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Reductions or Increases in Rate of Service Pension or ISS

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Issues affecting calculation of the rate of service pension or ISS

The calculation of a person's rate of service pension or ISS can be affected by:

  • application of the financial hardship rules,
  • participation in the pension loans scheme,
  • receipt of periodic compensation payments, and
  • receipt of Payments under the New Enterprise Incentive Scheme
Application of the financial hardship rules

    

If a person's assets reduced rate is less than the person's income reduced rate and the person has an unrealisable asset, the financial hardship rules may apply and the pension rate may be increased accordingly.    

Participation in the pension loans scheme

    

VEA ?

Section 52ZAAA VEA through to 52ZM VEA

VEA ? (go back)

If a person's rate of pension or ISS is income reduced or assets reduced and at least one of those rates is not a nil rate, the person may be able to receive an increase in their rate of pension or ISS in the form of a loan.    

Receipt of periodic compensation payments

    

If a person (or their partner):

the person's pension, or the compensation affected component of that pension (as the case may be) is to be reduced for the periodic payments period. The result is the compensation reduced rate of pension or ISS.

The amount by which the pension is reduced depends on whether the person is a member of a couple, and if they are a member of a couple, whether their partner is eligible for a compensation affected pension or qualified for a compensation affected payment under the Social Security Act.    

Receipt of payments under the New Enterprise Incentive Scheme

    

Receipt of a payment under the New Enterprise Incentive Scheme causes a 'dollar for dollar' reduction in the rate of pension. If, however, a person's pension and that of their partner are both to be reduced because of the payment, the reduction for each person is 50% of the payment. This effect is limited to a maximum of twelve months that amounts are payable under the scheme.    


An asset of a person is an unrealisable asset if:

  • the person cannot sell or realise the asset and cannot use the asset as a security for borrowing, or
  • the person could not reasonably be expected to sell or realise the asset and could not reasonably be expected to use the asset as a security for borrowing.

According to subsection 5NB(1) of the VEA a compensation affected pension means:

  •       an invalidity service pension payable to a person who has not reached pension age; or
  •       a partner service pension payable to a person who has not reached pension age; or
  •       an income support supplement payable to a person who has not reached qualifying age.

 

 

Periodic payments period means:

  •       in relation to a series of periodic payments - the period in respect of which the payments are, or are to be, made, and
  •       in relation to a payment of arrears of a series of periodic payments - the period in respect of which those periodic payments would have been made if they had not been made by way of an arrears payment.

Under subsection 5NB(1) of the VEA as in force on 9 July 1996, compensation affected component' in relation to an amount of a compensation affected pension that has a dependent child component, means that part of the amount of pension that is not the dependent child component.