Permanent Impairment Compensation
Permanent Impairment compensation is another form of compensation which is paid to a veteran, if eligibility has been established.
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What is Permanent Impairment compensation?
Permanent Impairment (PI) compensation is a tax-free, non-economic loss payment paid to veterans under DRCA or MRCA to compensate for permanent impairment arising from injury or disease of an accepted service condition.
VEA veterans receive a Disability Compensation Payment.
Back to topHow do I apply?
PI payments will be considered during the needs assessment carried out after DVA accepts liability for your conditions, however you can make a claim for permanent impairment at any time by providing DVA with a request in writing.
Back to topWhat will happen from 1 July 2026?
From 1 July 2026, all new permanent impairment claims will be determined under the improved MRCA.
The improved MRCA will have a number of PI related changes. These include:
- Changes to claim processing – “date of effect”
- Expansion of Eligible Recipients – Section 80 payments
- Adopting GARP M with new chapter 26
- Posthumous MRCA Permanent Impairment payment
- Payment to trust account
- Lump sums and financial advice
It is important to note that there will be no reduction in payments. If you are currently receiving payments, these will not change. Periodic rates of payment would continue to be indexed as usual.
Change to claims processing – “date of effect”
Under the current system, delegates must determine a precise date of effect for each condition being assessed. Even with the assistance of medical practitioners, this can be difficult to do.
From 1 July 2026, only an estimated date of effect will be required in order to commence payment.
In practice, the veteran’s medical practitioner will be asked to provide an estimated date of effect. If the delegate determines that all the requirements are met, DVA will commence payment from the first day of the estimated month.
For example, if a veteran’s medical condition is estimated to have become permanent and stable (to the required degree of impairment) from 24 November 2026, their permanent impairment compensation would be payable from 1 November 2026. Similarly, the veteran’s compensation would be payable from 1 November 2026 if the estimated date is provided as simply November 2026.
Expansion of Eligible Recipients - Section 80 payments
From 1 July 2026, section 80 of MRCA will be expanded to include primary carers in respect of Eligible Young Persons (EYP) section 80 payments. This means the primary carer/guardian of the eligible dependant young person/s can be the payment recipient.
VEA and DRCA veterans may be eligible to access the additional PI payment under section 80 of the MRCA from 1 July 2026 where they meet the criteria:
- which requires the veteran to have suffered an impairment of at least 80 impairment points and where the veteran has an EYP for the purposes of the Act, and
- have either a newly accepted condition under the MRCA, or there has been a 5 point worsening of their compensable conditions since their last assessment.
Adopting GARP M with new chapter 26
Currently, each Act uses a different tool to assess compensation claims.
From 1 July 2026, the Guide to the Assessment of Rates of Veterans’ Pensions under MRCA (GARP M) will be the only tool used.
As part of the improved MRCA, a new chapter will be introduced to the GARP M which accounts for impairment from previously compensated claims.
There will be a process to convert historic DRCA assessments to a GARP M assessment to create a baseline for MRCA PI purposes.
A permanent impairment assessment will consider worsening to be an increase from the assessed baseline. Each DRCA assessment will be considered in accordance with GARP M and the MRCA PI guidelines.
Posthumous MRCA Permanent Impairment payment
From 1 July 2026 the MRCA will expand to allow permanent impairment compensation to be paid as a lump sum to the estate of the deceased veteran where an initial liability or permanent impairment claim has been lodged prior to the veteran’s death (whether determined or undetermined).
Legal personal representatives will also have the option to convert a deceased veteran’s permanent impairment compensation entitlement (excluding the lifestyle components) to an age-based lump sum, for payment to the estate.
This will ensure dependants are not financially disadvantaged if a claim has not been resolved before the veteran passes.
Payment to trust account
Currently, the VEA has provisions providing the Commission with powers to administer trusts. These provisions are being brought into the improved MRCA from 1 July 2026.
Lump sums and financial advice
From 1 July 2026, an instrument-making power will be introduced to enable the Commission to determine circumstances where a vulnerable veteran must receive financial advice before receiving a lump sum payment.
Back to topCurrent VEA veterans
Currently, VEA veterans receive a Disability Compensation Payment.
From 1 July 2026, all new claims will be processed under the improved MRCA.
