Pension offsetting using Actuarial Tables

Last updated:

27 May 2022

This page contains the Australian Government Actuary Tables that are used for converting compensation lump sum payments into fortnightly equivalent amounts for the purpose of offsetting Disability Compensation Payment paid under the Veterans' Entitlements Act 1986 (VEA).

Offsetting occurs under these tables when a veteran or dependant receives lump sum compensation from another source which is for the same incapacity or death as their pension is paid, or when a veteran on an applicable Above General Rate Disability Compensation Payment receives a lump sum permanent impairment payment under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA).

What are Actuary Tables and when are they used?

Calculations of payments according to a person's life expectancy are based on factors contained in 'Life Tables'. These tables apply to superannuation, life insurance issues and also for planning for the future needs of the Australian community. They are published every five years following the national census and as our living conditions improve and both men and women enjoy an increasing average life expectancy, they are varied. The Australian Government uses Life Tables provided by the Australian Government Actuary for many purposes, one of which includes compensation offsetting under the VEA.

For the purposes of section 30C, section 74 and section 25A of the VEA, the Actuarial Tables are used to convert a lump sum compensation payment from another source into a fortnightly amount which then may be offset against a veteran's Disability Compensation Payment.

What is compensation offsetting?

Offsetting is the process of reducing one compensation payment in recognition of another compensation payment for the same incapacity or death, in most cases. The principle behind compensation offsetting is that a person should not be compensated twice for the same incapacity, when another person would only be eligible for the one source of compensation.

For more detailed information about the compensation offsetting provisions, please refer to Disability Compensation Payment and compensation offsetting.

How lump sum compensation is offset against Disability Compensation Payment?

When a veteran receives lump sum compensation for the same incapacity for which they are receiving Disability Compensation Payment an equivalent fortnightly amount is calculated based on the lump sum amount and is offset from the fortnightly rate of Disability Compensation Payment. This calculation is based on instructions received from the Australian Government Actuary. The offset against the Disability Compensation Payment will continue for the rest of the veteran's life and is indexed in line with CPI at the same time that the Disability Compensation Payment is indexed.

The information contained in the Actuarial Tables enable the department to calculate the initial fortnightly offset amount. Copies of these Actuarial Tables and an example of calculating a fortnightly equivalent are included in this page.

Example: - A veteran born on 7 July 1963 was granted Disability Compensation Payment effective from 8 October 1999. On 8 January 2002, he receives a lump sum payment of $23,451.00 from another source for the same incapacity.

The 'age next birthday column' that appears in the Actuarial Table is the age that the veteran will be on their next birthday following either the grant of Disability Compensation Payment or the date of the lump sum is paid - whichever event occurred earlier. In this example, the age applied is 37 as Disability Compensation Payment was granted prior to the lump sum and the veteran turned 37 on his next birthday.

Therefore the calculation of the initial fortnightly equivalent for the lump sum of $23,451 is as follows:

$23,451.00 x $15.845 = $37.16
$10,000.00*

* The figure of $10,000 is used to divide all lump sum amounts and obtain a relevant factor to calculate the offset amount. As most lump sum amounts are in excess of $10,000, once divided it will give a decimal figure with which to apply the standard figures supplied by the Australian Government Actuary.

This initial fortnightly amount is applied for the veterans' lifetime and is subject to indexation increases so that it remains on equivalent terms with the indexations applied to the Disability Compensation Payment.

Why is the offset applied for life and what will the total be?

The offsetting of Disability Compensation Payment as a result of other lump sum compensation is not based on repaying the amount of the initial lump sum accepted.

The instructions provided by the Australian Government Actuary to calculate the ongoing offset use assumptions that are consistent with those that underpin lifetime annuities - that is a life insurance company will pay a periodic annuity for life in exchange for an up front lump sum. The rate of annuity depends on other factors which include the life expectancy and the rate of interest to be earned on the lump sum. The instructions from the Actuary assume the same effects.

Due to the assumption that interest will be earned on the invested lump sum over a lifetime, a person is expected to receive more than the initial lump sum amount. The same rationale is applied to offsetting, in that the total accumulated dollar amount that will be offset against a veterans' Disability Compensation Payment over their lifetime is expected to be more than the initial amount of the lump sum compensation received.

For this reason, the total offset for each person will be different, depending on their compensation received and how long they live. However, the logic behind the offset is applied universally to every person.

Obligation to notify

A veteran who receives a Disability Compensation Payment, service pension or has any treatment entitlement must tell DVA within 21 days if compensation or damages are claimed or received.

Actuarial tables

The tables provided in this page are:

Table 1 - Veterans in receipt of Disability Compensation Payment who are offset under section 25A VEA for lump sum amounts paid on or after 1 March 2021. Section 25A requires the offset of any DRCA permanent impairment lump sum received, if a veteran becomes eligible for an applicable Above General Rate Disability Compensation Payment on or after 1 July 2004. Different tables will apply if the DRCA lump sum was received in the past.
Table 2 - Veterans in receipt of Disability Compensation Payment who are offset under section 30C or section 74 VEA for lump sum amounts paid on or after 1 March 2021. Section 30C and section 74 require the offset of any compensation received for the same incapacity or death against a relevant VEA pension.

