Special Rate Disability Pension

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What Is the Special Rate Disability Pension (SRDP)?

The Special Rate Disability Pension (SRDP) is an alternative to ongoing incapacity payments provided under the Military Rehabilitation and Compensation Act 2004 (MRCA).

It is designed for former members whose ability to work has been severely and permanently reduced by service-related injuries or conditions arising on or after 1 July 2004.

If you are assessed as eligible, the Department of Veterans’ Affairs (DVA) will give you a choice: you may continue receiving incapacity payments or elect to receive the SRDP instead.

This election must be made within the prescribed time frame and, once made, cannot be reversed.

What Is the Difference Between Incapacity Payments and the SRDP?

The key differences relate to tax treatment, duration and offsetting rules:

Tax and duration – SRDP is tax-free and can be paid indefinitely, whereas incapacity payments are taxable and generally cease when you reach Age Pension age (subject to limited statutory exceptions if the injury occurred close to pension age).
Offsets – The SRDP maximum rate is set by law at one half of the fortnightly “Special Rate” under the Veterans’ Entitlements Act 1986, then reduced by offsetting arrangements:
- Permanent impairment compensation already received or payable under MRCA/DRCA/VEA is deducted dollar-for-dollar.
- Commonwealth-funded superannuation is offset at 60 cents per dollar of the Commonwealth-funded component (if taken as a lump sum, the equivalent weekly amount is used).

These offsets exist because the SRDP compensates for both economic and non-economic loss, and legislation prevents double compensation for the same incapacity.

In some cases, these offsets may result in SRDP payments that are less than the person’s previous incapacity payments.

Who Is Eligible for the SRDP?

The eligibility criteria closely parallel those for incapacity payments, with additional thresholds:

You must have an MRCA impairment rating of 50 points or more that is likely to continue indefinitely.
You must currently be receiving incapacity payments, have had those payments redeemed or reduced to nil by Commonwealth superannuation offsetting, or have received a lump-sum incapacity payment.
You must be assessed as unable to undertake paid work for more than 10 hours per week, and rehabilitation is unlikely to increase that capacity.

When these conditions are met, DVA issues a written offer giving you 12 months to decide whether to elect the SRDP or stay on incapacity payments.

This decision is final once made.

Because the financial consequences can be significant and long-lasting, you are required to obtain advice from a suitably qualified financial adviser before making your election.

Why Do I Need Advice on the SRDP, and Who Can Give It To Me?

The SRDP decision involves multiple legislative calculations and can materially affect your lifetime income, tax position and superannuation.

Understanding the offsets and comparing the long-term outcomes against continuing incapacity payments is essential.

The Department of Veterans’ Affairs will provide guidance on the process, but for personalised financial analysis you should seek a licensed financial adviser experienced in veteran entitlements.

This professional can help you model different scenarios and give you the confidence that your decision aligns with your financial goals and obligations.