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Invalidity Service Pension

Legislative Authority

Veterans' Entitlements Act 1986
Section 7A (qualifying service)
Section
37 (eligibility)
Section 37A to 37N (payability, claims and rate)
Schedule 6 (rate calculators)

 

Stated Current Purpose/Intent

To provide income support to Australian veterans and mariners, Commonwealth veterans and mariners, and allied veterans and mariners, who are considered permanently incapacitated for work due to medical factors, and who are not yet entitled to pension on the basis of age.

 

Current Eligibility Criteria

A person is eligible if he/she:

  • is an Australian, Commonwealth or allied veteran or mariner; and
  • has rendered qualifying service; and
  • is permanently incapacitated for work; and
  • claims before reaching pension age.

A person is automatically accepted as meeting the permanent incapacity for work criterion if he/she:

  • is permanently blinded in both eyes; or
  • receives or is eligible for the Special Rate of disability pension (i.e. Totally and Permanently Incapacitated (T&PI)); or
  • receives or has at some time in their life been eligible for the Special Rate Disability Pension (SRDP) under the Military Rehabilitation and Compensation Act 2004.

A veteran who does not automatically meet the permanent incapacity for work criterion is considered to be permanently incapacitated to work if:

  • he/she has 40 impairment points or more under the Guide to the Assessment of Rates of Veterans' Pensions (GARP); and
  • he/she is permanently unable to do work for periods adding up to more than 8 hours per week solely because of the incapacity; and
  • the incapacity is considered to be permanent.

Invalidity service pension for blinded veterans is not subject to the income and assets tests.  However, any additional entitlements are subject to the income and assets tests.

A Commonwealth veteran or mariner, or allied veteran or mariner (generally) must have been an Australian resident for at least 10 years, or a refugee who holds a permanent entry permit or visa and is a permanent resident.

 

Date of Introduction

Service pension on the ground of permanent unemployability was first paid in 1936.

 

Original Purpose/Intent

As current.

 

Significant Changes in Criteria or Purpose Since Introduction

Chronology of changes including those relating to means testing.

1986

With the introduction of the VEA in 1986, the name of the pension changed from service pension permanent unemployability to service pension invalidity.  At the same time, the "85% permanently incapacitated for work" element of criteria was introduced and blindness became a qualifier.

1991

The pension name was changed to invalidity service pension.

1995

Introduction of requirement for certain invalidity service pensioners to test their eligibility for an overseas pension.

The 10-year residency requirement was removed for refugees who hold a permanent entry permit or visa and are permanent residents.

Treatment of the “economic loss” component of compensation received by pensioners under pension age (other than compensation paid by Veterans' Affairs) was brought into line with the policy administered by the Department of Social Security.  Invalidity service pension is now reduced by $1 for every $1 of compensation received as a periodic payment for economic loss.  A preclusion period is applied to lump sum payments.

1996

Lump sum advance of service pension was introduced.

1997

It was legislated that the single rate of service pension be maintained at least at 25% of MTAWE.  The relativity between single and married rates of pensions was also retained.

1998

The first MTAWE increase of $6.80 per fortnight in the single rate of service pension occurred on 26 March 1998.

2000

From 1 January 2000, ISP permanent incapacity eligibility criteria were changed and more closely aligned with the criteria for Special Rate of disability pension.

1 July 2000 taper rate on service pension was reduced from 50 cents in the dollar for income over the free area to 40 cents in the dollar.

2004

Service pension was extended to members, former members and declared members under the MRCA.

2007

20 September 2007, the assets test taper rate reduced to 37.5 cents reduction for each $250 of assets over the free areas.

2009

20 September 2009, the first of the changes introduced following the Harmer Review into the adequacy and sustainability of the pension system. Changes include:

  • the tightening of the income test taper from 40 cents in each dollar of income to 50 cents.
  • Transitional arrangements are in place for those who would otherwise be worse off.
  • Single service pension increased to 66.33% of the combined couples rate.
  • GST Supplement, Pharmaceutical Allowance, Utilities allowance and telephone allowance rolled into a single pension supplement and paid fortnightly with pension.
2010

20 March 2010, combined couples rate of service pension indexed and compared to 41.76% of MTAWE. Single service pension rate set at 66.33% of combined couples rate.

From 1 July 2010, multiple lump sum advances allowed.  Maximum advance set at 1.5 times fortnightly rate of pension. Minimum advance set at 0.5 times rate of pension.

2012

Clean energy advance payable for the period 1 July 2012 to 19 March 2013 for eligible recipients.

2013

Clean energy supplement commenced 20 March 2013 for eligible recipients.

From 1 July 2013 those that receive or are eligible for the Special Rate Disability Pension (SRDP) under the Military Rehabilitation and Compensation Act 2004 automatically satisfy the permanent incapacity for work criterion.

2014

Clean energy supplement replaced by energy supplement commenced 20 September 2014.

2015 Income test change: from 1 January 2015, income deeming applies to asset-tested income streams (long term) that are account-based.  Products held on, and those in receipt of income support since, 31 December 2014 are grandfathered from the change.