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7.8.3 Wholly Dependent Partner's payments
Note: Prior to 25 July 2018 under the MRCA, wholly dependent partners had six months to decide whether they received their compensation as a weekly payment, or convert the whole or part of the payment into a lump sum.
On 25 July 2018, amendments made by Schedule 3 to the Military Rehabilitation and Compensation Act 2004 (MRCA) extended the time in which wholly dependent partners would have to make a decision about how they received their compensation, from six months to two years.
References to “six months” in the following historical procedures have been omitted and replaced with “two years”.
For further information about the amendment of the decision time frame from six months to two years, see Schedule 3 – Compensation for member’s death for wholly dependent partners.
Wholly dependent partners of deceased members who have claimed compensation following the members' death under the MRCA in relation to a MRCA death are eligible to receive weekly payments for life based on the rate of the war widow/er's pension under the Veterans' Entitlements Act 1986 or may convert 25%, 50%, 75% or 100% of this weekly amount to its lifetime equivalent as a lump sum. Any portion of the weekly amount, not converted to a lump sum, will remain a weekly payment.
Example: Jim died while serving in Afghanistan in July 2013, his partner Alice claimed wholly dependent partner benefits and has elected to receive 25% of the weekly amount as a lump sum and then continue to receive 75% of the weekly amount as an ongoing payment.
The weekly payment is payable from the day after the date of the member's death regardless of when the claim is lodged. This is in contrast to the VEA under which the date of effect is limited to 3 months prior to the date the claim was lodged.
Any arrears in weekly payments for the period between the death and the claim being accepted are paid as the sum of the weekly amounts which applied during the period. The weekly payment is indexed twice a year.
The lump sum option is calculated using the partner's age on the birthday following the date of the member's death and the rate payable at the date of death. This figure is determined by using tables provided by the Australian Government Actuary. Care should be taken to ensure the correct table is used for the date of death. For the latest version of the tables see CLIK Actuary Tables Used For Age Adjusting Lump Sum Payments. Note that the lump sum amount does not include any Energy Supplement payable as the Energy Supplement continues to be paid fortnightly.
The formula to convert the weekly amount to an age based lump sum is:
Example where the death occurred prior to 15 January 2010
John was serving in Iraq and was killed there on 20th September 2009. On 26th October 2009, his wife Susan claimed wholly dependent partner benefits following the death and elected to receive it as a lump sum. On 20th September 2009 she was 32 and she was to turn 33 on 28th November 2009. Her lump sum is therefore calculated as follows:
Weekly payment as at 20 September 2009: $339.50
Susan's age on her next birthday after 20 September 2009: 33
Lump sum = $339.50 x 1487.7 = $505,074.15 (plus the additional compensation payment following death – see 7.8.4)
Example where the death occurred on or after 15 January 2010
Joe was serving in Afghanistan and was killed there on 2 April 2010. On 9 April 2010, his fiancée Karen (who was living with Jeff) claimed wholly dependent partner benefits which she elected to receive in the form of a lump sum. On 2 April 2010 she was 32 years of age and due to turn 33 on 16 October 2010. Her lump sum is therefore calculated as follows:
Weekly payment as at 2 April 2010: $354.80
Karen's age on her next birthday after 2 April 2010: 33
Lump sum = $354.80 x 1500.5 = $532,377.40 (plus the additional compensation payment following death discussed in 7.8.4).
Example where the choice was made to convert a weekly payment to a partial lump sum after 30 June 2013
Paul was serving in Iraq and was killed there on 20th June 2013. On 26th July 2013, his partner Jane, claimed wholly dependent partner benefits following the death, and received a letter from DVA notifying her of her lump sum options. On 20th June 2013 she was 32 year old and she was to turn 33 on 28th November 2013. Her lump sum options were therefore calculated as follows:
See rates chart (Link to rates chart MRCA WDP)
75% Lump Sum
1500.50 (link to actuary table 'Converting WDP weekly comp...after 2010) x
$403.50 x 25% =
50% Lump Sum
1500.50 x $403.50 x 50% =
$403.50 x 50% =
25% Lump Sum
1500.50 x $403.50 x 25% =
$403.50 x 75% =
100% Lump Sum
1500.50 x $403.50 =
(Plus the additional death benefit of $135,612.49 – see 7.8.4;
the MRCA Supplement of $3.10 per week (Jane resides in Australia and will not receive ISS); and the Energy Supplement of $13.70 per fortnight (Jane resides in Australia). See Comp & Support Policy Library section 7.4.2
For the Wholly Dependent Partners weekly payment: the date of death is significant, not the date of injury
Therefore, it is important to note – particularly in the case of a protracted illness leading to death – that the critical date for determination of compensation to wholly dependent partners in terms of weekly payments, is the date of death itself.
