Invalidity Benefit entitlements

If you are under age 60 and separate from the ADF because you are medically unfit for service, CSC must assess your eligibility for Invalidity Benefits. You will be assessed based on your incapacity for future work in civilian employment.

If you are classified Class A or B as a result of the assessment process, you will receive an Invalidity Benefit from ADF Cover.

ADF Cover Invalidity Benefit

An ADF Cover Invalidity Benefit is made up of two components—the basic annual Invalidity Benefit plus a top-up Invalidity Benefit.

These amounts depend on:

• The number of prospective years of service to age 60. This is the number of years until you reach age 60 if you were to remain in the permanent forces, or as a continuous full-time reservist.
• The number of years of qualifying service. This is, the number of continuous years of service (in whole years) in the permanent forces or as a continuous full-time reservist for your most recent period of service, if you have had a break in service.
• Your base rate of salary, plus any eligible allowance you are receiving on the date of your separation
• An incapacity factor. For Class A, the incapacity factor is 2.2%. For Class B, the incapacity factor is 1.1%.

1. Basic annual Invalidity Benefit calculation

   We calculate the basic annual Invalidity Benefit rate by multiplying:

   The number of prospective years of service to age 60

   x

   Your reported salary for ADF Cover purposes at time of discharge

   x

   Incapacity factor (Class A is 2.2%) (Class B is 1.1%)

   The basic annual rate is payable as long as you are classified Class A or B.

2. Top-up annual Invalidity Benefit calculation

   We calculate the top-up Invalidity Benefit by multiplying:

   Your years of qualifying service

   x

   Your reported salary for ADF Cover purposes at time of discharge

   x

   Incapacity factor (Class A is 2.2%) (Class B is 1.1%)

   The top-up Invalidity Benefit will cease when you reach age of 60, and is impacted by classification reviews.

Assessment process

If you are being medically transitioned from the ADF or have been approved for Retrospective Invalidity, CSC is required to determine your level of incapacity in relation to civilian employment. To do so, we are required to consider the following:

• your qualifications, skills and employment experience;
• the kinds of civilian employment a person with your skills, qualifications and experience might reasonably undertake (leaving aside the impairments);
• your retiring impairments—that is, the physical or mental impairment that led to your medical transition; and
• the degree that your retiring impairments have diminished your capacity to undertake the civilian employment kinds identified.

Degree of diminished capacity 

We will take into account the degree to which your physical or mental impairment that caused the invalidity has diminished your capacity to undertake the roles you would be qualified for outside the ADF. This assessment will result in a classification of A, B or C.

To enable us to make an assessment we may, with your consent, source information from the ADF and Department of Veterans Affairs (DVA). We will also consider any information you wish to provide.

Complete a consent form

Invalidity classifications

• Class A

  Generally, Class A means you are severely impacted by your impairments and would be largely restricted working within relevant civilian employment. Class A is allocated where there is an incapacity to undertake civil employment kinds of 60% or more. Class A provides a full Invalidity Benefit payment.

• Class B

  Class B means you have the capacity for some relevant civilian work at the time of your transition, but suffer moderate incapacity. Class B is allocated where there is an incapacity to undertake civil employment kinds of 30—59%. Class B provides a partial Invalidity Benefit payment.

• Class C

  Class C means that you have been deemed as not fit for ADF duty, but have the capacity to work within your relevant civilian employment with minimal restriction. Class C is allocated where there is an incapacity to undertake civil employment kinds of 0—30%. There is no Invalidity Benefit payable following a Class C determination.

What we need from you

Your Case Manager may ask you to provide the following information:

• Personal identification to ensure we are communicating, making a decision for, and setting up payments (if applicable) for the right person. This is to protect you and your Invalidity Benefit. Find out more about the identification requirements.
• Contact details. These will ensure we can communicate with you when we need to.
• You may also provide independent specialist reports for injuries that caused your medical transition.
• Details of your employment history and qualifications.
• Your Invalidity Benefit elections and payment details so we can process Invalidity Benefits if they are due to you.
• Your consent. Access our consent form.
• We may require you to attend a medical examination, at CSC’s expense, if we need more information.
• If we can’t locate certain details in your available records, we may need to request further information from you. An example of this could be your pre-service employment history.

Information we collect and hold will be in accordance with our privacy policy.

