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C16/2005 Processing and clearance procedures for cases involving MCRS where disability pension and/or service pension is in payment or has been claimed


DATE OF ISSUE:  5 May 2005

Processing and clearance procedures for cases involving MCRS where disability pension and/or service pension is in payment or has been claimed

Purpose of Instruction

The purpose of this instruction is to:

  • outline the practices that should be employed where a claimant has dual eligibility under the SRCA and the VEA; and
  • minimise the potential for overpayments resulting from a breakdown in liaison between the MCRS, Veterans' Compensation and Income Support areas.

There is a separate instruction for dealing with cases under the Military Rehabilitation and Compensation Act 2004.


The process for determining SRCA, Disability Compensation and Income Support payments requires the consideration of other forms of compensation/financial assistance that the claimant may be receiving or has received in the past.  This includes any compensation paid by the Military Compensation and Rehabilitation Service (MCRS).

Overpayments continue to occur due to the failure to offset (reduce) Disability Pension where a MCRS payment, either lump sum or ongoing fortnightly payments, is made.  Service pension may also need to be adjusted, depending upon the disposal of a lump sum or the receipt of ongoing MCRS payments.  Attention needs to be paid when granting MCRS, DP or SP to ensure that pensioner records are initially correctly examined and correct clearance procedures are followed.  This will ensure the potential for overpayments is minimised and help to ensure a high level of client service.

Responsibilities in the clearance process

Designated contact officers should be appointed in MCRS, Veterans Compensation and Income Support areas to ensure that all requests for clearances are tracked and that those handling the requests are suitably trained in relation to their role, responsibilities and knowledge of the issues involved.  Interstate clearance requests should also be expedited through these contact officers.

There is no set model for the roles and responsibilities of positions in the clearance process.  It is expected that each state will allocate staff based upon experience and resources.  Some states have expressed differing opinions as to whether all clearances should be referred to Income Support.  Whilst it is ultimately a local office decision, it is considered best practice to direct all MCRS clearance requests through a clearance officer within Veterans' Compensation, who then will liaise with Income Support for those minority of cases that are relevant. This reduces the need for double-checking and the Income Support areas only need to deal with cases that affect them.

What is expected is that each person within the clearance process should have clearly
defined roles and be fully aware of their responsibilities.

Any matters involving MRCA legislation should be referred to Director, Business Development and Procedures in National Office (Phone 16362).

Causes of overpayment

Both MCRS lump sum and ongoing Incapacity payments have the potential to cause significant overpayments of disability pension, war widow's pension or service pension.  This can be due to a failure to check electronic records by staff within:

  • MCRS - at the time MCRS payments are granted or increased or the incapacity for which the benefit is paid changes;
  • Veterans' Compensation - when a disability pension or war widow's claim or application for increase is successful; or
  • Income Support - when a service pension is granted or re-assessed.

Clearance Procedures

Attached to this Departmental Instruction are the clearance procedures for MCRS (Attachment A), Veterans Compensation (Attachment B) and Income Support (Attachment C).


Please refer any questions on this matter to Tim Adams in Compliance and Review, on

(03) 9284 6306, Stuart Kennedy (02) 6289 4716 or John Douglas (02) 6289 6362.


Branch HeadBranch Head Branch Head

Income SupportVeterans CompensationMilitary Compensation

      May 2005May 2005May 2005

Attachment A



Types of MCRS payments

MCRS variations usually involve one or more of the following scenarios:

  • a lump sum is granted in respect of permanent impairment or death; or
  • incapacity payments, which compensates a client for loss of wages, are granted or varied.

Need to check all states in VIEW in clearance process

Prior to granting or varying payments, MCRS should look in the 'Veteran Community' tab in VIEW.  Unlike the MCRS tab, which accesses data from a national database, the veteran community tab is partitioned on a state by state basis.  Therefore MCRS staff need to search across all states before they can be confident there is no DVA client record.

Clearance to be made with state with active file number

A client can have different file numbers recorded in different states.  When searching on VIEW, MCRS staff should note that while details relating to a file number might be found, that file is not necessarily the active file number.  The active file number denotes the state currently making payments.  The active file number is displayed at the top of VIEW and also appears in the second field on the Summary screen.  Any clearance needs to be made with the state with the active file number.

