18.104.22.168 About DVA war widow/ers pension, MRCA death benefits, SRCA death benefits & ISS
This topic provides information about the following:
- war widow/er's pension paid under the VEA
- death benefit payable to wholly dependent partners under the MRCA
- lump sum payments to dependants of deceased employees under the Safety, Rehabilitation and Compensation Act 1988 (SRCA), and
- income support supplement.
VEA war widow/er's pension
A war widow/er's pension:
- is payable to eligible widow/ers of ex-service men or women, tax-free and free of the VEA income or assets tests
- is not affected if the widow/er commences a de facto relationship or remarries (see the first sentence below under 'Social security treatment'), and
- can be paid until the war widow/er dies.
Social security treatment:
- A war widow/er's pension is income for social security purposes of the person and their partner.
- A war widow/er cannot receive a social security pension or benefit if their war widow/er's pension was granted after 20 March 1995.
MRCA death benefit
The MRCA death benefit is payable, tax-free and free of DVA income or assets tests, to eligible wholly dependent partners of deceased members or former members of the Australian Defence Force (ADF). A partner living with the member immediately before the member's death is regarded as being wholly dependent on the member for economic support without having to establish the dependency for economic support.
The widowed partner has the choice of receiving a periodic payment equivalent to the VEA war widow/er's pension or its lump sum equivalent.
A person who has received a lump sum mentioned in the MRCA paragraph 234(1)(b), or is receiving a weekly amount mentioned in that paragraph comes under the definition of:
- an armed services widow/er under the SSAct
- a war widow/er under the VEA.
Armed services widow/ers may be subject to multiple entitlement exclusions under the SSAct
MRCA additional death benefit
This is an age-based lump sum payment paid in addition to the MRCA death benefit where liability for the member's death has been accepted as related to ADF service rendered on or after 1 July 2004. It is tax-free and free of the VEA income and assets tests.
How MRCA payments are assessed under the SSAct
Generally, recipients of MRCA death benefits are precluded from receiving social security payments in addition to their VEA income support payments. Instead, recipients may be entitled to the VEA ISS and associated allowances, subject to the same rules as apply to VEA war widow/ers.
Note: For information on the treatment of MRCA payments if a person or their partner is entitled to a social security payment, refer to 22.214.171.124 About DVA Compensation Payments.
SRCA lump sum payments to dependants of deceased employees
Under the SRCA section 17(3), lump sum payments are made to dependants of deceased employees payable on death of the employee. These payments, while compensatory in nature are not regarded as compensation and should be assessed as ordinary unearned income for the recipient.
Policy reference: SS Guide 126.96.36.199 Treatment of specific compensatory type payments
ISS & social security pensions & benefits
VEA ISS is a DVA payment paid instead of a social security pension to a war widow/er - this includes someone who receives a VEA war widow/er's pension or a MRCA death benefit as a wholly dependent partner. ISS commenced on 20 March 1995.
A war widow/er CANNOT receive both ISS and a social security pension or benefit. A social security pension or benefit is not payable if a war widow/er is receiving ISS or would be eligible for ISS if they made a claim.
War widow/er's pension granted BEFORE 20 March 1995
- start to receive ISS, or
- continue to receive Age, WP, DSP or CP at a rate frozen at that date.
For most people who are war widow/ers the frozen rate of the social security pension is $124.90 a fortnight. Those people who were in receipt of a higher rate of pension in 1986 had their maximum rate frozen at the higher level. A person's income and assets can result in a lesser amount of pension being paid. SSAct section 1065(5) restricts blind war widow/ers from receiving a higher rate than the same ceiling rate applicable to pensioners who are not blind.
War widow/ers receiving frozen rate pension do not have their social security pension indexed. However, they can transfer to DVA and receive indexed ISS if they satisfy eligibility and payability rules. Any overlapping payments are recoverable. When ceasing a social security pension and commencing ISS, it is important that there are no gaps in the person's payments. The social security pension should be paid up until ISS commences.
War widow/er's pension (or MRCA death benefit) granted AFTER 20 March 1995
If a person was granted the VEA war widow/er's pension AFTER 20 March 1995 or a MRCA death benefit as a wholly dependent partner, they may:
- receive ISS subject to the income and assets tests and eligibility criteria set out in the VEA section 45A, and
- are precluded from receiving social security pensions or benefits.
Social security pensions are not payable from the date:
- the war widow/er is determined to be eligible for ISS
- war widow/er's pension is payable.
War widow/er's pensioners receiving ISS from DVA have their ISS indexed twice yearly in March and September.
Income test treatment of ISS for partner
ISS payments are NOT treated as income in assessing a partner's social security entitlement.
Act reference: SSAct section 8(8) Excluded amount-general, see (y)(i)