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Factsheet IS01 - Service Pension Overview

Purpose

This Factsheet explains what a service pension is, what the eligibility criteria are, and provides information on associated benefits. For more information on specific topics contact DVA.

What is a service pension?

A service pension provides a regular income for people with limited means. A service pension can be paid to veterans on the grounds of age or invalidity, and to eligible partners, widows and widowers. It is subject to an income and assets test.

The age service pension paid to veterans who have qualifying service and the partner service pension paid to eligible partners, widows and widowers, are paid earlier than the age pension paid by Centrelink. This is in recognition of the intangible effects of war that may result in premature ageing of the veteran and/or loss of earning power. Invalidity service pension may be granted at any age up to the age pension age.

The service pension is paid fortnightly, based on daily entitlements. The rate of service pension is adjusted twice-yearly, in March and September, in line with movements in the cost of living and/or average wages.

Who is eligible?

A service pension is payable to eligible veterans, their partners and widows and widowers. For service pension purposes, a veteran is a person who has qualifying service (refer to the next section ‘Eligibility for veterans’).

Eligible veterans include:

  • Australian Veterans;
  • Commonwealth Veterans;
  • Allied Veterans;
  • Australian Mariners;
  • Allied Mariners; and
  • Some Members, Former Members, Declared Members and former Declared Members covered under the Military Rehabilitation and Compensation Act 2004 (MRCA).

Eligibility for veterans

You are eligible for the service pension if you are a veteran who:

  • has qualifying service — generally, that is, has served in operations against the enemy while in danger from hostile forces of the enemy; and
  • meets the residency requirements — that is, is a resident of Australia and is present in Australia at the time of lodging the claim for service pension (additionally, Commonwealth Veterans and allied Veterans and Mariners must have been an Australian resident for at least 10 years, although there can be some exemptions);

and you are either:

  • of service pension age (see the section titled ‘What is pension age?’ in this Factsheet); or
  • permanently incapacitated for work (for more information refer to Factsheet IS44 Age and Invalidity Service Pension).

A service pension may not be payable because of your income and assets, even if you are eligible (refer to the section titled ‘Income and assets tests’ in this Factsheet).

Eligibility for current partners

Partner service pension may be paid to partners who are:

  • legally married to and living with a veteran; or
  • living in a de facto relationship with a veteran;

and in both cases above, the veteran is receiving or is eligible to receive the service pension.

Partners are eligible if:

  • they are qualifying age (refer to the section titled ‘What is qualifying age?’ in this Factsheet); or
  • they have dependent children; or
  • the veteran receives the special rate (Totally and Permanently Incapacitated) disability pension; or
  • the veteran is receiving, or eligible to receive, a Special Rate Disability Pension under the MRCA; or
  • they are 50 years of age or over and the veteran receives an above general rate (AGR) disability pension.

For detailed information regarding qualifying age and eligibility for partner service pension, refer to Factsheet IS45 Partner Service Pension.

Eligibility for former partners

Partner service pension may be paid to former partners who are legally married to, but separated from a veteran. Former partners are eligible if they meet the age or exemption criteria and the veteran is receiving, or is eligible to receive, the service pension.

Partner service pension can only be paid to a separated spouse for 12 months from the date of separation unless:

  • they have reached social security age pension age before they had been separated for 12 months; or
  • special domestic circumstances apply.

Special domestic circumstances are where the veteran has a psychological or mental health condition recognised by DVA and there was an unsafe or abusive domestic environment in respect of the partner or the partner’s family prior to separation.

A former partner is not eligible to receive partner service pension if they enter into a de facto relationship with another person. Eligibility also ceases if the former partner and the veteran divorce.

For detailed information regarding eligibility for former partners, please refer to Factsheet IS45 Partner Service Pension.

Eligibility for widows and widowers

If the widow or widower of a veteran was receiving partner service pension immediately before the veteran's death, he or she continues to be eligible for that pension.

There are a number of other circumstances in which a widow or widower of a veteran who has rendered qualifying service is eligible for partner service pension. For more information refer to Factsheet IS45 Partner Service Pension.

What is pension age?

The pension age for a male or female veteran who has qualifying service and the qualifying age for a male or female partner is 60 years.

*Note: -  From 1 July 2017 age pension age (non-veteran) will increase by six months every two years until it reaches 67 on 1 July 2023. This will not affect people born before 1 July 1952.

What is qualifying age?

Qualifying age is 60 years for both males and females.

Service pension and age pension

You cannot receive a service pension from DVA as well as an age pension or any other social security pension or benefit (except Family Tax Benefit).

