Service Pension Rate Calculation Process

Last amended: 5 March 2013

Service pension calculation – not blind or war widow/widower-pensioner

The following table shows the steps involved in the overall service pension rate calculation process for a person who is:

• not blind, or
• not a war widow/widower-pensioner.

Note: current rates are found in the Reference Library.    

The above rate calculation process is the standard process for service pensioners.

Transitional arrangements – pre 20 September 2009 pensioners

Transitional arrangements protect pensioners who were in payment immediately before 20 September 2009 and whose pension would be reduced under the standard rules. The process for the calculation of pension in these cases is:

• determine the person's maximum basic rate of service pension in accordance with Schedule 5, Part 5 subclause 31 (1), (2), (3) or (4). This is the transitional MBR (which is indexed by CPI only),    
  VEA →

   

  Schedule 5, clause 31 VEA

   

  VEA → (go back)
• add any amount of energy supplement and/or rent assistance to the transitional MBR to give the maximum payment rate,
• work out the income reduced rate, allowing for additional child income free area (if applicable). There is no work bonus income concession and the 40 cents taper rate applies,
• work out the assets reduction amount (using the standard rules in Module F) and deduct from the maximum payment rate, and
• the lower of the income reduced rate and the assets reduced rate (or the income reduced rate if both rates are equal) is the provisional payment rate.

The provisional payment rate calculated under the transitional arrangements applies until such time as the standard rules provide a higher rate of pension.

Service pension calculation where there are saved children

This is for historical reference only.

Where a person has saved children, the steps set out above for service pension calculation are modified, as follows:

• the dependent child add-on (for each dependent child) and guardian allowance (if eligible) are included in the maximum payment rate,
• when calculating any rent assistance payable, the higher rent assistance thresholds and rates of rent assistance payable to pensioners with saved children are to be used,
• if the pensioner is in receipt of disability compensation payment and is eligible for rent assistance, the rent assistance free area may be increased where there are dependent children, and
• the maintenance income test is applied to the maximum payment rate, along with the ordinary income test, to calculate the income reduced rate of pension. More →

Since 1 January 1998, it has not been possible for any new dependent child to be a saved child, unless the claim was lodged on or before 31 December 1997.

• Chapter 9.4 Children

   

  Payment of Rent Assistance

  Section 5.1.3

  Chapter 10.6 Maintenance Income

   

  Reference Library – Historical Pension Rates

  PRH

   

  More → (go back)

Service pension calculation - non-pensioner partner

Prior to 1 October 1995, if a pensioner's partner was not in receipt of a pension or benefit, the non-partnered maximum basic rate was used to calculate their pension. After that date, the pension of a person with a non-pensioner partner was calculated using the partnered rate.

Savings provision - non-pensioner partner pre 1995 (known as 04 cases)

A savings provision protected those partnered pensioners whose pensions were, immediately before 1 October 1995, calculated using the non-partnered maximum basic rate. The effect on the calculation of pension in these cases is:

• the rate of pension applicable immediately before 1 October 1995 (the saved rate) will be decreased by any reductions in pension resulting from a person's change in circumstances,
• any potential increases in pension as a result of a person's change of circumstances or as the result of indexation or other increases in any component of the person's pension will not increase the saved rate. Rather, these increases will be offset against the excess pension being paid because of the savings provision.

When the saved rate of pension equals the rate that would apply if the pensioner were assessed at the partnered rate, the savings provision cease to apply and the assessment reverts to a normal partnered assessment.

Circumstances where partner not receiving a pension (04 cases)

Circumstances in which the partner would not be receiving a pension are:

• the partner does not have residency,
• the partner is a war widow/widower and their combined income and assets prevents any ISS being paid,
• the partner is working and does not want to claim a pension,
• the partner is under the age at which a pension would be payable,
• the partner is receiving a compensation payment, or
• the pensioner is classified as 'blinded for service pension purposes' and their income and assets prevents the partner from being paid.

Other service pension calculations process

The table below lists service pension rate calculation processes used for other pensioners, and provides a link to the relevant calculators in the VEA.