Pension offsetting using Actuarial Tables

Last updated: 
17 January 2020

This page contains the Australian Government Actuary Tables that are used for converting compensation lump sum payments into fortnightly equivalent amounts for the purpose of offsetting disability pension paid under the Veterans' Entitlements Act 1986 (VEA).

Offsetting occurs under these tables when a veteran or dependant receives lump sum compensation from another source which is for the same incapacity or death as their pension is paid, or when a veteran on an applicable Above General Rate pension receives a lump sum permanent impairment payment under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA).

What are Actuary Tables and when are they used?

Calculations of payments according to a person's life expectancy are based on factors contained in 'Life Tables'. These tables apply to superannuation, life insurance issues and also for planning for the future needs of the Australian community. They are published every five years following the national census and as our living conditions improve and both men and women enjoy an increasing average life expectancy, they are varied. The Australian Government uses Life Tables provided by the Australian Government Actuary for many purposes, one of which includes compensation offsetting under the VEA.

For the purposes of section 30C, section 74 and section 25A of the VEA, the Actuarial Tables are used to convert a lump sum compensation payment from another source into a fortnightly amount which then may be offset against a veteran's disability pension.

What is compensation offsetting?

Offsetting is the process of reducing one compensation payment in recognition of another compensation payment for the same incapacity or death, in most cases. The principle behind compensation offsetting is that a person should not be compensated twice for the same incapacity, when another person would only be eligible for the one source of compensation.

For more detailed information about the compensation offsetting provisions, please refer to Disability pension and compensation offsetting

How lump sum compensation is offset against disability pension?

When a veteran receives lump sum compensation for the same incapacity for which they are receiving disability pension an equivalent fortnightly amount is calculated based on the lump sum amount and is offset from the fortnightly rate of disability pension. This calculation is based on instructions received from the Australian Government Actuary. The offset against the disability pension will continue for the rest of the veteran's life and is indexed in line with CPI at the same time that the disability pension is indexed.

The information contained in the Actuarial Tables enable the department to calculate the initial fortnightly offset amount. Copies of these Actuarial Tables and an example of calculating a fortnightly equivalent are included in this page.

Example: - A veteran born on 7 July 1963 was granted disability pension effective from 8 October 1999. On 8 January 2002, he receives a lump sum payment of $23,451.00 from another source for the same incapacity.

The 'age next birthday column' that appears in the Actuarial Table is the age that the veteran will be on their next birthday following either the grant of disability pension or the date of the lump sum is paid - whichever event occurred earlier. In this example, the age applied is 37 as disability pension was granted prior to the lump sum and the veteran turned 37 on his next birthday.

Therefore the calculation of the initial fortnightly equivalent for the lump sum of $23,451 is as follows:

$23,451.00 x $15.845 = $37.16
$10,000.00*

* The figure of $10,000 is used to divide all lump sum amounts and obtain a relevant factor to calculate the offset amount. As most lump sum amounts are in excess of $10,000, once divided it will give a decimal figure with which to apply the standard figures supplied by the Australian Government Actuary.

This initial fortnightly amount is applied for the veterans' lifetime and is subject to indexation increases so that it remains on equivalent terms with the indexations applied to the disability pension.

Why is the offset applied for life and what will the total be?

The offsetting of disability pension as a result of other lump sum compensation is not based on repaying the amount of the initial lump sum accepted.

The instructions provided by the Australian Government Actuary to calculate the ongoing offset use assumptions that are consistent with those that underpin lifetime annuities - that is a life insurance company will pay a periodic annuity for life in exchange for an up front lump sum. The rate of annuity depends on other factors which include the life expectancy and the rate of interest to be earned on the lump sum. The instructions from the Actuary assume the same effects.

Due to the assumption that interest will be earned on the invested lump sum over a lifetime, a person is expected to receive more than the initial lump sum amount. The same rationale is applied to offsetting, in that the total accumulated dollar amount that will be offset against a veterans' disability pension over their lifetime is expected to be more than the initial amount of the lump sum compensation received.

For this reason, the total offset for each person will be different, depending on their compensation received and how long they live. However, the logic behind the offset is applied universally to every person.

Obligation to notify

A veteran who receives a disability pension, service pension or has any treatment entitlement must tell DVA within 21 days if compensation or damages are claimed or received.

Actuarial tables

The tables provided in this page are:

  • Table 1 - Veterans in receipt of disability pension who are offset under section 25A VEA for lump sum amounts paid on or after 1 January 2015. Section 25A requires the offset of any DRCA permanent impairment lump sum received, if a veteran becomes eligible for an applicable Above General Rate disability pension on or after 1 July 2004. Different tables will apply if the DRCA lump sum was received in the past.
  • Table 2 - Veterans in receipt of disability pension who are offset under section 30C or section 74 VEA for lump sum amounts paid on or after 4 May 2015. Section 30C and section 74 require the offset of any compensation received for the same incapacity or death against a relevant VEA pension.

Table 1

Initial fortnightly amount of an indexed pension equivalent to a lump sum of $10,000 under section 25A of the VEA.