Checking for the need to request a clearance.

MCRS examiners search VIEW looking for a record of:

  • service pension; or
  • a disability pension with a condition that was similar to, or the same as, that on which the MCRS payment/s were based; or
  • whether a pensioner is in payment of T&PI, TTI or Intermediate Rate.

The Outstanding Cases Details folder under the Client Activity tab should also be checked to ensure that there are no claims for DP or SP in progress.  Action in the DP area may indicate the possibility of recent medical reports that could minimise the likelihood of the duplication of requests for medical reports.  Additional training for MCRS staff regarding VIEW navigation and the contents of these folders may be necessary.  The Summary screen has a number of hyperlinks.  The Summary screen also indicates if there is any information in the Outstanding Cases tab.  Clicking on the green hyperlink will directly open that tab.

Maintaining a record of VIEW screens searched

A signed and dated hard copy of the requested search results in VIEW is placed on file to provide a clear audit trail indicating which screens have been accessed.  This is in addition to the audit trail accessed by utilising the 'request reports' option in the menu bar in VIEW to request similar information.  Only a hard copy of the home state VIEW report need be included on file.  That copy should be endorsed with words such as “all states searched and no record found”.

Obtaining a clearance

Where there is a record of payment of SP or DP, and any doubt as to the need for adjustment, MCRS should err on the side of caution and request a clearance.  Where a clearance is not required, payments can be released.

The only question that arises with Service Pension payments is the disposal of the lump sum.  The MCRS Letter of Offer should make reference to the fact that the method of the lump sum disposal (ie invested or otherwise) will determine what, if any, effect it has on their Service Pension.

Veterans' Compensation will determine whether there is a relationship between the DP and MCRS accepted conditions.  Clearance will vary depending upon local procedures.  However, generally a clearance in the form of a letter from the standard letters in Defcare is sent to the relevant clearance officer in Veterans' Compensation.  That area then returns the clearance letter advising any adjustment amounts, if applicable.  The Veterans' Compensation clearance officer will also liaise with Income Support to obtain any clearance from them before returning the clearance form to MCRS.  This will be necessary where Incapacity payments and Service Pension have both been paid.

Each state will have its own method of following up these clearances, either via electronic reminders or a manual system.

Information required on Clearance

An exact diagnosis of the condition/s for which the MCRS benefit is being paid must be detailed on the clearance.  For example – 'lumbar disc degeneration with compression fracture of L3/4', rather than 'spinal condition'.  If the condition for which incapacity payments are paid changes, a further clearance must be sent to Veterans' Compensation.  For example – if the incapacity payments were initially granted for orthopaedic conditions, however the sequela condition of depression overtakes the orthopaedic condition and the incapacity payments become payable for the depression, a second clearance must be forwarded to Veterans' Compensation.

When incapacity payments are redeemed and a lump sum is paid, the section of the SRCA under which the redemption is paid must be specified on the clearance.

When the permanent impairment or death payment is actually made, a copy of the PI/Death Process View screen is to be attached to the clearance.

Attachment B


Veterans' Compensation

Clearance process to be followed within Veterans Compensation

When a disability pension or war widow's claim or application for increase is successful, Veterans' Compensation should check the MCRS tab in VIEW for any indication of an MCRS payment.  Unlike the 'veteran community' tab, this is a national database, so only one search is required.

Where a DVA client has been identified as also being an MCRS client in the MCRS Client Find facility and a medical condition closely matching the description of that in DVA has been recorded as 'Liability Accepted' by MCRS, MCRS should be contacted directly for further information.  The disability claim officer will refer the case to the MCRS area, requesting details of payment amounts, dates, etc, if applicable.

Where no MCRS client is identified in VIEW, a clearance may still be required if there is:

  • any indication from the file or pensioner; or
  • any likelihood of a compensation payment,

as the claim may be manually recorded on the 'old' card system held within MCRS.

War Widows or Widowers

If a war widow or widower applies to MCRS and the death of their spouse is accepted as caused by their military service, then MCRS can make a lump sum payment to the widow or widower and dependent children, in addition to weekly payments to dependent children.  This can require adjustments to any war widow/er's or orphan pension and ISS payable to the widow.  It is not possible to receive a significant lump sum under the SRCA without that lump sum reducing or cancelling WWP.