How do I claim service pension?

If you are planning to claim a service pension, you should telephone DVA and advise of your intention to claim so that your pension may be granted from the earliest date possible.

If you telephone DVA, enquiry staff will be able to assist you by:

  • Recording your intent to claim;
  • Providing information to assist you to create your own personalised MyAccount for managing all of your dealings with DVA, including lodging claims;
  • Providing guidance on lodging an online claim through the DVA website at www.dva.gov.au ; or
  • Tailoring a hard copy claim pack to be posted to you for completion; or
  • Arranging an appointment at a local Veterans' Information Service or Veterans' Access Network office where an officer can assist you to lodge your claim.

For more information on claiming service pension, please refer to the Factsheet IS02 How to Claim Service Pension

When will my pension be payable from?

If you are planning to claim a service pension, you should telephone DVA and advise of your intention to claim. If you are eligible for service pension at the time of your phone call, it may be possible to backdate your pension to this date. If your claim is not received within 3 months of this telephone call, the earliest date of grant is the date of lodgement. If you decide to make a claim online and have not previously advised DVA of your intention to claim, your intention to claim date will be the date that you commenced your online application.

Rates of service pension

There are two different rates of service pension:

  • a singles rate — payable to single pensioners, widows, widowers and former partners who are legally married to a veteran but are separated (not divorced)
  • a couples rate — payable to each member of a couple who are living together, whether legally married or living in a de facto relationship.

If only one member of a couple receives a service pension, the couples rate of pension is paid. If a couple separate because of ill-health or during a period of respite care, each member of the couple may be paid at the singles rate, however the couples rate of ordinary income free area and assets value limit applies.

If you are a veteran and you also receive a war widow(er)’s pension, the maximum amount of service pension you are entitled to is limited to $278.50 per fortnight.

Income and assets tests

The amount of service pension you receive depends on your income and assets. The pension is calculated under two separate tests, the income test and the assets test. The test paying the lower rate of pension is the one that is applied.

You can have a certain amount of income and assets, and still receive the maximum rate of pension. These limits are known as the ordinary income free area and the assets value limit.

There are two ordinary income free areas:

  • the singles income free area; and
  • the couples income free area.

There are four assets value limits:

  • singles who own their home;
  • singles who do not own their home;
  • couples who own their home; and
  • couples who do not own their home.

Income or assets above the ordinary income free area or assets value limit reduces the amount of service pension payable. The service pension ceases to be paid when income or assets exceed certain cut-off limits.

If you are a member of a couple, you are both treated as if you each receive half your combined income and you each own half your combined assets, regardless of who actually receives the income or owns the assets. Therefore, you are both paid the same rate of pension.

*Note: - For pension purposes, superannuation products are not counted as income producing or an asset until the person who owns the superannuation reaches pension age or makes a withdrawal from the investment. For more information about the assessment of superannuation, refer to Factsheet IS91 Managed Investments.

If you are considered to be blind, the service pension is paid free of the income and assets tests and at the maximum rate.  For more information refer to Factsheet IS147 Blind Pensioners.

What is the work bonus?

The work bonus is an incentive to encourage older pensioners who are able, to continue working. Under the work bonus rules, the first $250 of employment income earned per fortnight is excluded from the income test.

Example:  A work bonus eligible pensioner receives wages of $600 per fortnight. When their income is calculated for the income test, the first $250 is disregarded, so the assessable wages income is $350.

Additionally a work bonus bank has been introduced to enable eligible pensioners to accrue any unused amounts of the $250 fortnightly exemption to a maximum of $6,500. Any credit in this ‘bank’ can then be used to offset employment income that would otherwise be assessable in the future.

To be eligible you must be over qualifying age/pension age (refer to the section titled ‘What is pension age?’ in this Factsheet) and working as an employee. For more information on Work Bonus refer to Factsheet IS99 Work Bonus.

Giving away assets or income

You can give away assets up to:

  • $10,000 each financial year; but no more than
  • $30,000 over a rolling five-year period.

These limits apply to singles and couples. If you give away more than either limit, the excess amount will be counted as an asset under the assets test, and will be deemed to be earning income under the income test for 5 years from when the assets were given away.

If you give away assets above the limits in the 5 years before your service pension is granted, the excess amount will be counted as an asset and will be deemed to be earning income for up to 5 years from when the assets were given away.

These rules apply when:

  • you give away money or property; or
  • you transfer money or property to, for example, a family member.

However, these rules do not apply to the sale or use of assets to meet ordinary or extraordinary expenses such as ongoing living expenses, unusual medical expenses, a holiday, home improvements or a new car.

