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General Provisions for Lump Sum Compensation Payments

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Lump Sum Preclusion Period

A lump sum preclusion period applies if a person who receives or claims a [glossary:compensation affect:] — [glossary:ed:] [glossary:pension:] [glossary:(:]CAP[glossary:):] receives a lump sum payment that is compensation paid wholly or partly in respect of lost earnings or lost capacity to earn. The CAP is not payable to the compensation recipient during the lump sum preclusion period.

Reason for lump sum preclusion period

Lump sum compensation payments are assessable on the basis that people who cannot work because of a compensable injury should not receive income support for the same period from both DVA and from the compensation payer. Pensioners who would otherwise be eligible for a CAP are excluded from payment for the lump sum preclusion period.

Lump sum received by a person who is not a member of a couple

    

If a person who is not a member of a couple:

  • is eligible for a CAP, and
  • receives a lump sum compensation made wholly or partly in respect of economic loss (whether before or after the person became eligible for the pension),

then the pension is not payable for the lump sum preclusion period.

Lump sum received on or after 20 March 1997 by a member of a couple

    

If a person who is a member of a couple:

  • is eligible for a CAP, and
  • received a lump sum compensation payment on or after 20 March 1997 (whether that is before or after the person became eligible for the pension),

then the pension is not payable to the person for the lump sum preclusion period. The compensation payment does not affect the CAP payable to the person's partner under the compensation recovery provisions, however, the lump sum may be assessable under the income and assets tests.

Lump sum received before 20 March 1997 by a member of a couple

    

If a person who is a member of a couple:

  • is eligible for a CAP, and
  • received the compensation in the form of a lump sum before 20 March 1997 (whether that is before or after the person became eligible for the pension),

then the pension is not payable to the person for the lump sum preclusion period. If the person's partner is eligible for a CAP the pension will not be payable to the partner for the lump sum preclusion period.

Recovery where lump sum and pension received

    

If a person receives a lump sum compensation payment and has received a CAP for any day in the lump sum preclusion period the Commission may determine a recoverable amount to be paid back to DVA. The recoverable amount is the smaller of:

  • the amount of pension paid to the person (and the person's partner if the compensation payment is received before 20 March 1997) for the preclusion period, or
  • the compensation part of the lump sum.
Ex-gratia payments

Payments made for economic loss which are made when it has been established that the compensation payer is under no liability to make the payments are treated the same as other lump sum compensation payments. However, recovery can only be sought from the pensioner as there is no person or organisation liable to pay the compensation.


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.

 

 

The lump sum preclusion period is the amount of time that a person or their partner is ineligible to receive the pension after receiving compensation in the form of a lump sum. Refer to Subsections 59Q(3) to 59Q(8) of the VEA to determine the lump sum preclusion period

The lump sum preclusion period is the amount of time that a person or their partner is ineligible to receive the pension after receiving compensation in the form of a lump sum. Refer to Subsections 59Q(3) to 59Q(8) of the VEA to determine the lump sum preclusion period