Actuarial Table 7 (based on ALT 2010-2012; for lump sums paid on or after 1 January 2015)
AGE NEXT
BIRTHDAY
MALES FEMALES AGE NEXT
BIRTHDAY
MALES FEMALES
1 12.685 12.484 47 18.032 16.993
2 12.701 12.499 48 18.317 17.228
3 12.744 12.535 49 18.618 17.475
4 12.790 12.573 50 18.936 17.735
5 12.838 12.614 51 19.270 18.010
6 12.888 12.655 52 19.624 18.299
7 12.940 12.699 53 19.998 18.605
8 12.994 12.744 54 20.393 18.928
9 13.050 12.791 55 20.811 19.270
10 13.108 12.839 56 21.255 19.632
11 13.169 12.890 57 21.726 20.017
12 13.232 12.943 58 22.228 20.426
13 13.298 12.997 59 22.762 20.861
14 13.366 13.054 60 23.333 21.325
15 13.437 13.112 61 23.942 21.818
16 13.510 13.173 62 24.592 22.345
17 13.585 13.235 63 25.288 22.908
18 13.661 13.299 64 26.034 23.511
19 13.739 13.365 65 26.833 24.159
20 13.819 13.434 66 27.691 24.855
21 13.902 13.505 67 28.614 25.605
22 13.988 13.580 68 29.611 26.414
23 14.079 13.658 69 30.691 27.288
24 14.173 13.739 70 31.861 28.233
25 14.271 13.823 71 33.132 29.257
26 14.374 13.912 72 34.515 30.367
27 14.481 14.003 73 36.020 31.573
28 14.592 14.099 74 37.659 32.888
29 14.708 14.199 75 39.446 34.323
30 14.830 14.303 76 41.395 35.894
31 14.956 14.412 77 43.521 37.621
32 15.088 14.525 78 45.842 39.524
33 15.226 14.643 79 48.380 41.626
34 15.370 14.767 80 51.155 43.950
35 15.521 14.896 81 54.191 46.520
36 15.679 15.030 82 57.512 49.363
37 15.845 15.171 83 61.140 52.504
38 16.019 15.317 84 65.098 55.971
39 16.201 15.471 85 69.411 59.791
40 16.392 15.632 86 74.097 63.993
41 16.593 15.800 87 79.174 68.602
42 16.804 15.976 88 84.649 73.642
43 17.025 16.160 89 90.522 79.132
44 17.258 16.354 90 96.772 85.081
45 17.503 16.557 91 103.350 91.486
46 17.761 16.769      

For lump sums paid on or after 1 January 2015

Table 2

Actuarial Table (Based on 2010-2012) for section 30C and section 74 of the VEA
AGE NEXT
BIRTHDAY
MALES FEMALES AGE NEXT
BIRTHDAY
MALES FEMALES
1 12.685 12.484 47 18.032 16.993
2 12.701 12.499 48 18.317 17.228
3 12.744 12.535 49 18.618 17.475
4 12.790 12.573 50 18.936 17.735
5 12.838 12.614 51 19.270 18.010
6 12.888 12.655 52 19.624 18.299
7 12.940 12.699 53 19.998 18.605
8 12.994 12.744 54 20.393 18.928
9 13.050 12.791 55 20.811 19.270
10 13.108 12.839 56 21.255 19.632
11 13.169 12.890 57 21.726 20.017
12 13.232 12.943 58 22.228 20.426
13 13.298 12.997 59 22.762 20.861
14 13.366 13.054 60 23.333 21.325
15 13.437 13.112 61 23.942 21.818
16 13.510 13.173 62 24.592 22.345
17 13.585 13.235 63 25.288 22.908
18 13.661 13.299 64 26.034 23.511
19 13.739 13.365 65 26.833 24.159
20 13.819 13.434 66 27.691 24.855
21 13.902 13.505 67 28.614 25.605
22 13.988 13.580 68 29.611 26.414
23 14.079 13.658 69 30.691 27.288
24 14.173 13.739 70 31.861 28.233
25 14.271 13.823 71 33.132 29.257
26 14.374 13.912 72 34.515 30.367
27 14.481 14.003 73 36.020 31.573
28 14.592 14.099 74 37.659 32.888
29 14.708 14.199 75 39.446 34.323
30 14.830 14.303 76 41.395 35.894
31 14.956 14.412 77 43.521 37.621
32 15.088 14.525 78 45.842 39.524
33 15.226 14.643 79 48.380 41.626
34 15.370 14.767 80 51.155 43.950
35 15.521 14.896 81 54.191 46.520
36 15.679 15.030 82 57.512 49.363
37 15.845 15.171 83 61.140 52.504
38 16.019 15.317 84 65.098 55.971
39 16.201 15.471 85 69.411 59.791
40 16.392 15.632 86 74.097 63.993
41 16.593 15.800 87 79.174 68.602
42 16.804 15.976 88 84.649 73.642
43 17.025 16.160 89 90.522 79.132
44 17.258 16.354 90 96.772 85.081
45 17.503 16.557 91 103.350 91.486
46 17.761 16.769