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9.10.4 Compensation Offsetting and War Widow's/Widower's Pension or Orphan's Pension

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Last amended: 21 March 2013

Entitlement to a Gold Card

War widows/widowers and orphans retain their entitlements to a Gold Repatriation Health Card regardless of compensation offsetting.    

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Repatriation Health Cards

Section 7.1.2

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Clean Energy Supplement

Clean energy supplement payable to war widows/widowers is not offset.

Veterans' Children Education Scheme (VCES)

Compensation offsetting does not offset benefits provided under the VCES.    

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Veterans' Children Education Scheme (VCES)

Chapter 6.1

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How an award of compensation or damages affects a war widow's/widower's pension

Where a war widow's/widower's pension is in payment and a lump sum of compensation is later paid for a veteran's death, the VEA deems that the fortnightly equivalent pension to have started when the war widow's or orphan's pension started. Thus future payments of these pensions are reduced and retrospectively some or all of the pension already paid may become not payable. This constitutes an overpayment that must be recovered. Where DVA is aware of other compensation claims, recovery by a deduction from the lump sum is normally arranged through the veteran's solicitor or from the payment made under the SRCA, if administered by DVA.

How compensation following death paid under SRCA reduce war widows/widower's and orphans pension if paid for the same death

Subsection 17(3) of the SRCA provides that a single lump sum compensation payment is to be divided amongst the deceased client's dependants as compensation following death.  The SRCA allows discretion to divide and disperse the lump sum as the delegate deems appropriate – in most situations, the lump sum is divided amongst the widow and the dependent child/children.  However, for the purpose of compensation offsetting the total amount of the lump sum is converted into a single fortnightly equivalent and offset against the relevant DVA pension/s irrespective of whether it has been shared between more than one dependent.

The SRCA also provides a weekly amount of compensation that is payable for dependent child/children under subsection 17(5).  This periodic payment is added to the fortnightly equivalent calculated from the lump sum compensation following death paid under Section 17(3) of the SRCA to arrive at a total fortnightly offset amount from the compensation paid in respect of the client's death.  Once the two amounts are combined, there is a specific order of reduction when pension is payable to more than one dependant.

Subsection 30C(8) - 30C(12), 30D(5) - 30D(8), 74(9) - 74(12) of the VEA define the order a dependant's pension should be reduced where compensation offsetting applies.  The payment of the war widow/widower is preferred over the dependant child/children, meaning that any orphans pension payable is the first to be offset completely with any residual amount of fortnightly equivalent to be offset against the war widow's/widower's pension.  The order in which a pension should be reduced to nil by compensation offsetting is as follows:

  1. The younger child
  2. The older child
  3. The war widow/widower
Overseas war widow's/widower's pensions

If a person is assessed as receiving an overseas payment that is similar in character to the Australian war widow's/widower's pension paid under the VEA for the death of the same veteran, compensation offsetting will apply.  The war widow's/widower's pension paid by DVA will be reduced on a dollar for dollar basis by the amount of the foreign pension.

To be similar in character to an Australian war widow's/widower's pension, the payment from overseas should represent a compensation payment for the same death of the person's partner due to war-caused or war-related injury or disease arising out of the partner's war service, in connection with war or warlike operations in which the Crown has been engaged.  Provided that the payments are compensatory in nature rather than an income support payment, the test of being similar in nature is satisfied.

Compensation offsetting and adjusted income for income support supplement purposes

Any compensation payment offset against a war widow's/widower's pension is not counted again for offsetting against an [glossary:income support supplement:] ([glossary:ISS:]). However, the compensation amounts continue to be assessed as part of the client's overall adjusted income, when determining their ISS payability. The assessment of the full compensation amounts as income (and therefore as a component of adjusted income) occurs because they are not an excluded income amount under the VEA. Compensation payments which reduce a disability pension are excluded income.     

However, war widow/er pensions are not assessed as being disability pensions for the purposes of excluding the offsetting compensation payments from the definition of income.     

Any other compensation or damages, including any residual amount of compensation not used for offsetting against war widow's/widower's pension, are also part of the war widow/er's adjusted income and may affect the rate of ISS payability under the adjusted income test.

Compensation-offset WWP and compensation recovery

Any compensation payment that limits a person's war widow/er pension is excluded from the compensation recovery provisions.     

However, where there are residual compensation amounts (after offsetting), and the ISS payment is a compensation-affected payment (CAP), ISS may be reduced on a dollar for dollar basis under the compensation recovery rules. For assessment under the compensation recovery rules to arise, it is necessary that the residual compensation amounts payable in respect of the death of the person also be in respect of economic loss. This test requires that the payments represent compensation for lost earnings or lost capacity to earn. Where the economic loss test is not satisfied, Part IIIC does not apply and any residual compensation payments (after offsetting) are assessed as income only.

Compensation offsetting and income support supplement ceiling rate

Where the war widow's/widower's pension is offset by a compensation payment, a higher ceiling rate of ISS may be payable. The Rate Calculator for ISS allows the usual ceiling rate to be increased by the same amount that the WWP is limited by the compensation payment.     

The payable ISS rate is then determined by comparing the increased ISS ceiling rate with the rates payable under the adjusted income and assets tests, with the lowest rate being payable. In addition, the increased ISS ceiling rate cannot exceed the maximum rate of single service pension.

Only limitations on war widow's/widower's pension are included when calculating the new ceiling rate.  Limitations on orphan's pensions are not included.

Where a lump sum compensation amount is received and results in an offset against disability pension, there is no legislative provision to allow an equivalent reduction in a person's assessable asset value for income support supplement purposes.  The continuing compensation offset amount is intended to represent the fortnightly return that the pensioner could reasonably expect to receive by investing the lump sum payment.


The energy supplement is an ongoing, regular payment designed to help recipients meet the cost of living impact of the carbon price.

 

 

A form of pension that is paid to the partner of a veteran where the veteran has died as a result of war service or eligible Defence ServiceWar widow's/widower's pension is also paid to the partner of a veteran whose death was not war caused if the veteran was a ex-prisoner of war or if the veteran was receiving Extreme Disablement Adjustment Rate, Special Rate (T&PI) or a rate increased in respect of certain war-caused injury or disease.

 

A payment to make amends for loss or injury to a person or property, or as a recompense for some deprivation (such as compensation to the owner for compulsory acquisition of their property).

A form of pension that is paid to the partner of a veteran where the veteran has died as a result of war service or eligible Defence ServiceWar widow's/widower's pension is also paid to the partner of a veteran whose death was not war caused if the veteran was a ex-prisoner of war or if the veteran was receiving Extreme Disablement Adjustment Rate, Special Rate (T&PI) or a rate increased in respect of certain war-caused injury or disease.

 

Damages is the economic value of something lost or withheld. For compensation purposes, damages is the sum awarded for any loss or injury that has been sustained.