C28/2004 VETERANS' VOCATIONAL REHABILITATION SCHEME GUIDELINES

Purpose

Purpose

This document is intended to assist delegates in understanding the Veterans' Vocational Rehabilitation Scheme, including the changes made by the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 which received Royal Assent on 27 April 2004.  The latest changes commence from the first pension period after 1 July 2004.

Part of these changes concern the disability pension rate and the amount of disability pension payable to veterans who are undertaking a program under the Veterans' Vocational Rehabilitation Scheme.

Veterans' Vocational Rehabilitation Scheme

The Veterans ' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997 inserted Part VIA (comprising sections 115A to 115L) into the Veterans ' Entitlements Act 1986.

Part VIA provides the legislative authority for the establishment of a permanent Veterans' Vocational Rehabilitation Scheme (the Scheme). The aim is to assist veterans to find employment and to continue in employment.

The original Scheme commenced on 1 December 1997.

Overview of Pension Changes

Sections 115C to 115F:

• Maintain a veteran's rate of disability pension (pension rate on commencement – defined in ss.115D(7)) while undertaking a program (ie during study etc);

and thereafter, while maintaining the pension rate on commencement, provide for a reduced daily pension amount to be paid to the veteran based on the veteran's daily above general rate (defined in ss.115D(7)):

• for the first two years of employment, by paying a reduced pension amount equal to half the veteran's daily above general rate but increasing this by a taper amount which reduces from a value of one if the veteran is working 8 hours to zero if the veteran is working 40 hours per week. The resulting payment, together with earnings, should provide most veterans with a higher net income than the pension rate on commencement alone and hence an incentive to participate, and

• for a further five years, by increasing the reduction amount in steps until disability pension is limited to 100% of the general rate.  The taper rate continues to be applied to the above general rate component while it is being paid.

Changes to Part II of the VEA

To support the introduction of Part VIA changes have been made to Part II

of the Act.

In both sections 23 and 24 a new subsection 5 has been amended to allow calculation of a pension amount payable after a veteran commences work:

"(5) The rate at which pension is payable to a veteran to whom section 115D applies (veterans working under rehabilitation scheme) is the reduced amount worked out using the following formula:

General rate + (14 X Reduced daily pension amount worked out under section 115D)"

Subsection 24A(2) still applies to suspend the 8 and 20 hour capacity for work tests for the special or intermediate rates of pension:

"(2) Paragraphs (l)(b) and (c) do not apply to a veteran if the veteran is undertaking a vocational rehabilitation program under the Veterans' Vocational Rehabilitation Scheme or if section 115D applies to the veteran."

Approved program

To benefit from the new sections 115C to 115F a veteran must commence an approved vocational rehabilitation program.

Paragraph 2.3.1. of the Scheme provides that a veteran is taken to have commenced undertaking a vocational rehabilitation program on the date specified by the Commission in the determination approving the veteran's participation in an approved program.

Affected pension rates

Disability pension protection and preservation measures are provided in sections 115C to 115F.  These apply only to veterans who are assessed at the special or intermediate rates. This is because only they can commence an approved vocational rehabilitation program provided in Chapter 2 of the Scheme.

These pension rates are described in the legislation by the term pension rate on commencement.

If a blinded veteran is undertaking a program, s. 115D(6) provides that a Special Rate pension paid under s.24(3) will not be reduced.

Temporary Total Incapacity – pension under s.25

The Temporary Total Incapacity (TTI) rate is excluded from the pension protection and preservation measures provided in sections 115C to 115F.

A veteran receiving a TTI rate of pension can only undertake a rehabilitation program provided under Chapter 3 of the Scheme, not a vocational rehabilitation program which can only be provided under Chapter 2.

Pension while undertaking a program

Section 115C provides that undertaking an approved vocational rehabilitation program will have no effect on the rate of disability pension. The pension rate on commencement continues without reduction.

Pension after completion of a program

After completion of an approved vocational rehabilitation program, but before a veteran has secured employment, the safety net provision of ss. 115D(5) will apply. Again the pension rate on commencement continues without reduction (assuming that it takes more than 2 weeks to find employment).

Pension for years 1 & 2 of employment

Once employment has begun, a reduced daily pension amount is paid for two years. The legislation describes this as the initial period.  The formula for the reduction amount is set out in s.115D(2).  It is half the difference between the Special (or Intermediate Rate) and the 100% General Rate increased by a taper amount.  This taper amount varies from 1 when the veteran is working 8 hours per week to 0 when the veteran is working 40 hours per week.

Because the formula refers to the rate of pension (ie TPI or I/R) and not an amount, any CPI increases in this period will require the reduced daily pension amount to be re-calculated and hence an increase in the amount paid to the veteran.

