Example
A sergeant who joined the ADF at 18 is discharged as medically unfit at 35. To determine his rate of invalidity pension the following calculations are taken.

Determine the period of service he would have achieved had he remained in the scheme until 55. Actual service is 17 years and prospective service from age 35 to 55 is 20 years, providing a total period of expected service of 37 years. His employer benefit is calculated as follows:

7 years @ 18 per cent = 1.26 × FAS
13 years @ 23 per cent = 2.99 × FAS
17 years @ 28 per cent = 4.76 × FAS
Total = 9.01 × FAS

And using his FAS of $47,200 at the time of his discharge his employer benefit becomes: 9.01 x $47,200 = $425,272

To determine the Class A pension rate applicable for his invalidity benefits, that employer benefit is divided by 12 (the pension conversion factor for age 55). $425,272 divided by 12 = $35439.33

In this example, if classified Class A, the sergeant's invalidity pension would be $35439.33 a year. If classified Class B, his pension would be half that amount; that is $17,719.67 a year.

Level of benefit

The level of invalidity benefit will depend upon the degree to which the member is incapacitated from undertaking appropriate civilian employment because of the medical condition responsible for discharge.

Whether civilian employment is available or the member is employed are not necessarily relevant considerations.

What constitutes appropriate civilian employment is determined on the basis of education and working experience. Generally, medical opinion is obtained regarding the level of the member's incapacity to perform that employment.

Three levels

Class C - where incapacity is less than 30 per cent.
Class B - where incapacity is from 30 per cent up to 59 per cent.
Class A - where incapacity is more than 60 per cent.

Conditions

The entitlement will not apply if the discharge

• Occurs within the first two years of service and is attributable to a pre-existing condition not materially aggravated by the member's service.
• Was due to an injury that occurred while on absence without leave for more than 21 days.
• Was the result of a wilful action to obtain invalidity benefits.

Class A and B

Members classified as either Class A or B invalidity beneficiaries are entitled to receive a pension (indexed to CPI increases), a lump sum payment of their pre-July 1999 member benefit and preservation of the remainder of the member benefit, which can be claimed at the applicable preservation age.

The pension payable in both cases is based on the lump sum employer benefit calculated by multiplying the member's Final Average Salary by the benefit multiple that would have applied had the member remained in the scheme until age 55. The Class A pension rate is then determined by using the age 55 pension conversion factor. Class B pension is half that rate.

Reclassification

Members initially classified Class A or B will periodically have their classification reviewed. This process recognises that medical conditions can improve or deteriorate over time. It recognises that the member's appropriate civilian employment changes over time and influences the member's level of incapacity for that employment.

In the event a member's degree of incapacity has altered, the level of benefits payable will be reclassified (to Class A, B or C) and be paid at that new rate. Members need to be aware that this may mean an increase or decrease in the level of benefits.

Members initially classified Class C are not subject to future reviews.

Veterans' affairs

ADF members discharged as medically unfit may also qualify for additional benefits provided through Department of Veterans' Affairs and the Military Compensation and Rehabilitation Service. Members need to be aware that the basis of assessing these benefits is different to the assessment of superannuation invalidity benefits.

Class C

Class C beneficiaries are only entitled to a lump sum refund of their pre-July 1999 member benefit with preservation of the remainder of the member benefit until preservation age. The employer benefit accrued up to the time of discharge is also compulsorily preserved until age 55 (or preservation age).

• So Super provides factual information about scheme entitlements and is not intended to provide advice on an individual's particular circumstances. Further information can be obtained from ComSuper on 132 366.

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