The Australian Government Actuary issues instructions to DVA for the purpose of Section 30C, 74 and 25A of the VEA. The instructions are based on data contained within Australian Life Tables that is compiled following the most recently completed census. These tables contain formulas that enable delegates to calculate an initial fortnightly equivalent (FE) of the lump sum compensation being assessed for offsetting purposes. These Tables allow a FE calculation which is equivalent to a lump sum of $10,000 for a person's age and gender. This is then used to compare and multiply against the actual lump sum received, equalling a final FE offset amount.
The model that is used for compensation offsetting purposes is known as an 'actuarial model'. The actuarial model is prospective in nature. This means that for any claimant, at the time of the commencement of the offsetting process the actuarial present value of future offset amounts equals the value of the lump sum which is being offset. Therefore any future offset amounts resulting from lump sum compensation paid previously, is subject to 'current' actuarial values (latest instruction) and not the historical tables applicable to the date the lump sum compensation was received.
Selecting a person's “age next birthday” to determine the commencement date according to the AGA Tables will vary depending on the relevant section of the VEA the lump sum compensation is affected by. The lump sum compensation payments including SRCA payments are payable in various categories and recognising the specific lump sum type will inform the delegate of which VEA section to apply. The following table and examples illustrate this;
| VEA - Lump Sum affected by: | Then the 'age next birthday' in line with the AGA instructions is the; |
1 | Sect 30C(1), or Sect 74(3) Any lump sum compensation for the same incapacity or death as another pension is being paid. | Age the person would have been, or would be after the lump sum is paid or the pension becomes payable, whichever is earlier. |
2 | Sect 30C(2), Sect 30C(3), Sect 74(3A), or Sect 74(3B) Lump Sum Payments under Sect 137 DRCA or Sect 30 DRCA in respect of the same incapacity as another pension is being paid. | Age the person would have been, or would be after the lump sum is paid or the pension becomes payable, whichever is later. |
3 | Sect 25A Lump Sum payment under Sect 24, Sect 25 or Sect 27 DRCA for any incapacity. | Age the person would have been, or would be on the next birthday after the lump sum payment date. |
Examples
- A veteran who previously received a DRCA permanent impairment lump sum is subsequently granted a Disability Compensation Payment for the same incapacity. In this situation, the 'age next birthday' is the age the veteran would have been, or would be on the next birthday after the DRCA permanent impairment lump sum payment was made.
- A veteran previously received a DRCA incapacity payment at below the 'redemption ceiling rate', so the veteran's weekly incapacity payment is converted to a lump sum under Sect 30 DRCA. They subsequently were granted a Disability Compensation Payment for the same incapacity as the DRCA lump sum payment. In this situation, the 'age next birthday' would be the age the veteran would be, or would have been on the next birthday following the day the Disability Compensation Payment becomes payable to the veteran.
- A veteran who is granted Special Rate disability pension (SRDP), under MRCA, and prior to this received a DRCA permanent impairment lump sum payment will have their MRCA SRDP reduced. This applies for any lump sum payment under DRCA irrespective of whether it is for the same incapacity. The 'age next birthday' is the age the veteran would be, or would have been on the next birthday following the grant of the MRCA SRDP.