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C56/2002 Saved Child-Related Payments



Saved Child-Related Payments


The purpose of this Departmental Instruction is to:

  1. provide a list of saved child-related payment cases that require manual action to pay indexation increases by ex gratia payments, which will
    re-align them with similar payments of Family Tax Benefit (FTB);
  2. advise of a breakdown in work practices that is resulting in overpayments of saved child-related payments; and
  3. re-state the policy and procedures for cancellation of saved child-related payments for children turning 16 years.

Issue 1 - Indexation


The indexation anomaly was outlined in the Stateline of 20 December 2001, titled Saved Child Related Payments - January 2002 Indexation Anomaly.

The Stateline advised that until an amendment was made to the Veterans' Entitlements Act 1986, the movement in the CPI could not be applied to the saved child-related payments.


The minor and technical amendment is contained in Veterans' Affairs Legislation Amendment Bill (No.3) 2002, which has just been introduced into Parliament.  To bring these payments into alignment with similar FTB payments, a retrospective commencement date of 1 July 2001 (being the introduction of the new Family Tax Benefit) has been sought.

Due to the busy Parliamentary schedule and  the time lapse since these pensioners have received their intended child payment rate, Prime Minister and Department of Finance and Administration (DoFA) approval was obtained to pay the increases by way of ex-gratia payments until the legislation is passed.

Ex-gratia funding

DoFA has approved ex-gratia payments pending corrective legislation.  This will allow arrears payments and correct fortnightly payments to be made to existing saved child-related cases.

If the corrective legislation is not passed before 1 July 2003, further approval will be sought from the Minister for Finance to meet the shortfall.

The approval is based on the number of eligible saved child-related payments cases.  It is critical to the funding calculation that saved cases for children who have reached their 16th birthday are cancelled as detailed in this DI.

Issue of Funds

The funding is from existing service pension allocation.

The existing IPS payabilities for Dependant Child Add On (DCAO) and Guardian Allowance (GA) will apply:

Payment TypeCodes

GAA11100 85420

DCAOA11100 85425.

Current saved cases

An AIS run has identified DVA pensioners receiving 'saved' child-related payments (data as at 23 November 2002).  The records were cross-checked against VIEW and a list of cases needing manual action was compiled.

The number of 'saved' child-related payments cases  by State are:

NSW  9

QLD  7

VIC  4

TAS  9

SA  4

WA  1

Trusts & Companiesnil

(note: some cases have more than one child in the assessment)

A listing of file numbers will be e-mailed separately to all IS Managers.

(Note:  This list also contains names of children who are over 16 years and still incorrectly in payment.  Please refer to Issues 2 and 3 for further information about these cases.)

Impact of non-
alignment with FTB

As notified in the earlier Stateline, indexation was applied without legislative authority to the saved child-related payments in January 2001.  Thus, the rates of DVA payments exceeded the FTB equivalents from that time, until the FTB rates were indexed in July 2001.  The DVA saved child-related payments have been under paid since then.

A comparison of the amounts payable are shown in the following table.


Child payment component

DVA saved rate p.f.

Similar FTB




under 13 years




13 – 15 years




*Guardian Allowance





under 13 years




13 – 15 years




*Guardian Allowance





under 13 years




13 – 15 years




*Guardian Allowance




Note:  Guardian Allowance reflects the CPI movement – there is no equivalent FTB payment

Action required – arrears

Manual action is required to pay amounts owed to the pensioners due to the indexation anomaly of DVA saved child-related payments.  These arrears amounts will be made by way of ex-gratia payments.

State Offices will need to calculate any arrears payable by comparing the differences advised in the above tables and offsetting any initial overpayments (due to DVA's Jan 2001 incorrect indexation) from subsequent underpayments (due to the July 2001 and July 2002 FTB indexation).

Action required – ongoing payments

Ongoing payments are to be processed using the manual rate screen in PIPS to apply the correct rates of child-related payments.  These adjustments are also covered by way of ex gratia payments.

The processing officer should include a paragraph in the free text to inform the pensioner of the indexation correction.  Suggested wording of advice:

“The {payment type/s} in respect of {child/ren's name/s} has/have been adjusted to align with the indexed rates of the equivalent Family Tax Benefit payments.  The new rates of payments are outlined below.”

Manual action will no longer be necessary once the legislative correction to this anomaly is enacted and the relevant rates can be updated in PIPS.  The legislation is currently proposed to commence on 1 July 2003.  Further advice will be provided when this legislation is passed and receives Royal Assent.

