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Duration of Lump Sum Preclusion Period
Last amended: Commencement of the preclusion period
VEA →
The following table shows when the lump sum preclusion period commences under various conditions:
If... | Then the lump sum preclusion period begins on the day... |
both periodic compensation payments and compensation in the form of a lump sum are received for lost earnings or lost capacity to earn | after the last day of the periodic payments period, regardless of any breaks in the receipt of the periodic payments. |
a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum | on which the person's periodic compensation payment is a reduced payment due to receipt of the lump sum. |
none of the above applies | on which the loss of earnings or loss of earning capacity began. |
When does lost earnings or lost capacity to earn begin
Lost earnings or lost capacity to earn would usually commence on the day of the compensable event. However, some situations are not so clear cut, such as where the pensioner continues working with no loss of income following the injury. Delegates should adopt a commonsense approach to making an informed, factual decision based on the impact the compensable injury has had on the individual's earnings and earning capacity.
Examples of preclusion period start date
The following situations are examples of preclusion period start dates:
- A veteran is injured on 27 June 1997 and receives full rate sick pay until ceasing employment on 13 July 1999. The veteran receives no periodic compensation and successfully settles a common law action in October 2000, receiving a lump sum compensation payment. The start date of the preclusion period should be 14 July 1999, the day after employment ceased, as this is the date the lost earnings commenced.
- A person is awarded a lump sum for pain and suffering and future economic loss in respect of injuries sustained at birth. The start date of the preclusion period should be the person's date of birth as this is the date when the loss of earning capacity commenced.
- The preclusion period start date for compensation cases involving post traumatic stress disorder as a result of the 1964 Voyager accident would generally be:
- the day after employment ceased where the person ceased employment before normal retirement age, or
- the day after a promotion was lost if the reason for the loss of promotion and the reason for compensation are connected, or
- the date of injury where the person continued working with no loss of income until ceasing work as a consequence of reaching retirement age.
Lump sum awarded, but periodic payments continue
VEA →
If periodic payments are paid for an indefinite length of time, and a pensioner receives a lump sum compensation payment, the start date of the preclusion period cannot be determined. In these cases the pensioner is advised that a preclusion period will be applied in the future when periodic payments:
- cease, or
- are reduced because of the lump sum payment.
Preclusion period for compensation received before 20 March 1997
If the person or the person's partner received the lump sum compensation payment before 20 March 1997 the number of weeks in the lump sum preclusion period in relation to a person and the person's partner is:
Compensation part of lump sum/Average weekly earnings
where:
Average weekly earnings is the amount:
estimated as the average total weekly earnings, during a particular month, of all employees (all persons) in Australia, and
last published by the Australian Statistician before the lump sum compensation payment became payable.
Duration of preclusion period for compensation payment received between 20 March 1997 and 19 September 2009
If the person receives the lump sum compensation payment on or after 20 March 1997 and before 20 September 2009 the number of weeks in the lump sum preclusion period in relation to a person is:
52 x Compensation part of lump sum/OIFA + 2.5(MBR + PA)
where:
OIFA means annual ordinary income free area for a person who is not a member of a couple.
MBR means the annual maximum basic rate of service pension for a pensioner who is not a member of a couple.
PA means the annual rate of pharmaceutical allowance (PA) for a pensioner who is not a member of a couple.
The OIFA, MBR and PA used are those that were current immediately before the lump sum payment became payable.
If the number worked out is not a whole number, the number is to be rounded down to the nearest whole number.
Duration of preclusion period for compensation payment received between 20 september 2009 and 27 June 2013
If the person receives the lump sum compensation payment on or after 20 September 2009 and before 28 June 2013 the number of weeks in the lump sum preclusion period in relation to a person is:
52 x Compensation part of lump sum/OIFA + 2(MBR + PS)
where:
OIFA means annual ordinary income free area for a person who is not a member of a couple.
MBR means the annual maximum basic rate of service pension for a pensioner who is not a member of a couple.
PS means the annual rate of pension supplement (PS) for a pensioner who is not a member of a couple.
The OIFA, MBR and PS used are those that were current immediately before the lump sum payment became payable.
