The Special Rate Disability Pension, known as the SRDP, is an alternative form of financial compensation that replaces an incapacity payment program funded by the Department of Veteran’s affairs. The SRDP is more specifically targeted towards those whose ability to work has been severely restricted because of injuries, or conditions that are attributed to their military service, on or after the 1st of July 2004. The SRDP is awarded to those in need once it has been determined that they meet a strict set of eligibility requirements. After being assessed as eligible for the SRDP, a recipient will be offered the choice between continuing with their current incapacity payment plan or going ahead and commencing an SRDP plan as an alternative.
Special Rate Disability Pension
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What Is the Difference Between Incapacity Payments and the SRDP?
The main differences between incapacity payments and the SRDP involve taxability and offsetting arrangements. To begin with, the most basic difference between the two is that the SRDP is a tax-free payment payable indefinitely, whereas incapacity payments are usually taxed and generally cease as soon as a recipient becomes eligible for the Age Pension.
On the surface this makes the SRDP seem like a much more attractive welfare option, however, there are some cases where the offsetting arrangements that apply mean that the SRDP amount payable to an applicant may be less than their normal entitlement to incapacity payments.
This is because the SRDP is calculated based on the Special Rate of Disability Compensation Payment provided under the VEA. This rate is influenced by a dollar-for-dollar offset, applied to the weekly value of any permanent impairment compensation that has or is being paid.
This means that, for example, if an applicant is receiving Commonwealth superannuation, then the SRDP will be offset by 60 cents on the dollar for each dollar of the Commonwealth-funded component of their superannuation. This is due to the fact that the SRDP act as compensation for both “economic” and “non-economic” loss, meaning that offsetting arrangements are necessary to prevent a person being compensated twice for the same incapacity.
Who Is Eligible for the SRDP?
The eligibility criteria for the taxable incapacity payments, and tax-free SRDP payments are very similar. To begin with a possible applicant will need to be living with an injury or disease assessed at 50 or more impairment points which is likely to continue indefinitely. Once this criterion is fulfilled, the applicant will then need to prove that they are currently receiving incapacity payments, have had their incapacity payments reduced to nil because of commonwealth superannuation offsetting or have received a lump sum amount of incapacity payments. Following this, an applicant will need to be assessed and identified as being unable to undertake paid work for more than 10 hours per week, and that rehabilitation is unlikely to increase their capacity to undertake paid work for more than 10 hours per week.
Once the eligibility assessment process is completed and an applicant is deemed eligible for SRDP payments, they will receive an offer in writing, extending the opportunity to them to begin the SRDP program. From when they receive this notice, an applicant will have 12 months to inform the Department of Veterans’ Affairs if they wish to accept the offer, beginning on the SRDP program or continuing with their current program. A very important note, however, is that if an applicant chooses to receive the SRDP, they cannot change their decision at a later stage.
This is why it is extremely important to fully understand the broad range of financial implications that come from this decision, and as such in comes the final eligibility requirement for the SRDP – obtaining advice from a suitably qualified financial adviser before making the decision to receive the SRDP.
Why Do I Need Advice on the SRDP, and Who Can Give It To Me?
As the question as to whether to go on the SRDP is a multifaceted problem with multiple different elements and calculations to consider, it is extremely important to be confident that an applicant is making the correct decision before they choose whether to accept their SRDP offer. This is why it is a compulsory part of the application process to have obtained professional financial advice on this decision, in order to ensure that every applicant makes the best choice for their situation.
Luckily, veterans who hold a Department of Veterans’ Affairs white card with more than 50 points of credit, are eligible for free financial advice on this very issue. This is an incredibly valuable asset as understanding whether to stay on incapacity payments or accept a special rate disability pension and how the decision will impact their financial future is extremely important for all applicants.
As such, at Ausveterans we have partnered up with various financial partners who we trust deeply, in order to help spread this information and provide access to these services to those who need it. So, if you’re looking for advice on the SRDP program, look no further than the free services offered by these trusted financial advisors, who will help you make the best decision for you and your financial future.