Issue 2 - Corrective Action - Cancellation of saved child payments for children over 16 years


Effective 1 January 1998, the responsibility of paying child-related payments was transferred to Centrelink with the intention of simplifying and rationalising family assistance.  At that point, approximately 250 pensioners were identified as being financially disadvantaged by the transfer of payments.  Accordingly, special savings provisions were introduced to allow these pensioners to continue to receive their child-related payments from DVA.  The savings provisions continue until the child becomes ineligible or the new rate payable by Centrelink exceeds the current 'saved' rate.

From 1 July 1998 most payments made by Centrelink for dependent children 16 years and over were replaced by the youth allowance (YA).  DVA saved child-related payments should be cancelled from the date of the child's 16th birthday as the child would then be entitled to apply to Centrelink for YA.

The Veterans' Children Education Scheme was excluded from the payments integrated into YA.


There are 12 cases nationally identified as incorrectly in payment of dependent child add-on (DCOA) and/or guardian allowance (GA) in respect of 'saved' children over the age of sixteen years.  These cases are marked on the listing provided to IS managers.

Action required – Overpayment recovery

In most of these cases, an overpayment will have occurred as the payments  should have been cancelled from the date of the child/student's 16th birthday.

Care should be taken with these cases to offset any arrears payable from the indexation correction (prior to the child's 16th birthday), against any subsequent overpayment of pension.

Normal overpayment procedures will apply.  There is an existing IS Standard Letters - “routine OP letter” – which can be amended to notify the pensioner if an overpayment is to be recovered.

Issue 3 - Policy and procedures for children 16 years and over in Income Support assessments

Ongoing assessment

Saved child-related payments are not payable once the dependent child turns 16 years.  Refer to DI C40/98 for details.

An automatic report is generated for child reviews at 16 years at which time the system generated student review form should be issued.

If on review the child no longer meets the definition of dependent child, then the saved payment should be cancelled from the 16th birthday.  If the child is continuing in full-time education and continues to satisfy the relevant eligibility criteria, then the child details screen in PIPS should be updated with the appropriate indicators, i.e. student, receiving youth allowance etc.

It is important that the above indictors are noted correctly to ensure that the veteran and/or partner receive the benefit of the additional income free area and additional income limit for treatment eligibility.

Eligibility for a child 16 years and over

Under the VEA, a dependent child has the same meaning as in the SSA.   Eligibility for a child 16 years and over is as follows:

A young person who has turned 16 years but is under 22 years can still be a dependent child of the pensioner if:

  • they are wholly or substantially dependent on the pensioner, AND
  • their income in the financial year will not exceed the personal income limit, AND
  • they are receiving full-time education at a school, college or university.

A young person over 16 years cannot be considered a dependent child if:

  • they receive a social security pension or benefit such as Youth Allowance, or
  • their personal income is more than $7,706.20 per annum.  Income includes earning from casual, part-time or full-time earnings, or
  • they have turned 22 years of age.

Legislative references:VEA: section 5F

SSA: sections 5(1) to 5(4).

Children  remain in the DVA pension  assessment

Although the child-related payments are cancelled, dependent children continue to impact on the assessment of income support pensions from DVA:

Additional income free area

  • The additional income free area for each child is still included in the pension assessment until the child's 18th birthday, whilst the child continues to be either a dependent child (including a prescribed student i.e. receiving VCES) or a YA recipient.

  • The additional income free area in respect of a dependent child, who is not receiving YA and is not a prescribed student, is included in the pension assessment until the child turns 22 years.

Additional threshold for DVA treatment eligibility

Section 53E(2A) of the VEA provides the authority to consider a YA child to be a dependent child for the purposes of calculating the veteran's income/assets reduction limit for treatment eligibility.  Thus, the treatment benefits income levels for Gold Card continue to include the treatment income reduction amount until the child's 22nd birthday for each dependent child or YA recipient.

Pensioner Concession Card

  •       Dependent children (including YA recipients and prescribed student child) continue to be included on the DVA Pensioner Concession Card until the child's 22nd birthday.

Further Information

Priority action requested

Once the lists are received, priority action on processing is required to correct the payments for the affected pensioners.


For further information in relation to the above mentioned changes please contact Cheryl Oliver, Income Support Policy Section, on (02) 6289 6078.


Branch Head

Income Support

  1. December 2002