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Reductions or Increases in Rate of Service Pension or ISS
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.More ?
Participation in the pension loans scheme
A person may be able to receive an increase in their rate of pension or ISS in the form of a loan under the pension loans scheme (PLS). The PLS is available to any person receiving either pension or ISS, whether at the maximum rate or at a reduced rate, and to any person who is eligible for either pension or ISS but whose rate of payment is nil due to means testing
Receipt of periodic compensation payments
If a person (or their partner):
- receives periodic compensation payments,
- is eligible for a compensation affected pension for the periodic payments period, and
- was not at the time of the event that gave rise to the entitlement to compensation receiving that pension,
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.More ?
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.More ?
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.