C27/1997 RECEIPT OF LUMP SUM COMPENSATION PAYMENT FOR LOSS OF EARNINGS - PENSION PRECLUSION PERIOD FORMULA

DATE OF ISSUE:  15 APRIL1997

RECEIPT OF LUMP SUM COMPENSATION PAYMENT FOR LOSS OF EARNINGS - PENSION PRECLUSION PERIOD FORMULA

Purpose

The purpose of this Departmental Instruction (DI) is to amend  DI C16/97 and clarify elements of the formula used to calculate the pension preclusion period for a person who receives a lump sum payment of compensation on or after 20 March 1997 for loss of earnings.

Clarification of new VEA pension preclusion formula

Paragraphs 14 and 15 of DI C16/97 described the new pension preclusion period formula provided in new paragraph 59Q(7)(b) of the Veterans' Entitlements Act 1986 (VEA).  Paragraph 15 of that DI should have noted that each of the:  ·

Ordinary Income Free Area (OIFA); ·Maximum Basic Rate (MBR); and  ·

Rate of Pharmaceutical Allowance (RPA),  values to be used in the pension preclusion period formula for lump sum payments of compensation received on or after 20 March 1997 for loss of earnings are the “not a member of a couple” annual amounts set out in section 41 of the VEA.

Use only single rate OIFA, MBR & RPA

Please note that the paragraph 59Q(7)(b) VEA definitions of OIFA, MBR and RPA specify that those values remain the same regardless of a person's family situation.  Therefore, only the single person annual rates of OIFA, MBR and RPA are to be applied to the pension preclusion period divisor formula for lump sum compensation payments received on or after 20 March 1997.

What does the VEA say?

New paragraph 59Q(7)(b) VEA specifies that:

OIFA “means the amount specified in column 3 of item 1 in Table B in point 41-D4” (not member of a couple); ·MBR “means the amount specified in column 3 of item 1 in Table B in point 41-B1” (not member of a couple); and ·              RPA “means the rate of pharmaceutical allowance calculated as set out in point 41-CA7” (referred to in the point heading as “double rate”, which means double the married rate).

Any Questions?

Any questions about the new lump sum compensation pension preclusion period formula should be directed to Martin Dibb on telephone 06-2896751, fax. 06-2894853,  LAN C-C-BA-02.

MURRAY HARRISON

BRANCH HEAD

INCOME SUPPORT

14 April 1997