If you choose not to receive income (for instance, you choose not to receive a foreign pension to which you are entitled) in order to obtain a pension or a higher rate of pension, then we will still count that income as if you were actually receiving it.

 

What if I have too much income or too many assets?

If you have a high level of income or assets that prevents you from receiving the service pension under either the income or the assets test, you may be able to receive service pension through the Pension Loans Scheme. For more information refer to Factsheet IS116 Pension Loans Scheme.

If your income is within the limits that would allow you to receive payment of the service pension, but your assets exceed the cut-off limit, you may qualify under the hardship provisions. For more information refer to Factsheet IS117 Financial Hardship.

If your income is within the limits that would allow you to receive payment of the service pension, but your assets exceed the cut–off limit, you may be eligible for the Commonwealth Seniors Health Card. For more information refer to Factsheet IS126 Commonwealth Seniors Health Card.

Tax file number

You need to provide your tax file number to DVA. If you do not have a tax file number and are not eligible for an exemption you will need to apply for a tax file number through the Australian Taxation Office.

Pension Supplement & Allowances

There are a number of allowances payable to eligible pensioners:

  • pension supplement  — payable to all service pensioners, to help with the cost of prescriptions, rates, telephone and internet connections, energy, water and sewerage;
  • rent assistance — payable to service pensioners who pay private rent for their accommodation, subject to minimum rent limits; and
  • remote area allowance — payable to service pensioners who live in designated remote areas of Australia.

*Note: - DVA does not pay Family Tax Benefit. If you have dependent children you should contact the Family Assistance Office for any enquires about the payment of Family Tax Benefit.

What happens when my claim is decided?

If you are a veteran, DVA will determine your qualifying service and other eligibility. If you and/or your partner are eligible, DVA will work out how much service pension you will be receiving, depending on your income and assets. When a decision has been made you will be notified by letter. This will include the date of grant and amount of service pension you will receive. You will also be notified of your obligations as a service pensioner. Your Pensioner Concession Card will be issued at the same time.

DVA will also tell you if you are eligible for a Gold Card for treatment (see the section ‘Health care’ of this Factsheet). If you are eligible, the Gold Card will be posted separately 4–6 weeks later.

What if I am not happy with the decision?

If your claim for a service pension is not approved, or you are not happy with the rate of the service pension, you have the right to ask that we review the decision. You may apply to have the decision reviewed by a Review Officer. If you decide to apply for a review, you must do so within 3 months of receiving the letter notifying you of our decision. Your request for a review must set out in writing your reasons for seeking the review. You may also apply for a review through DVA online services or MyAccount via the DVA website www.dva.gov.au.

If you are dissatisfied with any aspect of the Review Officer’s decision, you may apply in writing to the Administrative Appeals Tribunal for a review of that decision. Your application should set out the reasons for your appeal and should be lodged with the Tribunal within 3 months of the date you receive the Review Officer’s decision.

Pensioner Concession Card

All service pensioners receive a Pensioner Concession Card. This card entitles pensioners to a range of Australian Government, State and local government benefits and concessions. These concessions vary from State to State, and are determined by the authorities providing the concessions. For more information refer to Factsheet IS125 Pensioner Concession Card.

*Note: - If a person is participating in the Pension Loans Scheme to obtain a substitute for the pension and is not otherwise entitled to a rate of pension, they are not entitled to the additional benefits associated with receipt of a pension such as a Pensioner Concession Card.

Health care

DVA issues one of three health cards to eligible veterans and war widows and widowers, providing health care at the expense of the Department:

  • the Gold Card — treatment and health services for all conditions;
  • the White Card — treatment and health services for specific conditions only; and
  • the Orange Card — pharmaceutical benefits for eligible Commonwealth and allied veterans and mariners.

Veterans who served with the Australian Defence Forces may be eligible for the Gold Card when granted the service pension if they:

  • receive service pension only and have income and assets within certain treatment benefit limits; or
  • receive any amount of service pension plus a disability pension of 50% or more of the general rate ; or
  • are permanently blind; or
  • have an impairment from one or more service related injuries or diseases that constitutes at least 30 impairment points under MRCA.

Some veterans are eligible for the Gold Card regardless of any service pension granted. For information on the eligibility criteria, refer to Factsheet HSV59 Eligibility for the DVA Health Card All Conditions (Gold) or Totally & Permanently Incapacitated (gold)

Partners are not eligible for health care at the expense of the Department.

