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.

For lump sums paid on or after 1 January 2015

Table 2