9.1.1 DRCA
Sections 20, 21 and 21A provide for reduction of weekly payments where the person is in receipt of superannuation benefits (pension and/or lump sum) under a Commonwealth superannuation scheme and the person:
is incapacitated for work as a result of an injury; and
'retires voluntarily, or is compulsorily retired, from his or her employment'; and
receives a pension under a superannuation scheme as a result of their retirement.
See section 9.3.1 for key dates and information on treatment of superannuation under relevant Acts prior to 1 December 1988 (the commencement date of the SRCA).
9.1.2 MRCA
Current members
Part 3 of Chapter 4 of the MRCA, which deals with serving members, contains provisions to reduce incapacity payments by any amount of Commonwealth-funded superannuation pension or lump sum a member receives or has received under a Commonwealth superannuation scheme.
Former members
Part 4 of Chapter 4, dealing with former members, contain provisions to reduce compensation where a person;
- retired voluntarily, or is compulsorily retired, from his or her work; and
- receives a pension or lump sum under a Commonwealth superannuation scheme as a result of their retirement.
9.1.3 Commonwealth Superannuation Schemes
The DRCA and MRCA reference superannuation benefits received from either a ‘superannuation scheme’ (DRCA) or a ‘Commonwealth Superannuation scheme’ (MRCA).
A ‘Superannuation Scheme’ is defined in section 4(1) of the DRCA and a ‘Commonwealth Superannuation Scheme’ is defined in section 5 of the MRCA. Generally it is any superannuation scheme under which the Commonwealth makes contributions on behalf of a person (referred to as either an employee (DRCA) or a member (MRCA) in the relevant legislation).
The definitions encompass those schemes applicable to defence members i.e. ADF Super/Cover; Military Superannuation and Benefits Scheme (MSBS); and Defence Force Retirement and Death Benefits Scheme (DFRDB) (including the Defence Force Retirement Benefits (DFRB)), as well as the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation (PSS), and the Public Sector Superannuation accumulation plan (PSSap) - for those reservists engaged in Commonwealth employment.
Commonwealth employment is employment in the Australian Defence Force (ADF), Australian Public Service (APS) or employment by a 'Commonwealth authority' or a 'licensed corporation' including most Commonwealth statutory authorities and Commonwealth-owned corporations.
Superannuation payments may be directed to any retirement savings account of the employee’s choice though and it is not essential that the Commonwealth administers the scheme only that contributions are being made by the Commonwealth. A private super fund, which accepts only the employee’s own personal contributions would not be included by the definition.
9.1.4 Meaning of 'retired'
A person must be both retired and receiving superannuation benefits as a result of that retirement to satisfy the superannuation provisions of the DRCA and MRCA (with the exception of current members under MRCA).
The DRCA and MRCA do not define what retired, or retirement is. Generally, retirement is linked to eligibility to receive the age pension or access to superannuation. In the context of the DRCA and MRCA, retirement includes any separation from Defence or Commonwealth employment (when relevant for Reservists), if that separation ultimately results in the person receiving Commonwealth-funded superannuation.
9.1.5 Superannuation received 'as a result of retirement'
The DRCA and Part 4 of the MRCA (for former members) superannuation provisions require that the superannuation is received as a result of retirement.
Although superannuation is money invested for a person's retirement (and eligibility relies on the person reaching their preservation age) there are some circumstances when a person may access supeannuation early.
Typically these are:
- Severe financial hardship
- Specified compassionate grounds; and
- Medical grounds.
For incapacity purposes, delegates need to consider whether the person is retired and whether the superannuation received was as a result of that retirement.
As guidance, superannuation received on the grounds of severe financial hardship or specified compassionate grounds would not be considered to be superannuation received as a result of retirement, i.e. it is received as a result of the person suffering financial difficulties, alternatively a person may still be working but receiving superannuation on compassionate grounds.
Superannuation received based on medical grounds is considered to be received as a result of retirement as the critieria to access this superannuation requires the person be retired from the workforce due to disability. In this case the person is retired from employment (including Defence) and receives superannuation due that retirement. These superannuation amounts are taken into account.
Superannuation received due to medical retirement (discharge) from the ADF i.e. resulting in a Class A or B pension payment is considered received as a result of retirement and is taken into account.
MRCA current members
The wording of the MRCA provisions (Section 89A) in relation to current members require that any superannuation received under a Commonwealth superannuation scheme should be taken into account in calculating incapacity payments, regardless of the reason for that superannuation payment.