Differences between CSC and DVA

CSC may provide superannuation Invalidity Benefit payments if you are unable to undertake civilian employment after serving in the ADF. DVA may provide compensation for service related conditions (injury or disease) causing incapacity, in the form of incapacity payments.

Read here for more on DVA incapacity payments.

Draft classification

Your Case Manager will contact you to explain your draft classification decision before we finalise it, and if required, provide you with a copy for your records.

You can let your Case Manager know if you think we’ve missed something or you wish to provide further information.

Once we are ready to finalise your classification decision, we will provide you a formal Decision Notice in writing.

Interim Benefits 

If more information is required to determine a classification and it is expected that your incapacity will be at least 30%, you may be eligible for an interim Class B Invalidity Benefit.

If you are found to be eligible, an Invalidity Benefit will commence at the Class B rate until we obtain the additional required information.

It is important to note that the final determination may result in a classification of Class A, or B notwithstanding the interim Class B classification.

After transition

Ongoing correspondence

Check that your contact details remain up to date so you can receive important information from us, if applicable, including:

• biannual Consumer Price Index (CPI) statements and annual Pay as You Go (PAYG) payment summaries; and
• your Annual Statement.

Indexing of your Invalidity Benefit (Class A/B)

All Invalidity Benefits are indexed twice yearly, with effect from the first payday in January and July. This is based on any upward movement in the Consumer Price Index (CPI) for the six months ending 31 March and 30 September each year.

If the CPI rises, Invalidity Benefits are increased, if the CPI falls, Invalidity Benefits will remain the same. The first CPI adjustment to an Invalidity Benefit is calculated as a proportion of the full amount. This means if you have been in receipt of your Invalidity Benefit for three months, the adjustment will be half of the full CPI amount for that six-month period.

We issue CPI statements in January and July each year showing the Invalidity Benefits applicable for the next six months. Taxation information is included with the July CPI Statements in the form of a Pay as You Go (PAYG) Payment Summary.

For more information on CPI rates, visit the Australian Bureau of Statistics.

Review and reclassification

If your circumstances change following an Invalidity Classification you might want to consider a review of the classification. Changes that could lead to a review and possible reclassification include:

• If you re-gain employment in a role that is different to the employment kinds included as part of your original Invalidity Classification decision, or you undertake re-skilling or education that would allow you to gain different employment outside of these original employment kinds. Even when your medical conditions remain the same, your overall level of incapacity against all employment types may change as a result of re-skilling or new kinds of employment.
• If your medical conditions improve or get worse, this could mean your level of incapacity against your recognised employment kinds has also changed.

Reviews and potential reclassification are only available for members with an initial Invalidity Classification of Class A or Class B. If your initial classification was a Class C, you are unable to request a review, or be reviewed by CSC.

Required classification reviews

For ADF Cover members, it is a legislative requirement that all Class A and B Invalidity Benefits be reviewed within 12 to 36 months of the initial classification. We will be in touch to arrange the review. Subsequent reviews and possible reclassifications can be at any time in the future, up until the point you turn 65. Your classification cannot be downgraded past the age of 60.

When we conduct classification reviews, we consider employment kinds again, to determine whether these have changed, along with any available new medical evidence, before determining a degree of diminished capacity. Diminished capacity is the overall impact that your impairments have on your ability to work in roles you are qualified for.

Example

A member was employed in the Infantry at the time of their transition from the ADF and as part of their Invalidity Classification decision is assigned an employment kind of Protective Service Officer. After service, this same member undertakes work in hospitality. As part of a CSC review, we consider the new employment the member has undertaken and their previous in-service roles, and assign them the employment kinds of both Protective Service Officer and Hospitality Worker. The impact of their retiring impairments is then assessed against both employment kinds as part of the review.

Returning to the ADF

If you are in receipt of a fortnightly Invalidity Benefit and subsequently return to the ADF, your Invalidity Benefit will ceased. If, following your period of re–entry, you retire on invalidity grounds again, your eligibility for Invalidity Benefits will be reassessed. If, at the end of your period of re–entry, you do not retire on invalidity grounds, your previous Invalidity Benefit will not be reinstated.

Tax and your Invalidity Benefit

Invalidity Benefits are subject to normal Pay as You Go (PAYG) tax deductions in the same way a salary is. We are required to withhold tax from your Invalidity Benefit in accordance with Australian Tax Office (ATO) guidelines. You may be eligible to receive tax concessions or offsets.