Note that once work has commenced there is a requirement for the veteran to notify changes in working hours.  The taper rate depends on this information.

The final pension amount payable is the 100% General Rate plus 14 times the reduced daily pension rate.

Attachment A gives factors that are applied to the daily above general rate to give the correct reduced daily pension amount for different hours worked.  Attachment B gives examples of the operation of the factors for the initial period.

Pension for years 3 to 7 of employment

After two years, the second period and a stepped decrease in the reduced daily pension amount will begin. The formula, set out in ss.115D(3), results in 10 decreases in the reduced daily pension amount over five years.  Again, a taper rate is applied and information needs to be collected on the veteran's working hours.

In this formula, the meaning of "No. of CPI indexation days" which is used in the definition of “CPI amount” is given in the definitions in s.115A as the day that begins each 'relevant period' within the meaning of that term in section 198.  It results in decreases in the reduced daily pension amount each September and March.

Again any indexation increases in this period will require the reduced daily pension amount to be re-calculated.

The final pension amount payable is the 100% general rate plus 14 times the reduced daily pension rate.

Attachment A gives factors that are applied to the daily above general rate to give the correct reduced daily pension amount for different hours worked and different CPI indexation days.  Attachment C gives examples of the operation of the factors for the second period.

Pension after 7 years of employment

The pension rate that will apply after 7 years of employment is effectively 100% of the General Rate.

This is achieved by setting the reduced daily pension amount at nil.

Information on hours worked

The veteran is required to provide information on the number of hours being worked and advise of any changes to this number.  It is not necessary for the veteran to advise immediately of small fluctuations, say 2 or 3 hours per week as these will be picked up with regular review, but any larger changes should be notified.  Veterans should be advised that failure to notify significant changes to hours worked may result in an overpayment of disability pension which DVA will recover.

In the absence of advice from the veteran, staff must seek regular confirmation of hours being worked.  If the veteran is working consistent hours this would be done quarterly.  In other cases more frequent requests would be appropriate.  Requests could be timed to coincide with inquiries about earnings.

Safety net

There are three safety net provisions in the new legislation:

• s.115C provides that there will be no reduction in pension while a veteran is undertaking an approved vocational rehabilitation program;

• ss.115D(5) provides that if a veteran is unemployed for a continuous period of at least two weeks, there will be no reduction from pension rate on commencement for any payday falling with in the period of unemployment.  Unemployment (defined in s.115A) includes periods of less than 16 hours of work in a pension period.

This provision does not suspend the process of increasing the reduction amount. When a veteran returns to work the reduction amount will be whatever would have applied had there not been a period of unemployment.

(Note that no pension reduction applies to veterans who return to work on a casual or part time basis and who work less than 8 hours per week under ss.115D(1).)

• s. 115E & s. 115F provides that if a veteran's work and pension income rate (a term defined in s.115A) is less than pension rate on commencement, the veteran may apply to the Commission to increase the reduced daily pension amount. For example this might apply if a veteran could only secure employment with a very low rate of pay or where, because of industry downturn, employment is intermittent or less than a full working week.

Note: Normally a determination under these sections will be for a period fixed in relation to the facts of the case. Once the period of a determination expires the reduction amount will be whatever it would have been had these safety net sections not applied.

Method of reducing pensions

The pension rate on commencement remains on the Payment Master File and a limitation on pension is imposed reflecting the difference between the pension rate on commencement and the amount calculated under ss.23(5) or ss.24(5).

For the time being, due to the very low number of affected veterans, the limitation will be calculated manually and entered through PIPS/PC on the Payment Master File. On each occasion that there is a step down in the pension rate because of participation in the scheme, or an indexation adjustment to Disability Pension rates, the limitation will have to be recalculated and reset.

The limitation should be entered on PIPS/PC as "MISC".  A notation should also be made in the "Comments" tab in VIEW of the details of the adjustment.  To interrogate VIEW for further details of the limitation go to the following tabs: Pension Assessment/Disability Pension - adjustment amount.

Appeal Rights

The operation of section 115D to determine a reduction amount is 'self executing' and does not involve a 'decision' that may be appealed to the Veterans' Review Board or the Administrative Appeals Tribunal.

Should a dispute arise there should be an internal review of the veteran's complaint and the calculations used to determined the reduction amount.

Should the veteran wish to pursue a formal appeal, the only recourse is under the Administrative Decisions (Judicial Review) Act 1977 which involves an appeal to the Federal Court.  A veteran wishing to take this course should seek professional legal representation.