MCRS staff are required to check VIEW and request clearances prior to making any payment where there is a record of a War Widow/er's payment in VIEW.  If a WWP claim is pending, the onus is on Veterans' Compensation to contact MCRS prior to granting the pension.

Veterans' Compensation staff are required to check the MCRS tab in VIEW prior to granting a WWP.  They should search on the veteran's details and not the widow's.  If the cause of death has been accepted, there will be a date and a determination reflecting this recorded, similar to the recording of a disability claim.  Full details need to be obtained from MCRS so the WWP can be adjusted.

War widows or widowers exceptions and inclusions

Like DP claims, a clearance is only an issue for service occurring after 1949.  While the majority of claims relate to serving members with a SM file prefix, examiners should examine the service documents and request a clearance where there is a possibility of compensation.

Payments made by MCRS under the Defence Act 1903 are not offset against war widow/er's pension, however they may affect income support payments.  It is possible for a dependant to receive a full war widow/er's pension and a lump sum under the Defence Act.  This is normally only done by younger widow/er's.

Suitable timeframe when calculating adjustments

Different states use different timeframes when calculating and advising an adjustment.  Where a 'one month in advance' calculation is used, there is sometimes insufficient time for the clearance and acceptance process to be concluded.  The process involves cases being referred back to MCRS; MCRS issuing an offer letter; and the client then advising MCRS of their decision.  Only then can MCRS staff notify the DP processing staff of the outcome of the offer.  This notification is to include a copy of the Defcare PI/Death process view screen.   There is often not enough time to effect a reduction of DP by the specified payday used in the initial calculation advised to the pensioner, thereby creating an overpayment.  It is preferable to over-recover by limiting the DP two months in advance and releasing any arrears at the end of the process, rather than having to recover a second overpayment.  The timeframe should be adjusted slightly where a SP clearance is also required.

Effect of recent legislative changes

New legislation was effected under s25A of the VEA, effective from 1/7/2004.  The changes mean that persons now being granted or increased to the Above General Rate (AGR) ie greater than 100%, which includes “Intermediate Rate” and “Special Rate or TPI”, will have their DP rate adjusted if a lump sum payment under the SRCA has been made, regardless of whether compensation was paid for the same or a like condition. These offset provisions also apply to a person granted temporary incapacity allowance under s107 VEA, or loss of earnings allowance under s108 VEA.  As there is no question on the existing claim form asking if a person ever received compensation payments for unrelated conditions, a clearance will be required.

Attachment C


Income Support

When to check the MCRS tab

The MCRS tab should be checked in all new claim cases where the veteran has a SM or SS prefix.  Clients with early war prefixes such as Korea (KM or SR) should have the MCRS tab checked where there is any indication that they may have applied for compensation.

Note that generally speaking, claims can be made to MCRS by anyone who had service from 1949 onwards.


Incapacity payments paid under the Safety, Rehabilitation and Compensation Act 1988 (SRCA) generally terminate at age 65.  Claimants in continuous receipt of incapacity payments since 1988 are paid at a reduced rate after age 65.  Those entitled to only a small payment can request that it be converted to a lump sum, the amount to be calculated based on actuarial tables.

Income Support should note a review for a veteran's 65th birthday where incapacity payments are recorded in the SP assessment.  MCRS staff are also required to provide details to the Veterans' Compensation clearance officer where payments are terminated.


The new Military Rehabilitation and Compensation Act 2004 (MRCA) relates to injuries to a service member on or after 1/7/04.  Only persons serving after 1/7/04 can get a MRCA payment.  A person can claim aggravation under MRCA for existing conditions covered under the VEA or SRCA where that aggravation occurred during service after 1/7/04.  Where there is any suspicion of MRCA eligibility, the case is referred to the specialist team in Queensland for examination.

An increasing number of cases have been processed under the new legislation, with all cases being closely checked to determine the effect, if any, on existing payments.  Many applicants are reservists, serving members or those who have recently left the forces.

Given the relatively new nature of the payment and the few claims lodged to date, a separate instruction will be issued in relation to these cases if interdepartmental liaison is identified as a problem.