Last amended: 1 July 2013
Eligibility criteria
A person is eligible for invalidity service pension if the person:
- is a veteran,
- has rendered qualifying service,
- is permanently incapacitated for work, and
- meets the additional residency requirement, if a Commonwealth veteran, allied veteran or allied mariner.
Note: The veteran does not need to be pension age and the incapacity does not need to be related to their service.
The eligibility criteria for invalidity service pension were amended effective from 1 January 2000. Eligible veterans who were in payment immediately prior to this date retain their eligibility under the old criteria (85% permanent incapacity). This savings provision is provided for in the Veterans' Affairs Legislation (Permanent Incapacity – Transitional) Regulations 1999 No. 358.
Lodging a claim
Although a person may meet the eligibility criteria for invalidity service pension, such a person will not be granted invalidity service pension unless they lodge a proper claim.
A veteran may not claim invalidity service pension if the veteran has reached age 65.
Payability
There are a number of situations where a person may be eligible for invalidity service pension, but not payable. For example:
- the person is receiving another income support payment, or
- the rate of pension is nil.
War widows/widowers paid invalidity service pension
A war widow or war widower who is also a veteran, may be paid invalidity service pension if they meet the eligibility criteria. However, the rate of that pension may be limited to a ceiling.
Taxation
Invalidity service pension is not subject to income tax when paid to a pensioner who is under age pension age. When an invalidity service pensioner reaches age pension age, the pension becomes taxable.
Invalidity service pensioners participating in the Veterans' Vocational Rehabilitation Scheme (VVRS)
VVRS assists invalidity service pensioners and other eligible veterans to find, or continue in, suitable paid employment. Whilst participating in VVRS, invalidity service pensioners receive the income protection benefits of the scheme and retain section 37 invalidity service pension eligibility.
Legislation Library
Veterans' Vocational Rehabilitation Scheme - Operational Guidelines
Compensation recovery provisions may apply
If the pensioner receives (or is eligible to receive) compensation payments for economic loss, such as incapacity payments, the compensation recovery rules may apply. Compensation recovery will reduce ongoing invalidity service pension payability or, if a lump sum compensation payment is received, will prevent payment of invalidity service pension for a calculated period of time known as the lump sum preclusion period.
MRCA payments and invalidity service pension
Former members who are eligible for Special Rate Disability Pension (SRDP) under the MRCA are taken to satisfy the permanent incapacity for work eligibility test for invalidity service pension. SRDP is an ongoing payment that can be made to a former member in lieu of incapacity payments. The maximum weekly amount of SRDP under the MRCA is one half of the fortnightly rate of Special Rate pension under the VEA.
SRDP is exempt from the income test when assessing whether invalidity service pension may be payable. In contrast, incapacity payments paid under the MRCA are regarded as assessable income.
Special Rate Disability Pension offsets and assessment of Commonwealth superannuation as income
SRDP payments under MRCA are offset to the extent that permanent impairment payments have already been made to the pensioner under the VEA, SRCA or MRCA. Where Commonwealth superannuation is also received, then the remaining SRDP payment is further offset at 60 cents in the dollar. The amount of superannuation that is applied to offset the SRDP payment (to nil payment, but not below nil rate) at the offset rate of 60 cents in the dollar is not assessable as income, for invalidity service pension purposes. Any remaining superannuation after the offset calculation is applied is assessable as income. An example calculation is included in the MRCA Policy Manual, at Chapter 13.8 Invalidity Service Pension.
The offset Commonwealth superannuation amount is known as the Special Rate Disability Pension reduction amount
It is not assessed as it is an excluded income amount for VEA income support purposes.
Excel spreadsheet for calculation purposes
An Excel spreadsheet which assists in calculating the SRDP Commonwealth Superannuation Corporation (CSC) reduction, to determine the assessable and excluded amounts of Commonwealth superannuation for income support purposes, is available on the Income Support Intranet web-page.
Calculating the SRDP Commonwealth Superannuation Corporation (CSC) reduction amounts - TRIM reference 11185018E
http://sharepoint/servingourcustomers/incomesupport/Documents/BL_DI/2011-2012/11185018E.tr5
Restrictions on dual pensions
Restrictions exist on the payment of dual pensions.
Transfer from invalidity service pension to age service pension
An invalidity service pensioner may transfer to age service pension where the age requirement is met, and where the test of being permanently incapacitated for work is no longer satisfied. Transferring between invalidity service pension and age service pension may be initiated by a pensioner providing medical evidence of fitness to work, or where there is evidence that the veteran has commenced working for periods adding up to more than 8 hours per week.