The transitional rules

Last updated: 
20 September 2020

If you received service pension, age pension or income support supplement before 20 September 2009 at less than the maximum rate, your pension may be paid under transitional rules. You may also be affected if you received rent assistance at a rate reduced by disability pension or permanent impairment payments. This page explains the transitional rules.

What are transitional rules?

On 20 September, 2009 the Secure and Sustainable Pension System reforms began to take effect. These changes were designed to better target income support to the people least able to support themselves.

Transitional rules were introduced to ensure no one was worse off under the new system. This means if you were receiving pension before 20 September 2009 and are better off under the old rules, you will continue to be paid under those rules until you are better off under the new system.

What are the key differences?

The key differences for pensioners paid under the transitional rules are:

  • a transitional payment rate;
  • the rate at which assessable income reduces your pension;
  • the impact of children on your income free area;
  • the method used to index your pension; and
  • you do not have access to the work bonus.

How do I decide which rules are best for me?

DVA calculates your pension under both sets of rules. You will be paid under the rules that result in the highest pension payment. However, once you have moved to the new rules you cannot move back to transitional rules.

How do I know if I am paid under transitional rules?

You may be paid under the transitional rules if you have income which is affecting your rate of payment under the income test or you receive rent assistance which is reduced by your disability pension or permanent impairment payment.

If you are unsure which rules you are paid under, you can contact DVA for clarification.

What if I transfer from a Centrelink payment?

If you are receiving a payment from Centrelink that is calculated according to the transitional rules and you transfer without any break in payment to a service pension, age pension or income support supplement paid by DVA, you are entitled to continue to have your rate of payment calculated under the transitional rules.

Centrelink payments which may be paid under the transitional rules are:

  • age pension;
  • disability support pension;
  • and carer payment;

What is the transitional payment rate?

Under transitional rules you will be paid a single fortnightly payment which includes the:

  • previous pension rate;
  • old allowances (including quarterly allowances such as Utilities Allowance and Telephone Allowance); and
  • minimum increase that all pensioners received on 20 September 2009.

The maximum transitional rate is:

  • Single - $789.30 per fortnight
  • Couples - $636.80 per fortnight

The rate paid to you is likely to be less than this amount because of your other income.

What is the difference to assessable income?

Under transitional rules, every dollar of income above the income free area will reduce your pension by 40 cents.

Under the new rules your pension will be reduced by 50 cents for every dollar of assessable income over the income free area. For pensioners over qualifying age, there is also the work bonus concession on the income test treatment of employment income. For more information on the work bonus, refer to the Work Bonus.

You are not eligible for the work bonus if you are paid under transitional rules. However, the pension you are paid under the transitional rules is higher than what you would receive if you were paid under the new rules taking into account the difference in taper rates and the work bonus.

What is the difference if I have children?

Under transitional rules you will continue to receive an additional income free area for every dependent child you have. This means you can have more income before your pension is reduced.

If you are unsure whether your child is classed as a dependent see Dependent Children and your Income Support Payments. To find out what your income free area is contact DVA.

How will my transitional payment be indexed?

Your payment will be indexed by CPI on 20 March and 20 September every year. It will not benefit from indexation by the Pensioner and Beneficiary Living Cost Index or the Male Total Average Weekly Earnings. For more information on indexation see Indexation of Income Support Pensions and Allowances.

Obligations

When you are granted an income support pension and periodically after that, you will be notified of your obligations. You will be required to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of changes to your circumstances that might affect the rate of income support pension you receive or your eligibility to receive that pension. These obligations apply equally to trustees.

In relation to dependent children, the sorts of things you will need to tell us about within 14 days (28 days if you live overseas or receive remote area allowance) are if:

  • you no longer have custody or control of your dependent child;
  • your dependent child travels overseas;
  • your child ceases full time education;
  • your dependent child begins to receive payments such as Youth Allowance, Veterans’ Children Education Scheme, the Post Graduate Awards Scheme, or an Abstudy scheme; or
  • your dependent child is over 16, and their income increases above $11,893.60 per year.

Usually an overpayment of pension will not occur when you have met your obligations. However, sometimes even if you have met your obligations, an overpayment can occur because we have not been able to process the change before the next payday. We do our best to avoid this occurring, but it is not always possible. To provide you with your exact entitlement we are obliged to recover overpayments of pension where they do occur.