• Tax File Number

  In accordance with the Taxation Laws Amendment (Tax File Numbers) Act 1988, we are required to withhold Pay as You Go (PAYG) tax at the top marginal rate, plus the Medicare levy, from Invalidity Benefits. If a person does not provide a Tax File Number (TFN) we are required to validate your TFN with the Australian Tax Office’s records to confirm it is yours and is correct.

• Tax File Number Declaration form

  If you are eligible to claim an Invalidity Benefit, you need to lodge a Tax File Number (TFN) Declaration. The information you provide will determine how much tax will be deducted from your Invalidity Benefit.

More information (ATO)

Retrospective Invalidity

What is a Retrospective Invalidity assessment?

Retrospective Invalidity assessment is the process of assessing a member’s circumstances to determine whether grounds existed on which the member could have been medically transitioned from the ADF. This assessment is based on the medical conditions (injury or disease) of the member present at the date of transition from the ADF.

The guiding legislation for Retrospective Invalidity assessment is:

• Rule 30 of the Military Superannuation and Benefits Act 1991;
• Section 31A of the Australian Defence Force Cover Act 2015; and
• Section 37 of the Defence Force Retirement and Death Benefits Act 1973.

Considerations when applying for Retrospective Invalidity assessment

• Transition reason

  You cannot apply for Retrospective Invalidity assessment if you transitioned from the ADF on medical grounds and have already been assessed by CSC for Invalidity Benefits for the same period.

• You can only apply once

  If you have previously applied for, and been provided with a Retrospective Invalidity decision, you will not be eligible to apply for assessment for the same period again. You may however be eligible to request reconsideration of the decision. 

• Multiple periods of service

  If you have provided service over multiple periods, you will need to advise CSC which period/s you would like to be assessed for Retrospective Invalidity. There are additional considerations if you have both MilitarySuper and ADF Cover accounts.  You can discuss this further with your Case Manager.

• Potential financial impact

  • DVA Payments
    If you are currently receiving or have previously received DVA payments, these payments may be reduced or ceased. DVA will recover overpayment from CSC arrears that result from a Retrospective Invalidity benefit payment. There may also be a debt recoverable by DVA from you directly if the arrears do not cover DVA’s overpayment.
  • Centrelink and Child Support Agency
    There can also be Centrelink and/or Child Support Agency implications.
  • Tax
    You may be required to amend your tax returns from prior years, if approved for Retrospective Invalidity Benefits.

  Members should consider seeking financial advice to better understand the potential financial impact of a Retrospective Invalidity application.

How do I apply for Retrospective Invalidity assessment?

If you separated from the ADF on non-medical grounds and wish to be considered for Retrospective Invalidity, the first step is to submit an application form to the ADF. If the ADF supports your application for Retrospective Invalidity, a Case Manager will contact you to talk through the process and schedule a one-on-one consultation. During the consultation, your Case Manager will ask you questions about your claim and tell you what further information (if any) is needed.

More information on the process, and the submission form, can be found at the Defence website.

Assessment process

To approve your application, CSC must be satisfied that grounds existed on which you could have been medically transitioned, considering all relevant circumstances.

In order to do this, we will assess all available evidence to confirm if a medical condition was present and causing you symptoms or restrictions at the time of your transition from the ADF. These conditions (injury or disease) do not need to be service-related.

We will usually need to access your ADF medical and personnel records from the time of your transition from the ADF as part of our assessment. We may also consider your file from DVA and/or Open Arms.

We also accept medical evidence that has been obtained independently, at or around the date of transition or post transition, if it references your situation at the time of transition. This evidence should relate to diagnosed conditions (injury or disease) and indicate your medical situation and restrictions at the time of your transition.

As part of our assessment, we will also source information from you relating to your employment and any qualifications gained post-transition as part of the assessment process. This will include any periods with the ADF reserves.

Invalidity Classification post Retrospective Invalidity approval

If CSC is satisfied that grounds existed and you are approved for Retrospective Invalidity, we will then assess your level of incapacity. Please note this is a different process and decision. During this assessment, you will be classified as either a Class A, Class B or Class C incapacity level.

If you are classified as Class A or Class B you will be entitled to an Invalidity Benefit. Applicants who are classified as Class C won’t be entitled to an Invalidity Benefit. See Assessment process.

How long will an assessment take?