Notifying the Partner of the choice between a lump sum, a weekly payment or a combination of the two
Section 235 of the MRCA specifies that the Commission must give the partner a written notice as soon as practicable specifying the weekly amount and the amount payable if it is converted to each lump sum amount (25, 50, 75 and 100%). The notice must advise the partner that he or she can choose between the lump sum and the weekly amount or a combination of both. It must also specify the date on which the notice is given. The standard letter to be sent to wholly dependent partners can be found in CADET in the standard letter suite.
Making the choice between the lump sum, the weekly payment or a combination of the two
A wholly dependent partner who receives the above notice may choose to be paid the lump sum,the weekly amount or a combination of the two. In order to elect a lump sum, the MRCA requires that:
- the partner's choice must be advised in writing; and
- it must be made within two years of the date the claimant receives the notice.
The MRCC can extend this period, in special circumstances, before or after the end of the two years. If the partner does not make the choice within the two years or in the timeframe of the extended period then the weekly payment remains. The decision to extend the period within which a wholly dependent partner can make a choice between weekly payments or a lump sum has been delegated by the MRCC to Deputy Commissioner (DC) or First Assistant Secretary (FAS) Rehabilitation and Support (R & S) Division . Where a wholly dependent partner or their representative requests an extension of time they should be asked to provide reasons for being unable to make the choice within two years. These reasons should be included in a rrequest to the appropriate DC or FAS R & S Division so that a decision can be made in line with the requirements of the Act. The request should also, wherever possible, nominate the date by which the choice will be made. The request is to be prepared by the R&C location Director and forwarded to the relevant Deputy Commissioner or FAS R & S Division to ensure all relevant details and circumstances of the case are noted and included.
What constitutes Special Circumstances for the purposes of s236(4)?
The Military Rehabilitation and Compensation Commission (MRCC) is of the view that the phrase special circumstances for the purposes of s236(4) is to be considered in a non-restrictive manner, i.e. the Commission will take a broad view on what constitutes special.
By way of illustration, the following list provides some examples of circumstances that are special:
- The claimant is deployed in warlike/non-warlike operations at any time during the two year period.
- The claimant has a disability which affects their capacity to make the election.
- The claimant is experiencing psychological distress as a result of the death of their partner.
- The claimant has not received financial advice.
- The deceased estate has not been finalised.
- A dispute that directly impinges upon the nature of the choice is still before the courts (e.g. a matter before the Family Court over a custody matter).
- The upcoming birth of a child of the claimant or the claimant’s partner.
- The claimant is sick or hospitalised.
- The claimant had to travel overseas to visit a sick family member.
- The claimant’s family member is severely injured or there is a death of a family member.
- The claimant lost his/her job during the 6 month election period and is unsure of his/her ability to find work in the short term.
This list is not exhaustive and the delegate should take a non-restrictive view of ‘special’ when considering such a claim. The discretionary nature of special circumstances makes it impossible to give a precise list of when the provisions would apply.
The important point is that each case be assessed on its own merits, taking into account the particulars of the individual's case.
Is the client required to provide the delegate with a reason for requesting an extension under s236(4)?
Yes. The legislation makes it clear that an extension may only be granted if the circumstances are special and this entails that a reason must be provided. This is required even though the phrase ‘special’ is being interpreted in a very broad sense.
Is there a time limit on an extension granted under s236(4)?
A person granted an extension under s236(4) is to be reviewed after 6 months to establish if they are still considering their payment choice. The delegate should provide the client with updated lump sum conversion amounts (adjusted for periodic payments already made) and remind them about the availability of reimbursement for financial/legal advice, if such compensation has not yet been claimed.
A client may request a further extension, which should then be considered in accordance with these guidelines. However, an extension may not be granted indefinitely. Each 6-month period of extension will require a reason and should be assessed by the delegate on its merits.
Financial and legal advice to assist in deciding between weekly and lump sum payments
A wholly dependent partner entitled to compensation may make a claim for payment of the costs of financial and legal advice obtained to assist in making an informed decision between a lump sum and weekly payments. The person who provides the advice attracting the payment must be a suitably qualified financial adviser or practicing lawyer and the advice must be provided after the member's death. The legal advice must only aid in making a choice to receive a lump sum amount and is not intended to cover legal advice that may be required in dealing with other matters such as family court disputes and other legal matters tied to the administration of the estate.
The Commission must determine the amount of compensation for the cost of the advice that it considers reasonable. The maximum and up-to-date amount of financial assistance available can be found in CLIK rates chart for current amount under 'Reimbursement limits – Financial and legal advice compensation'. This figure is indexed according to CPI. The claimant can receive a second opinion but any amount over this limit cannot be reimbursed.
A suitably qualified financial adviser is someone employed by an organisation that holds an Australian Financial Services Licence (as administered by the Australian Securities and Investments Commission).
A practicing lawyer is a person who is admitted to the legal profession by a federal court or a Supreme Court of a State or Territory and holds a practising certificate (however described) entitling the person to practise that profession.