Hardship Provisions

Legislative Authority

Veterans' Entitlements Act 1986
Sections 52Y to 52ZAA

Stated Current Purpose/Intent

To provide assistance to a person who owns valuable assets, which produce little or no income, in circumstances where there are valid reasons why the assets cannot or should not be disposed of, or the person cannot otherwise raise funds on those assets.

Current Eligibility Criteria

The assets test presumes that people with substantial assets, apart from their home, apply those assets to produce income for their own support.  In cases where substantial assets are held but they produce little or no income, the owners are expected to re?arrange their financial affairs before calling on the community for income support through the pension system.

However, there are instances where a person is unable to re-arrange his or her financial affairs, or could not reasonably be expected to re-arrange them because of particular circumstances applying.  Consequently, special provisions are included in the VEA so that people are not placed in severe financial hardship due to the normal application of the assets test.

The following conditions must be met before the hardship provisions can apply:

• the rate of service pension or income support supplement payable (including nil rate) is determined under the assets test;
• the person must not have disposed of income or assets for less than adequate consideration;
• the person or the person's partner has an unrealisable asset;
• the person would be considered to be suffering severe financial hardship, if the financial hardship provisions were not applied;
• the person must lodge a written request for payment of service pension or income support supplement under the hardship provisions; and
• there is no other course of action which the person could reasonably be expected to take to improve his or her financial position.

A pensioner is not in severe financial hardship if their total annual assets tested service pension or income support supplement plus other income exceeds the maximum annual rate of pension.

Date of Introduction

1985

Original Purpose/Intent

Hardship provisions were introduced under the assets test in 1985 to assist in cases where the value of a person's assets reduced the amount of service pension payable with the result that the pensioner was in severe financial hardship.