For information on using the Gold Card, refer to Factsheet HSV60 Using the DVA Health Card – All Conditions (Gold) or DVA Health Card Totally & Permanently Incapacitated (Gold).

For information on the White Card, refer to Factsheet HSV61 DVA Health Card – Specific Conditions (White).

For information on the Orange Card, refer to Factsheet HSV69 Repatriation Pharmaceutical Benefits Card (Orange).

Is my service pension taxable?

Most service pensions are considered income for taxation purposes and are therefore taxable. However, a service pension granted on the grounds of invalidity is not a taxable pension until the person reaches social security age pension age. The partner service pension, received by the partner of an invalidity service pensioner, is also non-taxable until the veteran or the partner reaches age pension age. Partner service pension paid to a former partner is taxable.

If your pension is taxable, you will receive a Payment Summary (previously called a group certificate) from DVA at the end of each financial year. Generally speaking, if the service pension is the only income you receive, you will not have to lodge a tax return.

The following are not taxable:

  • pension supplement (except for the basic amount);
  • veterans supplement;
  • service pension allowances;
  • disability pension and allowances; and
  • war widow(er)’s pension.

Your obligations

As a service pensioner you have a responsibility to keep us informed of changes that may affect the amount of pension you receive. These responsibilities are described in our Factsheets and letters to you as ‘obligations’.

In order to meet your obligations, you need to tell DVA within 14 days (28 days if you live overseas or receive remote area allowance) if:

  • your residential situation changes;
  • your relationship status changes;
  • you receive the maximum rate pension and your income exceeds the ordinary income free area and/or your assets exceed the assets value limit;
  • you receive a reduced rate pension and your income and/or assets exceed the limits stated in our most recent letter to you about your service pension;
  • you move or travel overseas; or
  • there is any other change that would affect the rate of your service pension.

Fulfilling your obligations within the specified time period assists us in maintaining your correct rate of service pension.

Can I apply for an increase in my service pension?

Yes. If you receive a reduced rate of pension, you may apply for an increase in your rate of pension any time there is a change in your circumstances. You can do this by contacting us by phone, in writing, or in person. Please note that the earliest date your pension can be increased from is the date that you notify the Department of the change in your circumstances.

Financial information

We can provide information on how your particular financial circumstances, or future financial decisions, might affect your service pension. To arrange an appointment contact DVA.

Centrelink Financial Information Service

Centrelink runs a dedicated Financial Information Service (FIS) which is also free to DVA pensioners. This service provides confidential independent information about financial investments - for example, what is available, analysis of investment products, taxation implications and general information on financial planning. FIS Officers provide information to people over the telephone, at personal interviews, or through financial seminars. They do not recommend any particular type(s) of investment, prepare financial plans or give financial advice.

For more information:

Centrelink FIS: 132 300

Arranging your affairs

It is advisable to keep all your important papers, such as wills, birth certificates, and mortgage papers, in a safe place known to family and friends. A folder containing information to assist you in arranging your affairs, called Planning Ahead — A Guide to Putting Your Affairs in Order, is available from DVA, or ex-service organisations such as the R&SL or Legacy.

Bereavement payments

Additional financial assistance, in the form of a bereavement payment and/or a funeral benefit, may be provided. For more information, veterans and their families eligible under the Veterans’ Entitlements Act 1986 (VEA) should refer to Factsheet BR04 Bereavement Information.

Veterans eligible under the MRCA should refer to Factsheet MRC18 Bereavement Payments.

Freedom of information

Under the Freedom of Information Act 1982 you may seek access to information about yourself. This means that you can look at your personal files held by DVA and ask for copies of documents. You need to apply in writing and there is an application fee of $30.00. However, the fee does not apply if the documents you need relate to claims for, or increases in, your pension.

Privacy

The Privacy Act 1988 governs the collection and handling of personal information by Australian Government agencies, including DVA, and the process is overseen by the Privacy Commissioner to ensure the rights of individuals are protected.

More Information

DVA General Enquiries

Phone: 1800 555 254 *

Email: GeneralEnquiries@dva.gov.au

DVA Website: www.dva.gov.au

Factsheet Website: www.dva.gov.au/factsheets

* Calls from mobile phones and pay phones may incur additional charges.

Related Factsheets

Disclaimer

The information contained in this Factsheet is general in nature and does not take into account individual circumstances. You should not make important decisions, such as those that affect your financial or lifestyle position on the basis of information contained in this Factsheet. Where you are required to lodge a written claim for a benefit, you must take full responsibility for your decisions prior to the written claim being determined. You should seek confirmation in writing of any oral advice you receive from DVA.

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22 March 2019