Compensation Offsetting

A veteran's 'pension rate on commencement' – ie the full amount of a special or intermediate rate pension - is first subject to a reduction or limitation worked out under section 115D.  The remaining amount of pension is then subject to any compensation offsetting limitation that may apply as this is money that the veteran is actually receiving or deemed to be receiving.

Other benefits

By preserving a veteran's pension rate on commencement, other benefits dependant on that rate of pension are also preserved.  Hence the entitlement of a veteran receiving a TPI pension to a GST exemption on a motor vehicle, Gold Card treatment benefits and in the event of death, automatic entitlement to a war widow/er's pension, remain unaffected.

Further Enquiries

Further enquiries concerning the amount of disability pension to be paid where a veteran is undertaking a program under the Veterans' Vocational Rehabilitation Scheme may be made to Veterans' Compensation Branch, National Office.

Hours worked

Initial period

Second period - CPI indexation days since beginning of second period

1

2

3

4

5

6

7

8

9

10

9

1.969

1.865

1.750

1.621

1.477

1.313

1.125

0.909

0.656

0.358

0.000

10

1.938

1.836

1.722

1.596

1.453

1.292

1.107

0.894

0.646

0.352

0.000

11

1.906

1.806

1.694

1.570

1.430

1.271

1.089

0.880

0.635

0.347

0.000

12

1.875

1.776

1.667

1.544

1.406

1.250

1.071

0.865

0.625

0.341

0.000

13

1.844

1.747

1.639

1.518

1.383

1.229

1.054

0.851

0.615

0.335

0.000

14

1.813

1.717

1.611

1.493

1.359

1.208

1.036

0.837

0.604

0.330

0.000

15

1.781

1.688

1.583

1.467

1.336

1.188

1.018

0.822

0.594

0.324

0.000

16

1.750

1.658

1.556

1.441

1.313

1.167

1.000

0.808

0.583

0.318

0.000

17

1.719

1.628

1.528

1.415

1.289

1.146

0.982

0.793

0.573

0.313

0.000

18

1.688

1.599

1.500

1.390

1.266

1.125

0.964

0.779

0.563

0.307

0.000

19

1.656

1.569

1.472

1.364

1.242

1.104

0.946

0.764

0.552

0.301

0.000

20

1.625

1.539

1.444

1.338

1.219

1.083

0.929

0.750

0.542

0.295

0.000

21

1.594

1.510

1.417

1.313

1.195

1.063

0.911

0.736

0.531

0.290

0.000

22

1.563

1.480

1.389

1.287

1.172

1.042

0.893

0.721

0.521

0.284

0.000

23

1.531

1.451

1.361

1.261

1.148

1.021

0.875

0.707

0.510

0.278

0.000

24

1.500

1.421

1.333

1.235

1.125

1.000

0.857

0.692

0.500

0.273

0.000

25

1.469

1.391

1.306

1.210

1.102

0.979

0.839

0.678

0.490

0.267

0.000

26

1.438

1.362

1.278

1.184

1.078

0.958

0.821

0.663

0.479

0.261

0.000

27

1.406

1.332

1.250

1.158

1.055

0.938

0.804

0.649

0.469

0.256

0.000

28

1.375

1.303

1.222

1.132

1.031

0.917

0.786

0.635

0.458

0.250

0.000

29

1.344

1.273

1.194

1.107

1.008

0.896

0.768

0.620

0.448

0.244

0.000

30

1.313

1.243

1.167

1.081

0.984

0.875

0.750

0.606

0.438

0.239

0.000

31

1.281

1.214

1.139

1.055

0.961

0.854

0.732

0.591

0.427

0.233

0.000

32

1.250

1.184

1.111

1.029

0.938

0.833

0.714

0.577

0.417

0.227

0.000

33

1.219

1.155

1.083

1.004

0.914

0.813

0.696

0.563

0.406

0.222

0.000

34

1.188

1.125

1.056

0.978

0.891

0.792

0.679

0.548

0.396

0.216

0.000

35

1.156

1.095

1.028

0.952

0.867

0.771

0.661

0.534

0.385

0.210

0.000

36

1.125

1.066

1.000

0.926

0.844

0.750

0.643

0.519

0.375

0.205

0.000

37

1.094

1.036

0.972

0.901

0.820

0.729

0.625

0.505

0.365

0.199

0.000

38

1.063

1.007

0.944

0.875

0.797

0.708

0.607

0.490

0.354

0.193

0.000

39

1.031

0.977

0.917

0.849

0.773

0.688

0.589

0.476

0.344

0.188

0.000

40 & over

1.000

0.947

0.889

0.824

0.750

0.667

0.571

0.462

0.333

0.182

0.000