VEA veterans will be able to lodge a claim for MRCA benefits including claims for new conditions or for worsening of their existing VEA conditions.
Following a new claim from 1 July 2026, a whole of person assessment will be completed to assess the veteran's overall level of impairment and the level of compensation will be established taking into account any previous compensation paid.
VEA veterans may be eligible to access the additional PI payment under section 80 of the MRCA from 1 July 2026 where they meet the current MRCA criteria which requires:
- that the veteran has suffered an impairment of at least 80 impairment points
- the veteran has an EYP for the purposes of the Act the time of being determined to have an impairment of at least 80 points
- the veteran has either a newly accepted condition under the MRCA, or there has been a 5 point worsening of their compensable conditions since their last assessment
Whilst you can start the process of gathering documents to apply under the MRCA, only claims from 1 July 2026 will be considered under this expanded eligibility.
It is important to note that there will be no reduction in payments. If you are currently receiving payments, these will not change. Periodic rates of payment would continue to be indexed as usual.
Scenario: Marie – currently receiving DCP
Marie, 48, has coverage across all three Acts and is currently receiving 10% Disability Compensation Payment (DCP). She has received a permanent impairment (PI) payment of $15,000.00 under DRCA. Marie lodges a new claim for hearing loss and tinnitus related to her VEA service in East Timor.
The current system (pre 1 July 2026):
- Marie’s current rate of DCP 10% is $66.96 per fortnight.
- Marie’s hearing loss and tinnitus are assessed as service-related under the VEA.
- Following an assessment, Marie’s DCP rate is increased to 40% DCP ($244.74 per fortnight).
- Marie’s compensation increased by $177.78 per fortnight.
From 1 July 2026 onwards:
- Marie’s current DCP rate of 10% DCP ($66.96 per fortnight) is grand parented.
- Marie’s hearing loss and tinnitus are assessed as service-related under the MRCA.
- Marie’s impairment from previously compensated conditions is 15 points.
- Marie’s new assessment is 28 points.
- Marie will be paid Permanent Impairment compensation of $115.32 per fortnight or she can elect to receive an age based lump sum of $66,482.74 (takes into account payments under previous Acts).
- Marie’s new payments are:
- $182.28 per fortnight ($66.96 DCP and $115.32 PI); or
- $66.96 per fortnight (DCP) and a PI lump sum of $66,482.74.
Key Points:
- In contrast to VEA DCP payments, veterans can choose to receive their MRCA PI payments as weekly amounts (paid fortnightly) or convert the payment to an age-adjusted lump sum (or a combination of both).
Additional scenarios are available at the legislation reform page.
Back to topCurrent DRCA veterans
From 1 July 2026, all new permanent impairment claims will be processed under the improved MRCA.
DRCA veterans will be able to lodge a claim for MRCA benefits including claims for new conditions or for worsening of their existing DRCA conditions.
Following a new permanent impairment claim from 1 July 2026, a whole of person assessment will be completed to assess the veteran's overall level of impairment and the level of compensation will be established taking into account any previous compensation paid.
There will be a process to convert historic DRCA assessments to a GARP M assessment to create a baseline for MRCA PI purposes.
A permanent impairment assessment will consider worsening to be an increase from the assessed baseline. Each DRCA assessment will be considered in accordance with GARP M and the MRCA PI guidelines.
Whilst you can start the process of gathering documents to apply under the MRCA, only claims from 1 July 2026 will be considered under this expanded eligibility.
It is important to note that there will be no reduction in payments. If you are currently receiving payments, these will not change. Periodic rates of payment would continue to be indexed as usual.
If you have already received lump-sum permanent impairment compensation under the DRCA in 2024 you will retain that lump sum, with no risk of it being reduced.
Back to topCurrent MRCA veterans
Veterans with MRCA only coverage would continue to have their compensation and rehabilitation benefits assessed and provided under the MRCA. From 1 July 2026, claims will be assessed under the improved MRCA.
Back to topAdditional Resources
There is a range of additional resources available on the Legislation Reform website covering a variety of topics. These include: Special Rate Disability Pension (SRDP) and Compensation for Dependants.
There are individual pages for different veteran cohorts including VEA veterans, DRCA veterans, MRCA veterans and family members of veterans.
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