Lump Sum Under Section 21

Section 21 is almost identical to section 20, except it deals with the situation where the employee elects to take the superannuation entitlement as a lump sum, rather than as a weekly pension. The formula is:

AC - (SA ÷ 520 + SC)

AC and SC are the same as in section 20.

SA now refers to the GFP of the lump sum. The effect of the formula (÷ 520) is to spread the lump sum amount over approximately ten years to convert it to a weekly figure.

Example

An employee with a $500.00 NWE is retired on invalidity grounds due to his compensable condition.

He receives a lump sum payment of $60,000.00. $5,000.00 of that figure is from his own contributions.

Prior to retirement, the employee was a member of the PSS, which has a minimum of 2% contribution rate per week.

AC is 75% x $500.00 or $375.00 [under 19 (3) (a)];

SA is ($60,000.00 - $5,000) ÷ 520 or $105.77; and

SC is 2% x $500.00 or $10.00.

The employee's compensation entitlement is:

$375.00 - ($105.77 + $10.00) = $259.23

Source URL: https://clik.dva.gov.au/military-compensation-reference-library/historical-information/comcare-operations-manual/volume-ten-incapacity-payments/part-five-retirement-and-superannuation/superannuation-and-act/lump-sum-under-section-21