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DATE OF ISSUE: 24 February 1992



The purpose of this instruction is to provide information about changes to the payment of Pharmaceutical Allowance (PA) introduced in the 1992/93 Budget session.  It should be noted that although access to PA is either as a service pensioner, or through the Repatriation Pharmaceutical Benefits Scheme (RPBS), these changes only affect the payment of PA as a service pensioner.


2.PA was introduced in 1990 to compensate pensioners for the cost of prescriptions that were previously provided free of charge.

3.Under the existing provisions of both the Veterans' Entitlements Act (VEA) and the Social Security Act (SSA), PA is a separate allowance payable in addition to age/service pension.  However, both Departments administer the payment of PA differently.

4.The Department of Veterans' Affairs (DVA) administers PA in line with the legislation - i.e. as a discrete amount which is not included as a component of pension and allowances for the purposes of the income and assets tests.  The minimum amount of payment is $1 of pension plus the full amount of PA either at the married rate of $2.60 per fortnight, or the single rate of  $5.20 per fortnight.

5.On the other hand, the Department of Social Security (DSS) includes PA as a reducible amount under the income and assets tests, with a minimum payment set at $1 per fortnight.


6.From payday 1 April 1993, both Departments will administer PA in the same manner by adding it to other pension components before the application of the income and asset tests in order to determine the rate of age/service pension payable, with PA being the last component to be reduced.

7.However, pensioners whose pension is reduced because of income or assets (but are still eligible for some amount) will always receive a minimum amount of pension which is equal to their full rate of PA.

For example

A married couple in a service pension only assessment, assessed at $1.40

of service pension and allowances



8.Where however, pension entitlement (i.e. service pension and all allowances including PA) is reduced to NIL, no PA will be payable, unless entitlement exists under the RPBS.

Primary Entitlement To PA

9.The primary entitlement to PA will remain as a service pensioner.  This will have the effect of raising the pension cut-out point, thereby ensuring that payment of  pension and status as a "service pensioner" are maintained for as long as possible.  This will be particularly beneficial when access to fringe benefits is extended to all service pensioners on 1 April 1993.

10.The only exception to this rule are frozen rate war widow/ers who will continue to receive PA with their war widow/ers pension.

11.Therefore for a service pension couple in a married assessment where one partner has entitlement under the RPBS both partners will continue to receive PA until all service pension entitlement is lost.  Only after service pension entitlement is lost will the PA be paid solely to the RPBS partner.

For example

A married couple in a service pension assessment, where the veteran has entitlement to an STEC card

(a) assessed at $1.40 of service pension and allowances



(b) assessed at $0 of service pension and allowances




12.For most service pensioners there will be no change to their entitlement.  Only those clients who are in receipt of $1 service pension at the time of the change will be adversely affected.  This is because currently those service pensioners who are only eligible for a service pension rate of between 1 and 99 cents are paid $1 pension plus PA per fortnight.  On 1 April 1993, they will receive their actual pension rate with the PA component built into the rate calculation process.   On the other hand, including PA in the income/asset test will mean a higher cut-out point for pension, and thus allow pensioners to have more income before they lose pension or fringe benefits.


13.The eligibility and assessment rules for PA and Advance Pharmaceutical Allowance (APA) are currently contained in Part VIIA of the VEA.  The VEA will be amended to include PA in part V (a new section 5PA, plus new subsections in the Rate Calculators); whilst the RPBS rules and APA will continue to be maintained in Part VIIA.   This method will bring PA into line with the calculation of other service pension components.

14.The above changes are contained in the Veterans' Affairs Legislation Amendment Bill (No 2) 1992, which received Royal Assent on 24/12/92.


15.The changes to PA processing will be mostly invisible to the user, and will be mainly confined to the assessment module to include PA in the order of reduction (as the last item to be reduced) and to increase the minimum amount of pension (to the full rate of PA applicable).

16.The only screen changes will be for the Manual Rates screen.  For cases where service pension is in payment no change to processing will be necessary.  Where the entitlement has been reduced to PA only, examiners will need to -

.select a miscellaneous method of assessment by entering "Y" into the MISCELLANEOUS field  (i.e. "99"  method of assessment);  and

.record the PA rate by entering the letters "S" or "M" (for single or married rate) into the SERVICE PENSION field.  The rate will then be displayed on the screen as "S-5.20", or "M-2.60".

17.Changes will also be required to handle PA advances.  These are detailed at Attachment A.


Implementation advice

18.There will be no need to provide all recipients of PA with an advice about this change as for the majority of service pensioners there will be no variation to their entitlement - i.e.  the change is only an administrative one.

19.A Selective Review System Run prior to implementation will identify those clients who are likely to incur a variation in payment.  This list  will be checked after processing and if the amount of SP has varied, an advice will be arranged by Central Office (as per example at Attachment B), in conjunction with relevant Branch Office.

