How the service pension MBR is indexed
The partnered maximum basic rate (MBR) is indexed each 20 March and 20 September by the greater of CPI and PBLCI, then further increased if necessary so that it equals 50% of the MTAWE benchmark. The MTAWE benchmark is 41.76% of MTAWE. The combined partnered MBR is set at double the partnered MBR and the 'not a member of a couple' MBR is then set at 66.33% of the combined partnered MBR. Different rules apply for the transitional rate of service pension.
How the pension supplement is indexed
The combined partnered rate of pension supplement is indexed each 20 March and 20 September with CPI only. The 'not a member of a couple' rate of service pension is set to be 66.33% of the combined partnered rate while the partnered rate is set at 50% of the combined partnered rate.
Calculating the maximum rate of service pension
The maximum rate of service pension is equal to the sum of the MBR and the pension supplement. Rent assistance, energy supplement and remote area allowance may also be added to the maximum rate payable.
Pension MBR factor
The pension MBR factor is the new 'not a member of a couple' MBR divided by the old 'not a member of a couple' MBR, rounded to three decimal places. Special rules applied in calculating the factor on 20 September 2009. The factor is calculated at the same time that service pension rates are indexed. The factor is used to index certain amounts, instead of directly indexing them using CPI or other increases:
- income support supplement (ISS),
- ceiling rate of service pension paid to war widow/widower veterans with qualifying service,
- war widow's/widower's pension (paragraph 30(1)(b) component only), and
- disability compensation payment (both the general rate and above general rate components).
How ceiling rate income support supplement and service pension are indexed
The ceiling rate for ISS and for war widow(er) pensioners entitled to service pension is indexed each 20 March and 20 September using the pension MBR factor. This also applies to the ceiling rate of service pension paid to war widow/widower veterans with qualifying service.
How the maximum transitional pension and income support supplement are indexed
The maximum transitional pension rate is indexed using CPI only, on 20 March and 20 September each year.
How war widow's/widower's pension is indexed
War widow's/widower's pension is made up of three parts - the 30(1)(a) component, the 30(1)(b) component and the 30(1)(c) component. Each component is individually indexed each 20 March and 20 September. The three components are added together to make up the pension payable. The following table explains how the three components are indexed:
Component | Indexation |
Paragraph 30(1) (a) VEA component | Not indexed but set as equal to the new 'not a member of a couple' MBR |
Paragraph 30(1) (b) VEA component | Pension MBR factor |
Paragraph 30(1) (c) VEA component | CPI only |
How disability compensation payment is indexed
Disability compensation payment is indexed using the pension MBR factor.
How education allowance is indexed
Education allowances are indexed each 1 January against CPI only.
How the veterans' supplement is indexed
The veterans supplement is indexed against CPI only on 1 January each year, commencing 1 January 2010.
How the Prisoner of War Recognition Supplement is indexed
The Prisoner of War Recognition Supplement is indexed using CPI only on 20 September each year, commencing 20 September 2012.