Under the improved Military Rehabilitation and Compensation Act 2004 (MRCA), permanent impairment compensation is worked out as a weekly amount and paid fortnightly. A veteran does not need to make a formal choice to continue receiving the weekly amount. Depending on the amount payable, the veteran may instead choose to convert all or part of that amount into a lump sum.
The preferred option will depend on the permanent impairment decision, the DVA compensation options offered and the veteran’s personal and financial circumstances. Before making a choice, the underlying impairment assessment should also be checked because the lump sum is calculated from the weekly amount determined by DVA.
What are the available payment options?
Every eligible veteran may choose between retaining DVA periodic payments or converting the entitlement entirely into a DVA lump sum. Some veterans may also choose a combination of lump-sum and periodic payments.
The available combination options depend on the weekly amount as a percentage of the maximum weekly rate:
- If the entitlement is under 10% of the maximum weekly amount, the veteran may choose either 100% as a lump sum or continue receiving periodic payments.
- If the entitlement is between 10% and 20% of the maximum weekly amount, the veteran may also choose 50% as a lump sum and retain 50% as periodic payments.
- If the entitlement is above 20% of the maximum weekly amount, the veteran may choose 25%, 50% or 75% as a lump sum and retain the balance as periodic payments. The options of taking 100% as a lump sum or continuing with periodic payments also remain available.
The maximum weekly permanent impairment rate is indexed. From 20 September 2026, the published maximum weekly benefit is $447.39, although the amount payable to an individual veteran depends on their permanent impairment assessment and compensation factor.
How is a DVA lump sum calculated?
A DVA lump sum is not calculated by simply multiplying the weekly payment by a fixed number of years.
DVA converts the weekly amount using life-expectancy factors provided through Australian Government Actuary tables. The applicable factor is based on the veteran’s age next birthday at the date of the notice concerning the payment choice.
Age adjustment applies to males over 30 and females over 35 at their next birthday. Before those thresholds, the maximum conversion factor applies. The different thresholds reflect the life-expectancy data used in the conversion tables.
This means two veterans with the same weekly amount may receive different lump-sum offers because of their ages. Age does not determine the impairment points, but it can materially affect the amount produced when the weekly entitlement is converted into a lump sum.
Any periodic amounts paid before the veteran makes the choice are deducted from the relevant lump-sum component. If only part of the weekly amount is converted, the corresponding proportion of periodic payments already received is deducted.
How long does a veteran have to make the choice?
A veteran ordinarily has six months from receiving the section 76 notice to advise DVA in writing that they wish to convert some or all of the weekly amount into a lump sum.
If the permanent impairment decision is under review, the six-month period does not begin until the relevant review by the Veterans’ Review Board, Administrative Review Tribunal or through reconsideration has been finalised.
The Military Rehabilitation and Compensation Commission may extend the six-month period where special circumstances exist. However, a veteran should not assume that an extension will be granted. The offer, election form and decision letter should be reviewed promptly.
If the veteran does not choose a lump sum, the entitlement continues as DVA periodic payments. No formal election is required to continue receiving the weekly amount on a fortnightly basis.
Why the payment choice is final
A permanent impairment payment choice to convert all or part of the weekly amount into a lump sum is final and cannot ordinarily be changed after it has been made.
This includes a choice to convert only part of the entitlement. If a veteran elects to take a partial lump sum and retain the balance as periodic payments, the retained periodic component cannot later be converted into another lump sum.
Before submitting the choice in writing, check:
- the accepted conditions included in the permanent impairment assessment;
- the impairment points and lifestyle rating;
- the weekly amount determined by DVA;
- the available lump-sum and combination options;
- the age and conversion factor used;
- whether previous periodic payments were deducted correctly; and
- whether any review rights should be exercised before making the choice.
The final nature of the election makes it important to distinguish disagreement with the underlying permanent impairment assessment from uncertainty about how the compensation should be paid.
Lump sum and periodic payments serve different purposes
A DVA lump sum provides immediate access to the converted amount. This may assist with significant expenses, debt reduction or other financial priorities, but it also transfers responsibility for managing that capital to the veteran.
DVA periodic payments provide an ongoing indexed income stream. Periodic payments may offer greater predictability over time, but they do not provide the same immediate access to capital.
There is no universally preferable option. The comparison may involve cash-flow needs, existing debts, family circumstances, investment risk, estate planning and the possible interaction with other payments or entitlements. These issues should be considered with an appropriately qualified financial adviser.
DVA describes permanent impairment compensation as a tax-free payment for non-economic loss. However, the consequences of receiving or investing a lump sum can depend on the veteran’s broader circumstances, so individual tax, financial and social-security advice may still be appropriate.
Legal advice and financial advice have different roles
Legal advice can address whether the permanent impairment decision is correct, whether all accepted conditions were assessed, whether DVA applied the correct impairment and lifestyle ratings, and whether review rights should be exercised.
Financial advice can consider how each permanent impairment payment choice may affect the veteran’s cash flow, assets, liabilities and longer-term financial objectives.
Where a veteran has an impairment rating of at least 50 impairment points, compensation may be available towards the combined cost of suitably qualified financial and legal advice about the payment choice. From 20 September 2026, the published maximum reimbursement is $3,397.18.
The legal or financial adviser should be given the permanent impairment decision, section 76 notice and DVA information explaining the payment options.
Common questions about the payment choice
Is a medical discharge payment one lump sum?
Not necessarily. Permanent impairment compensation is separate from the fact of medical discharge and is based on impairment arising from accepted service-related conditions.
Under the MRCA, permanent impairment compensation begins as a weekly amount paid fortnightly. A veteran may then choose to retain DVA periodic payments or convert some or all of the entitlement into a DVA lump sum, depending on the options available.
Are DVA and CSC payments the same?
No. DVA compensation and Commonwealth superannuation benefits are separate entitlements administered under different schemes.
DVA permanent impairment compensation addresses non-economic loss arising from accepted service-related conditions. CSC benefits may arise under a military superannuation scheme and can involve different eligibility, incapacity and payment rules.
A veteran may have dealings with both DVA and CSC, but a decision or payment from one does not determine the outcome under the other. Each entitlement should be considered separately before comparing the available payment options.
Can the choice be changed later?
Ordinarily, no. Once the veteran advises DVA in writing of the choice to convert all or part of the weekly amount into a lump sum, that choice cannot be changed.
This is why the veteran should confirm the underlying assessment and seek any necessary advice before submitting the election.
Before making a permanent impairment payment choice
The appropriate DVA compensation options depend on the amount awarded, the choices available under the MRCA and the veteran’s individual circumstances. The headline lump-sum figure should not be considered in isolation.
KSC Law can review the permanent impairment decision, accepted conditions, impairment points, lifestyle rating and available review rights before a permanent impairment payment choice is made. A suitably qualified financial adviser can then assist the veteran to compare the personal and financial consequences of a DVA lump sum, DVA periodic payments or an available combination.