Special Rate Disability Pension
This page explains the circumstances under which the Special Rate Disability Pension (SRDP) may be granted under the Military Rehabilitation and Compensation Act 2004 (MRCA).
On this page
- What is the Special Rate Disability Pension?
- Who will be offered Special Rate Disability Pension?
- SRDP eligibility and additional benefits
- SRDP and Rehabilitation
- Financial considerations of SRDP
- How is the SRDP payment calculated?
- SRDP and income support payments
- Receiving financial and legal advice prior to making a decision
- Payment of costs for a qualified financial and legal adviser
- Finding a qualified financial and legal adviser
- How do I make a claim?
What is the Special Rate Disability Pension?
The SRDP provides an alternative form of periodic compensation (instead of incapacity payments) for people whose capacity for work has been severely restricted because of conditions due to military service on or after 1 July 2004. SRDP is not automatically granted. If you are assessed as being eligible for the SRDP, you will be offered the choice between commencing SRDP or continuing to receive incapacity payments.Back to top
Who will be offered Special Rate Disability Pension?
You will be offered the choice of receiving taxable incapacity payments up until you reach Age Pension age or a tax-free SRDP if you:
- have an injury or disease assessed at 50 or more impairment points which is likely to continue indefinitely; and
- are in receipt of incapacity payments or have had your incapacity payments reduced to nil because of commonwealth superannuation offsetting or because you received a lump sum amount of incapacity payments; and
- are assessed as:
- unable to undertake paid work for more than 10 hours per week; and
- rehabilitation is unlikely to increase your capacity to undertake paid work for more than 10 hours per week.
If you become eligible to receive the SRDP you will be offered the choice to receive SRDP payments in writing, after which you will have 12 months from the date of the offer to advise DVA if you wish to accept the payment offer. There are financial implications attached to your decision, which is why you will be required to obtain advice from a suitably qualified financial adviser prior to making the decision to receive SRDP.
It is also important to note that once you make a choice to receive SRDP, it cannot be changed at a later stage.Back to top
SRDP eligibility and additional benefits
Once you are eligible for SRDP, even if you choose not to receive the SRDP payment, you will receive a Veteran Gold Card embossed with the letters 'TPI' and the high rate of the MRCA Supplement payment. In addition, your dependent children will be eligible for education assistance through the Military Rehabilitation and Compensation Act Education and Training Scheme (MRCAETS).
If your circumstances change and you become ineligible for SRDP i.e. if you return to work, your SRDP payments will cease (if you were receiving SRDP payments). You will not lose entitlement to the additional benefits though i.e. you will retain your Gold Card and other additional benefits.
You may become eligible for SRDP again if your circumstances change and you meet the criteria again.Back to top
SRDP and Rehabilitation
Rehabilitation is a key feature of the MRCA. DVA's rehabilitation approach is different to traditional workers compensation schemes that focus mainly on return to work. While it is recognised that returning to work is an important part of a vocational rehabilitation plan/goal, it may only be one aspect of your holistic rehabilitiation needs. Your rehabilitation program will look at all of your current circumstances and broader rehabilitation needs, to maximise your recovery and improve your wellbeing. If you are assessed as SRDP eligible, you can still participate in a rehabilitation program.Back to top
Financial considerations of SRDP
SRDP is payable indefinitely, whereas incapacity payments generally cease in line with Age Pension age. But for some former members, the offsetting arrangements that apply to SRDP (see “How is the SRDP payment calculated?”) mean that the SRDP amount payable to you may be less than your normal entitlement to incapacity payments.
The SRDP is exempt from income tax, however it is considered assessable income in working out the rate of Disability Support Pension from Services Australia. The amount that the SRDP reduces any Services Australia income support payment is reimbursed in the form of the Defence Force Income Support Allowance.
It is important to note that receiving the SRDP may affect your eligibility for the Family Tax Benefit and other benefits such as Child Support Agency and Social Security payments, which is why there is a requirement for financial advice to be obtained prior to making a choice to receive SRDP.
A former member who has a dependent child and is receiving SRDP under the MRCA will qualify for the Pensioner Education Supplement (PES). However, PES is paid for the benefit of the former member, not to the dependent child. The PES is a fortnightly Services Australia payment, which provides assistance for the benefit of the former member with their ongoing study costs in respect of approved courses of study that they choose to undertake. Approved courses of study are wide-ranging and extend to secondary education, TAFE courses, preparatory courses for entry to tertiary education (including Bachelor and higher degrees through universities and colleges).
Services Australia will confirm whether a course of study is able to be approved when an application is made for PES. Services Australia assesses each applicant's circumstances individually and in some cases, additional criteria may need to be met before a person can be paid the PES. For more information about the PES, please contact Services Australia on 13 24 90.
Energy Supplement may also be payable to recipients of Special Rate Disability Pension.Back to top
How is the SRDP payment calculated?
The SRDP rate is based on the Special Rate of disability pension provided under the VEA.
However, it is offset dollar-for-dollar by the weekly value of any permanent impairment compensation that has or is being paid. This includes any MRCA permanent impairment payments, lump sum compensation paid under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) and disability pension paid under the VEA.
