Departmental Instruction



The purpose of this Departmental Instruction (DI) is advise of the abolition of the earnings credit scheme for service pensioners and income support supplement recipients on 20 March 1997.


2.The earnings credit scheme was intended to provide an added incentive for service pensioners and income support supplement recipients to undertake and continue in casual or temporary work.  It allowed clients to accrue a notional balance in an earnings credit account.  That amount was then disregarded when determining their ordinary or adjusted income from remunerative work under the income test.

3.Issues relating to the earnings credit scheme were that it had a very low take up rate, was costly to administer and was uncertain whether the scheme acted as an incentive to find work.

4.As a consequence the Government decided that the earnings credit scheme be abolished.  The Veterans' Affairs Legislation Amendment (1996-97 Budget Measures) Act 1996, which received Royal Assent on 5 March 1997 repealed the earnings credit provisions contained in the Veterans' Entitlements Act 1986 (the VEA) on 20 March 1997.

Effect of the amending legislation

5.The effect of the amending legislation is that the earnings credit scheme will cease to exist on 20 March 1997.  Pensioners with an earnings credit account balance that affects their ordinary or adjusted income, will cease to have the earnings credit account balance affecting their ordinary or adjusted incomes from 20 March 1997.

Standard letters

6.The standard letters relating to the earnings credit scheme will be deleted as soon as possible.


7.The brochure “Service Pension and Earnings Credit” is no longer required and should be discarded.

8.Any further enquiries in relation to this matter should be directed to John Bruce (06) 2896441, fax (06) 2894853, C-C-BA-09.

Murray Harrison

Branch Head

Income Support