Quarterly and Payment advices

20.There will be no change to the current payment details paragraphs used in the quarterly and "daily" advices - i.e. PA will continue to be shown as a

discrete amount.

21.Where SP has been reduced to zero, but other allowances including PA are payable, the amount of payment will continue to be shown as two items - i.e. one amount as "Service pension and allowances which includes Guardians Allowance....", plus a discrete PA amount (current example in paragraph 6.17, chapter 6, "Payment Advices System - Paragraph Content" refers).

22.Where PA only remains in payment, it will be shown as follows:

Service pension and allowances              $0.00

Pharmaceutical allowanc                2.60

TOTAL Fortnightly PAYMENT              $2.60


23.The effective date for this change is 1 April 1993.  This will also be the effective date for a number of other Budget changes and the March Quarterly Advices.  For further details concerning ADP processing and the timetable for the March processing run please refer to the Departmental Instruction on this matter.


24.Due to the small number of clients who are likely to be affected by this change the collection of statistical information by the Branches will not be required.


25Freda Widawski is the Project Officer for PA, and may be contacted in the NSW Branch Office on 02/2137431.  Branch Contact Officers are listed at Attachment C.






Currently when APA is granted, the PA payment is removed from the Payment Master File (PMF) for the duration of the advance.  Where there is no other payment apart from PA a suspension is recorded so that payment details are retained on the PMF.

In future, a suspension will be automatically recorded for all APA cases under suspension code "7240".  These suspensions will be processed automatically on a fortnightly basis.

For example, a client requests an advance of PA -

.examiner goes to PYLP screen and requests an "add";

.cheque payment is made;

.system automatically calculates number of instalments;

.puts on a suspensions of PA; and

.automatically reinstates PA when the advance has been recovered.

if a manual cheque payment is required

.examiner records on the system that the payment has been made;

.the system ensures that an automatic payment is not issued; and

.puts on suspension/reinstates PA as above.

Where another suspension already exists which includes the PA component, no recovery of APA will take place until after the existing suspension on the PA component is lifted.

Where another suspension which does not include the PA component already exists, then the suspension amount will be increased by the amount of PA, and the suspension code changed to miscellaneous.  Cases with a miscellaneous suspension code will require manual processing for Statutory Increases.  For all other codes, the PA amount and the suspension amount will be automatically updated.

Once APA, has been recovered the suspension amount will be adjusted back to the original suspension.  However the miscellaneous code will be continued unless manually changed.







This letter is to tell you about changes that affect your pension and allowance payments.

Changes to the Minimum Rate of Payment

Currently the minimum rate of service pension which can be paid is $1 per fortnight.  This means that if your actual assessed rate of pension is, say, $0.10 cents, you are currently paid $1.00 service pension. In addition,  Pharmaceutical Allowance (PA) payments are currently paid separately from service pension.

Following changes introduced by the Government in the 1992 Budget, from 1 April 1993 PA will be included in the service pension assessment, and the actual  assessed rate of service pension will be payable.

Including PA in the pension assessment means that you will be able to have more income before service pension ceases and fringe benefits are lost.

You will now receive your actual entitled rate of service pension plus your full entitlement of PA.

Payment Details

The amount of pension you receive each fortnight is set out below.  Payment at this rate will be made on 1 April 1993.


Service pension and allowances              $X.XX

Pharmaceutical allowance                X.XX

TOTAL Fortnightly PAYMENT              $X.XX

Your Right of Review

If you do not agree with a decision affecting your rate of service pension, you may apply to have it reviewed by a Delegate of the Repatriation Commission.  The Delegate may decide the original decision was correct, or may decide to change it.  If the decision is changed, your pension may be increased or decreased.

Any request for a review must be made in writing within three months of the day you receive this letter.  Your letter should state the specific grounds for your request for review.

Changes You Have Already Told Us About

If you have told us recently about a change to your income and assets or your domestic situation, it may not have been included when sending you this letter. If this is the case, we will be sending you another letter as soon as the change has been put in place.

Release of  Information

The information you give to this Department is used to work out your eligibility for pension and other benefits.  Some information that you have supplied may be released to other agencies such as the Department of Social Security, the Australian Taxation Office, the Health Insurance Commission, various State and Local Government Authorities and superannuation funds.

Information is supplied to such agencies to verify income/asset details, match information, pay accounts for treatment, and verify eligibility for concessions.

If you have any questions about any of the above matters, please contact this office at the address or telephone number listed at the top of this letter.

Yours sincerely


Deputy Commissioner as

Delegate of the Secretary



STATENAMETITLE              TELEPHONE              FAX NO

NSWGayle StanilandSenior               02/2137933              02/2137803


VICMaureen BeggsSSO              03/2846379              03/2846797

QLDStephen HarkinAssistant              07/2238653              07/2238533



SAPaul SimmondsSSO              08/2132414              08/2132412

WATony PetroniBenefits              09/4258245              09/2213094



TASDoug McLeanSSO              002/216683              002/216602