When a current employee reaches age 65, his or her entitlement to weekly incapacity payments ceases.
However, under the 1971 Act, there was no such upper limit. Under that Act, the expectation of former employees was that their compensation entitlement would continue until their death.
For this reason, reduction in entitlements for former employees over 65 has been 'phased in' so that those employees who had made their financial plans on this expectation could appropriately adjust.
Section 134 applies to this category of employee, and states:
“When a former employee to whom section 131 or 132 applies reaches 65, the amount of compensation payable per week to the former employee but for this section shall be reduced by an amount calculated under the formula:
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5 x (65 - A) x C |
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100 |
where:
A — is the age of the former employee, expressed in completed years, as at the commencing day; and
C — is that amount of compensation payable per week to the former employee.”
This calculation gradually reduces an employee's compensation entitlement by 5% for every year between the commencement of the Act and the employee's 65th birthday.
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Example |
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An employee is 64 at the date of the commencement of the 1988 Act. |
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When he turns 65, his compensation is reduced by 5%, representing 1 year between 01/12/1988 and his 65th birthday. |
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OR |
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An employee is 46 at the date of the commencement of the 1988 Act. |
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When she turns 65, her compensation is reduced by 95%, representing 19 years between 01/12/1988 and her 65th birthday. |
It is Comcare policy to freeze an employee's compensation entitlement once they turn 65 and the section 134 calculation is made. This is in line with over 65 year old entitlements.