Each Retrospective Invalidity assessment is unique, so the time taken to complete can vary considerably. Assessments can be lengthy due to the number of records we are required to review, and the time it can take to source additional evidence to support your application. Your Case Manager will keep you informed and contact you if further information is needed for the assessment.

Working with representatives and advocates

CSC has dedicated Case Managers to assist you through the Retrospective Application process, and you can also engage a support person. You do not need to pay a support person to represent you in the CSC Retrospective Invalidity claim process.

If you do choose to use a representative to assist you in the assessment process, you should notify us of their appointment by completing the Third Party Authority form.

Differences between CSC and DVA

CSC provides superannuation Invalidity Benefit payments if you are unable to undertake civilian employment after serving in the ADF. DVA provides compensation for service-related conditions (injury or disease) causing incapacity in the form of incapacity payments.

CSC can only consider impairments that could have led to your medical transition, whereas DVA can consider other service related conditions (injury or disease). This may mean that a medical condition accepted by DVA for incapacity payments may not be included in a CSC assessment for Invalidity Benefit payments.

DVA claim on arrears payments

If you are approved for Retrospective Invalidity and classified as either Class A or Class B, CSC notifies DVA of the assessment outcome so DVA can determine if they have any claim on your arrears. DVA incapacity payments are offset (reduced) by superannuation payments you receive through CSC.

More information on DVA incapacity payments.

If you have been in receipt of incapacity payments from DVA and are later paid Invalidity Benefits retrospectively from CSC for the same period, you will have an overpayment of incapacity payments. This happens because the offset (reduction) was not applied to the DVA incapacity payments at the time you were receiving them.

DVA will recover any overpayment directly from your Invalidity Benefit arrears payment, before any payment is made to you. CSC will release the relevant amount from the Invalidity Benefit arrears directly to DVA prior to releasing the remainder, if any, to you. If the arrears payment isn’t enough to repay the whole amount of the overpayment, you may have an outstanding debt with DVA. DVA will need to negotiate a recovery plan with you to repay this debt.

Tax implications

CSC withholds tax according to ATO requirements. You should be aware that any recovery against your arrears by DVA will be a gross amount and this might mean that your CSC arrears does not cover the whole amount due to DVA. You should discuss any implications with DVA and/or a financial adviser relating to your arrears recovery. 

Financial planning

Before proceeding with a Retrospective Invalidity application, you may wish to consider the financial implications of this decision or access financial advice. If you require financial advice, CSC’s authorised Financial Planners* provide a personal financial advice service. It is a ‘fee for service’ advice, which means you receive a fixed quote upfront. There are no obligations, commissions or hidden fees.

To make an appointment with a Financial Planner call 1300 277 777 or visit Financial planning.

*CSC Financial Planners are authorised to provide financial advice by Guideway Financial Services (ABN 46 156 498 538, AFSL 420367). Guideway is a licensed financial services business providing CSC Financial Planners with support to provide members with specialist personalised financial advice, and strategies.

Appeals and complaints

Appealing a decision

If you are dissatisfied with a decision made by CSC, you can request reconsideration of the decision by completing an Application for Reconsideration of a Decision.

You have 30 days from the date you receive a decision to submit your request for reconsideration. It is important that you send a copy of, or otherwise refer to, the decision you are seeking reconsideration and let us know why you do not agree with the decision.

Once you have made your initial request to have the decision reconsidered, extra time will be allowed for you to submit any further evidence you would like considered. The original decision remains effective, pending resolution of your request.

You will be assigned a Reconsiderations Case Officer who will conduct a thorough and independent investigation of the decision. Your Case Officer will invite you to provide any additional documentary evidence to support your request, if necessary. On rare occasions, CSC may send you for a medical examination.

Once the investigation is complete, your matter will be referred to the Defence Force Case Assessment Panel (DFCAP) for reconsideration of the decision. You will be advised of DFCAP’s decision and supplied with a copy of the reasons for the decision once DFCAP has reconsidered your case.

See here for further information about the appeals process.

Making a complaint

If you are dissatisfied with how your claim has been handled, we encourage you to talk to us. Contact your Case Manager to start this process.

Alternatively, you can make a formal complaint or provide feedback.

Making a complaint

Further options

If you disagree with either your reconsideration decision or your complaint response, you may refer the issue to the Australian Financial Complaints Authority (AFCA). AFCA is an independent dispute resolution body established by the Australian Government to deal with complaints about superannuation.

For more information, visit ACFA or call 1800931678.