Table 1

Actuarial Table 8* (based on ALT 2015-2017)
AGE NEXT BIRTHDAY	MALES	FEMALES	AGE NEXT BIRTHDAY	MALES	FEMALES
1	12.654	12.461	47	17.862	16.878
2	12.673	12.478	48	18.135	17.106
3	12.716	12.513	49	18.422	17.346
4	12.761	12.551	50	18.725	17.599
5	12.808	12.591	51	19.044	17.865
6	12.857	12.632	52	19.383	18.145
7	12.908	12.675	53	19.740	18.441
8	12.961	12.719	54	20.118	18.754
9	13.016	12.765	55	20.517	19.085
10	13.074	12.813	56	20.940	19.436
11	13.133	12.863	57	21.388	19.807
12	13.195	12.915	58	21.863	20.202
13	13.259	12.968	59	22.367	20.622
14	13.326	13.024	60	22.903	21.069
15	13.395	13.081	61	23.475	21.546
16	13.466	13.140	62	24.085	22.057
17	13.539	13.201	63	24.738	22.604
18	13.614	13.264	64	25.439	23.191
19	13.691	13.329	65	26.193	23.821
20	13.770	13.397	66	27.004	24.498
21	13.852	13.468	67	27.879	25.227
22	13.937	13.542	68	28.823	26.013
23	14.026	13.619	69	29.843	26.862
24	14.118	13.699	70	30.947	27.779
25	14.214	13.782	71	32.143	28.771
26	14.315	13.869	72	33.439	29.848
27	14.419	13.959	73	34.847	31.019
28	14.529	14.053	74	36.379	32.294
29	14.642	14.152	75	38.047	33.686
30	14.761	14.254	76	39.870	35.212
31	14.885	14.360	77	41.866	36.888
32	15.015	14.471	78	44.052	38.730
33	15.150	14.587	79	46.449	40.757
34	15.292	14.708	80	49.077	42.992
35	15.440	14.834	81	51.955	45.457
36	15.594	14.965	82	55.103	48.178
37	15.756	15.102	83	58.540	51.182
38	15.925	15.246	84	62.282	54.500
39	16.102	15.396	85	66.343	58.157
40	16.288	15.552	86	70.729	62.183
41	16.482	15.716	87	75.440	66.603
42	16.685	15.888	88	80.457	71.440
43	16.898	16.068	89	85.745	76.709
44	17.122	16.256	90	91.252	82.399
45	17.357	16.454	91	96.922	88.510
46	17.603	16.661

Initial fortnightly amount of an indexed pension equivalent to a lump sum of $10,000 under section 25A of the VEA.

*For lump sums paid on or after 1 March 2021

Table 2

Actuarial Table (Based on ALT 2015-2017) for section 30C and section 74 of the VEA
AGE NEXT BIRTHDAY	MALES	FEMALES	AGE NEXT BIRTHDAY	MALES	FEMALES
1	12.654	12.461	47	17.862	16.878
2	12.673	12.478	48	18.135	17.106
3	12.716	12.513	49	18.422	17.346
4	12.761	12.551	50	18.725	17.599
5	12.808	12.591	51	19.044	17.865
6	12.857	12.632	52	19.383	18.145
7	12.908	12.675	53	19.740	18.441
8	12.961	12.719	54	20.118	18.754
9	13.016	12.765	55	20.517	19.085
10	13.074	12.813	56	20.940	19.436
11	13.133	12.863	57	21.388	19.807
12	13.195	12.915	58	21.863	20.202
13	13.259	12.968	59	22.367	20.622
14	13.326	13.024	60	22.903	21.069
15	13.395	13.081	61	23.475	21.546
16	13.466	13.140	62	24.085	22.057
17	13.539	13.201	63	24.738	22.604
18	13.614	13.264	64	25.439	23.191
19	13.691	13.329	65	26.193	23.821
20	13.770	13.397	66	27.004	24.498
21	13.852	13.468	67	27.879	25.227
22	13.937	13.542	68	28.823	26.013
23	14.026	13.619	69	29.843	26.862
24	14.118	13.699	70	30.947	27.779
25	14.214	13.782	71	32.143	28.771
26	14.315	13.869	72	33.439	29.848
27	14.419	13.959	73	34.847	31.019
28	14.529	14.053	74	36.379	32.294
29	14.642	14.152	75	38.047	33.686
30	14.761	14.254	76	39.870	35.212
31	14.885	14.360	77	41.866	36.888
32	15.015	14.471	78	44.052	38.730
33	15.150	14.587	79	46.449	40.757
34	15.292	14.708	80	49.077	42.992
35	15.440	14.834	81	51.955	45.457
36	15.594	14.965	82	55.103	48.178
37	15.756	15.102	83	58.540	51.182
38	15.925	15.246	84	62.282	54.500
39	16.102	15.396	85	66.343	58.157
40	16.288	15.552	86	70.729	62.183
41	16.482	15.716	87	75.440	66.603
42	16.685	15.888	88	80.457	71.440
43	16.898	16.068	89	85.745	76.709
44	17.122	16.256	90	91.252	82.399
45	17.357	16.454	91	96.922	88.510
46	17.603	16.661