9.1.5 Order of Reduction

Last amended: 5 March 2013

Order of reduction for service pension

To ensure that the non-taxable allowances associated with service pension are reduced last, when the rate of pension is to be reduced under the income or assets tests or the maintenance income test

reductions to service pension occur in the following order:

• the maximum payment rate, excluding pension supplement, energy supplement, rent assistance and any additional amounts for saved children,
• the pension supplement basic amount,
• any remaining portion of the pension supplement amount that exceeds the minimum pension supplement amount
• rent assistance (if any),
• additional amounts for saved children (if any),
• the energy supplement, then
• the minimum pension supplement amount.

The minimum amount payable is the minimum pension supplement and the clean energy supplement.

Order of reduction for ISS

Pension rate reductions for an ISS recipient under the adjusted income test or the assets test occur in the following order:

• the maximum payment rate apart from rent assistance and the minimum pension supplement amount, then
• rent assistance (if any), then
• minimum pension supplement amount.

For ISS purposes, any saved child related payment is paid in addition to the provisional rate of ISS resulting from the adjusted income test or the assets test. These payments are therefore not included in the order of reduction.

ISS cannot be reduced for blinded pensioners.  However, rent assistance is subject to rate reductions.

Reduction under compensation recovery provisions - service pension, no saved children

When a service pensioner without saved children:

• receives additional amounts for rent assistance and
• the pension is to be reduced because of the receipt of periodic compensation payments,

the reduction occurs in the following order:

• that part of the pension that does not include rent assistance, pension supplement and energy supplement then
• the pension supplement basic amount, then
• any remaining portion of the pension supplement that exceeds the minimum pension supplement amount, then
• rent assistance (if any),
• the energy supplement, then
• the minimum pension supplement amount.

Reduction under compensation recovery provisions - ISS, no saved children

When an ISS recipient without saved children:

• receives additional amounts for rent assistance, and
• the ISS is to be reduced because of the receipt of periodic compensation payments,

the reduction occurs in the following order:

• ISS apart from rent assistance and minimum pension supplement amount, then
• rent assistance (if any), then
• the minimum pension supplement amount.

Reduction under compensation recovery provisions - service pension, saved children

When a service pensioner with saved children has the compensation affected component of the pension reduced because of the receipt of periodic compensation payments:

the reduction occurs in the following order:

• that part of the compensation affected component of the pension that does not include the minimum pension supplement amount,
• the energy supplement, then
• the minimum pension supplement amount.

Allowances excluded from order of reduction for service pension and ISS

Remote area allowance is not included in the order of reduction, as its payability depends on the payability of service pension or ISS. If service pension or ISS is reduced to nil, then remote area allowance is automatically cancelled..