Comcare Payments and Superannuation

An injured employee who is retired from employment and receives a pension and/or lump sum under a superannuation scheme must have their incapacity payments determined in accordance with sections 20 to 21A of the Safety Rehabilitation and Compensation Act 1988 (SRCA).

“Retirement” in this context can include medical retirement, redundancy and/or resignation or termination for some other reason. If a worker accepts a voluntary redundancy or resigns for reasons other than ill health, this may mean that there is no entitlement to receive loss of earnings (incapacity) benefits. However, the right to claim medical and like expenses and/or lump sum impairment continues after termination of employment whatever the reason for the termination.

In the case of medical retirement and/or forced redundancy, injured workers may still be entitled to loss of earnings (incapacity) benefits.  However, these benefits may be reduced on the basis that superannuation has been “received” and the formulas in sections 20 to 21A of the SRCA referred to above will be applied.

An employee is taken to have “received” their superannuation benefit if they have retired from employment and accessed their superannuation or reached their minimum preservation age (usually age 55) and rolled over their superannuation benefit to another fund (whether by election or not.) If retirement takes place before the preservation age of 55, a worker is not taken to have “received” his or her superannuation because this is not presently payable. (Comcare v Dunstan [2014] FCAFC 2)

Comcare (or a licensee) can only take into account the employer-funded component of a superannuation benefit. Contributions made by workers are not taken into account when applying the formula and calculating a worker’s incapacity benefits.

Most superannuation schemes provide for a total and permanent disability (TPD) benefit to be paid (which is over and above the normal resignation benefit) where a worker is considered to be totally and permanently disabled as may be the case on medical retirement.

A TPD benefit may be considered to form part of superannuation as it is received on retirement. However, what is then required is the identification of the ‘superannuation amount’ (i.e. the proportion of the TPD lump sum payment attributable to the employer’s contributions, and not the employee’s own contributions).  In other words, some or all of the TPD payment may form part of the superannuation amount as defined (Lushington and Comcare [2001] AATA 310 (18 April 2001). 

What the lump sum payment is comprised of should be considered on a case by case basis in order to assess the employer’s contribution. It may be that the superannuation scheme identifies a part of the lump sum as attributable to the employer’s contributions or where that is not possible, it may be that the whole of the lump sum is considered to be the superannuation amount.

Under the current formula each $100,000 in superannuation lump sum received will result in a reduction in incapacity benefits of approximately $50.00 per week.

Once employment is terminated, incapacity payments will be increased on 1 July every year by the relevant indexation rate as prescribed.