation Factor) Determination 1998
1 The whole of the instrument
Repeal the instrument
Schedule 2—Pension valuation factors
Indexation factor for person’s income stream
Age of person on next birthday 8% At least 7% but less than 8% At least 6% but less than 7% At least 5% but less than 6% At least 4% but less than 5% At least 3% but less than 4% At least 2.5% but less than 3% At least 2% but less than 2.5% At least 1% but less than 2% Less than 1%
Pension valuation factor
20 or less 82 60 45 35 28 23 21 19 16 14
21 to 25 74 55 42 33 27 22 20 19 16 14
26 to 30 66 51 40 32 26 21 20 18 16 14
31 to 35 58 46 37 30 25 21 19 18 15 13
36 to 40 51 41 33 28 23 20 18 17 15 13
41 to 45 44 36 30 25 22 19 17 16 14 13
46 to 50 38 32 27 23 20 17 16 15 13 12
51 to 55 32 27 24 21 18 16 15 14 13 11
56 to 60 26 23 20 18 16 14 14 13 12 11
61 to 65 21 19 17 15 14 12 12 11 10 10
66 to 70 16 15 14 12 11 11 10 10 9 8
71 to 75 12 11 10 10 9 8 8 8 7 7
76 to 80 9 9 8 8 7 7 7 7 6 6
81 to 85 6 6 5 5 5 5 5 4 4 4
86 to 90 4 4 4 3 3 3 3 3 3 3
91 to 95 3 3 3 3 3 3 3 3 3 3
96 to 100 3 2 2 2 2 2 2 2 2 2
101+ 1 1 1 1 1 1 1 1 1 1
Section 1 - Social Security (Pension Valuation Factor) Determination 2018 - Social Security (Pension Valuation Factor) Determination 2018 | Zoe