If the number worked out is not a whole number, the number is to be rounded down to the nearest whole number.
Duration of preclusion period for compensation payment received on or after 28 June 2013
If the person receives the lump sum compensation payment on or after 28 june 2013 the number of weeks in the lump sum preclusion period in relation to a person is:
52 x Compensation part of lump sum/OIFA + 2(MBR + PS + ES)
where:
OIFA means annual ordinary income free area for a person who is not a member of a couple.
MBR means the annual maximum basic rate of service pension for a pensioner who is not a member of a couple.
PS means the annual rate of pension supplement (PS) for a pensioner who is not a member of a couple.
ES means the annual rate of clean energy supplement (ES) for a pensioner who is not a member of a couple
The OIFA, MBR and ES used are those that were current immediately before the lump sum payment became payable.
If the number worked out is not a whole number, the number is to be rounded down to the nearest whole number.
Preclusion period must be continuous
The lump sum preclusion period must be a continuous period, not adjusted for periods:
- for which sick leave has been paid, or
- when the pensioner:
- is fit, or
- has temporarily recovered from the disease, injury or condition.
Preclusion period ceases
The following table details the circumstances when a preclusion period ceases:
If... | Then... |
the preclusion period expires
| the CAP is restored and reassessed. If pension payments were cancelled because a nil rate would have been payable for six months or more, the person will need to reapply for pension. |
the compensation recipient attains pension age | the compensation recovery provisions cease to apply and pension payments are re-assessed under the income and assets tests. If the compensation was received prior to 20/3/97 and the recipient is a member of a couple the compensation recovery provisions may continue to apply to the partner. |
Preclusion period for MRCA incapacity payment lump sum
A person who has received a lump sum of incapacity payment but then elects to receive MRCA Special Rate Disability Pension (SRDP) will, if his or her lump sump preclusion period has not already finished, have his or her lump sum preclusion period changed to cease the day before the SRDP becomes payable.
According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate as ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).
According to Section 5E(2) of the VEA a person is a member of a couple, if they are:
- legally married to another person and is not living separately and apart from the other person on a permanent basis; or
- living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
- all of the following conditions are met:
- living with another person, whether of the same sex or a different sex;
- not legally married to that person;
- in a de facto relationship with that person; and
- not in a prohibited relationship
The term “partnered” is also commonly used.
According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate as ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).
The pension supplement is added to a person's maximum basic rate. The pension supplement is calculated as a 'combined couple' rate. The 'not a member of a couple' rate is 66.33% of the 'combined couple' rate. The member of a couple rate is 50% of the combined couple rate. From 1 July 2010, the minimum pension supplement amount will be able to be claimed on a quarterly basis rather than on a fortnightly basis.
According to Section 5E(2) of the VEA a person is a member of a couple, if they are:
- legally married to another person and is not living separately and apart from the other person on a permanent basis; or
- living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
- all of the following conditions are met:
- living with another person, whether of the same sex or a different sex;
- not legally married to that person;
- in a de facto relationship with that person; and
- not in a prohibited relationship
The term “partnered” is also commonly used.
According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate as ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).
The pension supplement is added to a person's maximum basic rate. The pension supplement is calculated as a 'combined couple' rate. The 'not a member of a couple' rate is 66.33% of the 'combined couple' rate. The member of a couple rate is 50% of the combined couple rate. From 1 July 2010, the minimum pension supplement amount will be able to be claimed on a quarterly basis rather than on a fortnightly basis.
According to Section 5E(2) of the VEA a person is a member of a couple, if they are:
- legally married to another person and is not living separately and apart from the other person on a permanent basis; or
- living in a prescribed registered relationship with the other person (whether of the same sex or a different sex) and is not living separately and apart from that other person on a permanent basis; or
- all of the following conditions are met:
- living with another person, whether of the same sex or a different sex;
- not legally married to that person;
- in a de facto relationship with that person; and
- not in a prohibited relationship
The term “partnered” is also commonly used.
The energy supplement is a fortnightly or quarterly payment designed to help recipients meet the cost of electricity and gas bills.
Military Rehabilitation and Compensation Act 2004