If you are receiving Commonwealth superannuation, such as under the Defence Force Retirement and Death Benefits Scheme or the Military Superannuation Benefits Scheme, then SRDP is also offset by 60 cents in the dollar for each dollar of the Commonwealth-funded component of superannuation. Where part or all of that superannuation is taken as a lump sum, tables from the Australian Government Actuary are used to convert this amount to a weekly equivalent for SRDP offsetting calculation purposes.
Your claims assessor can provide you with information on how your payments will be calculated or you can view our webpage on pension offsetting for general details.
It should be noted that the amount of superannuation that is used to reduce the SRDP is not counted as income for the purposes of VEA service pension or Services Australia income support payments.
Because the SRDP is compensation for both "economic" and "non-economic" loss, these offsetting arrangements are necessary to prevent a person being compensated twice for the same incapacity.Back to top
SRDP and income support payments
Former members who are assessed as eligible for the SRDP under the MRCA may also be eligible for income support payments under the VEA or the Social Security Act 1991 (SSA). Specifically, those former members who have qualifying (warlike) service may be eligible for invalidity service pension under the VEA.
Invalidity service pension (ISP) is an income support pension that may be paid to eligible veterans and former ADF members who are permanently incapacitated for work. ISP is subject to income and assets tests but is not subject to income tax while the person is under social security pension age. Partners of former members who are eligible for ISP may also be eligible for a partner service pension.
For more information about service pension, please refer to Service pension overview.
Former members without qualifying service may be eligible for a disability support pension under the SSA from Services Australia.
The calculation of income support entitlements may be a factor for a former member in making a decision about whether to elect to receive SRDP or to continue to receive incapacity payments.Back to top
Receiving financial and legal advice prior to making a decision
If you are eligible for the SRDP, you must seek financial advice from an independent and suitably qualified financial adviser or lawyer before payment of SRDP can commence. This is not mandatory if you do not wish to receive SRDP, but it is still highly recommended.
This is a complex issue for most people and the considerations can vary with different personal circumstances. Some of the matters you should bear in mind are:
- the taxation treatment of the payments that are being offered;
- the effect that the payments may have on your eligibility for income support payments such as a social security pension, or a service pension under the VEA;
- if you have dependants, the additional assistance or taxation benefits that may be available to you through the DVA or Services Australia;
- your ability to undertake rehabilitation or return to work even on a part-time basis at some stage in the future;
- that incapacity payments cease at Age Pension age but SRDP can continue; and
- any superannuation offsetting arrangements that may apply to the MRCA payments that are offered.
Your own commitments, existing assets and lifestyle are critical to planning for the future and you should begin to consider these matters before you consult a financial adviser.
This page will also be helpful to a financial adviser or lawyer in the event that you decide to seek professional advice. If you do, you should ensure that he or she has a copy at the time of your appointment.Back to top
Payment of costs for a qualified financial and legal adviser
Reimbursement is available from DVA for the costs you may incur in obtaining advice from a suitably qualified financial adviser or lawyer (up to a maximum statutory amount). This is intended to enable you to obtain advice regarding which option best suits your individual circumstances. Please note that the advice is not intended to cover other legal matters.
If you are not happy with any advice that you may receive from a professional adviser, it is open to you to see another adviser for a second opinion. However, it should be noted that the maximum total amount that can be awarded for any single payment choice is limited and any amount exceeding this limit cannot be reimbursed.
The maximum amount payable is changed on 1 July each year in line with movements in the Consumer Price Index. For the current maximum amount, refer to Compensation payment rates for MRCA.Back to top
Finding a qualified financial and legal adviser
DVA does not recommend or endorse any particular financial adviser(s) or lawyer(s). Who you choose to advise you is entirely your decision. However, to be eligible for assistance with the cost of the financial and legal advice, the financial adviser and lawyer must be suitably qualified. This requirement is intended to ensure that you obtain accurate and professional advice.
A financial adviser employed by an organisation that holds an Australian Financial Services (AFS) licence is accepted as a suitably qualified person. The Australian Securities and Investment Commission (ASIC) MoneySmart website has a register of financial advisors who hold an AFS licence. You can contact ASIC by telephone on 1300 300 630 or visit www.moneysmart.gov.au
The Services Australia Financial Information Service (FIS) is a free, confidential service that provides education and information on financial issues to all Australians. A FIS officer may help you to understand how SRDP impacts your circumstances. More information can be found at Services Australia or over the phone on 132 300 and say ‘Financial Information Service’ when prompted.
A practising lawyer means a person who is admitted to the legal profession by a Federal Court or Supreme Court of a state or territory and holds a practising certificate entitling the person to practice that profession. To find a lawyer in your area please refer to the Australian Lawyers Directory http://www.australianlawyersdirectory.com.auBack to top
How do I make a claim?
Your eligibility for SRDP will be automatically considered once you have met certain criteria. Alternatively, you may request an assessment of your eligibility for SRDP either in writing or by contacting DVA verbally.Back to top