The CSC invalidity classes determine whether an invalidity benefit is payable and can materially affect the form and amount of that benefit.
The classification does not simply measure the seriousness of a diagnosis or whether a member remains fit for ADF service. The Commonwealth Superannuation Corporation considers the member’s incapacity for appropriate civilian employment because of the medical conditions that led to their transition from the ADF, which CSC refers to as retiring impairments.
The benefit consequences depend on the member’s superannuation arrangements. MilitarySuper, DFRDB and ADF Cover use the Class A, B and C framework, but they do not calculate or pay benefits in the same way.
How does CSC determine the invalidity class?
CSC considers the member’s skills, qualifications and experience before and during service. It then identifies the types of civilian employment the member could reasonably undertake using that background, disregarding the retiring impairments.
CSC assesses how the retiring impairments affect the member’s capacity to perform those civilian occupations. It may use the Australian and New Zealand Standard Classification of Occupations to identify relevant employment types.
The resulting classifications are:
- Class A: incapacity of 60% or more;
- Class B: incapacity of 30% to 59%; and
- Class C: incapacity of less than 30%.
The percentage is not a whole-person impairment rating and is not the same as DVA impairment points. It represents CSC’s assessment of the member’s incapacity for the identified civilian employment.
A member can be medically unfit for further ADF service but still be assessed as capable of civilian employment. The ADF’s decision to medically discharge a member and CSC’s invalidity classification are therefore separate decisions that answer different questions.
What does Class A mean?
Class A applies where CSC assesses the member as having incapacity of 60% or more for appropriate civilian employment because of the retiring impairments. A Class A classification generally produces the higher invalidity benefit available under the applicable scheme.
For a DFRDB member, the Class A pension is generally calculated at 76.5% of the member’s annual salary for superannuation purposes. That salary may differ from the member’s ordinary salary or total remuneration. The invalidity benefit cannot be commuted into a lump sum.
For a MilitarySuper member, Class A generally results in the employer benefit being paid fortnightly as an invalidity pension. The employer benefit cannot be taken as a lump sum, although different rules apply to the member and ancillary components of the account.
For an eligible ADF Cover member, the Class A annual invalidity benefit can include a basic benefit and a top-up benefit. CSC applies a 2.2% incapacity factor when calculating those components, together with recognised salary, qualifying service and prospective service to age 60.
A Class A classification does not necessarily mean the member is incapable of every form of employment. It means CSC has assessed a high level of incapacity for the civilian employment identified through its classification process.
What does Class B mean?
Class B applies where CSC assesses incapacity for appropriate civilian employment at between 30% and 59%. A Class B pension is generally payable, but the calculation depends on the member’s scheme.
For a DFRDB member, the Class B pension is generally calculated at 38.25% of annual salary for superannuation purposes. Where the member has completed at least 23 years of effective service, the percentage may instead increase according to completed years of effective service, up to the applicable maximum. The invalidity benefit cannot be commuted into a lump sum.
For a MilitarySuper member, a Class B classification generally results in the employer benefit being paid fortnightly. As with Class A, the employer benefit cannot be taken as a lump sum. Separate preservation, rollover and release rules apply to the member and ancillary benefits.
For an eligible ADF Cover member, the Class B calculation uses a 1.1% incapacity factor. The annual benefit can include both a basic component and a top-up component, calculated by reference to salary, qualifying service and prospective service to age 60.
Class B does not mean the member is “half disabled”. It reflects a moderate assessed level of incapacity for the civilian occupations CSC identified as appropriate to the member’s background.
What does Class C mean?
Class C applies where CSC assesses the member’s incapacity for appropriate civilian employment at less than 30%. A Class C decision does not mean that the member has no medical condition or no functional restrictions. It means the assessed incapacity for the relevant civilian employment is below the threshold for a Class A or Class B invalidity pension.
For MilitarySuper members, a Class C classification generally means no immediate payment of the employer benefit. That benefit usually remains preserved until the member reaches age 55 or satisfies another condition of release, such as total and permanent incapacity or applicable financial-hardship requirements.
The member and ancillary benefits are separate components. Depending on the circumstances and whether a condition of release is met, they may be preserved, rolled over to another superannuation fund or paid as a cash lump sum.
The consequences for DFRDB members differ because DFRDB has its own benefit structure. The member’s final Decision Notice and the rules of the relevant scheme must therefore be considered before concluding what Class C means financially.
Which medical conditions does CSC assess?
CSC focuses on the retiring impairments, meaning the medical conditions that led to the member’s medical transition from the ADF.
A member may have other diagnosed conditions that affect their daily life, have been accepted by DVA or remain under investigation. Those conditions are not necessarily included in the CSC assessment if they did not form part of the medical transition.
This makes it important to check the conditions identified in the ADF medical-transition documents and CSC’s draft classification. If a relevant condition contributed to the discharge but was omitted or described inaccurately, that issue should be raised before CSC finalises its decision.
The condition does not necessarily need to have been caused by ADF service. CSC invalidity benefits and DVA compensation apply different tests. However, exclusions may arise in some circumstances involving pre-existing conditions, intentional conduct intended to obtain a benefit or extended absence without leave.
What evidence is relevant to the classification?
A military super invalidity claim requires more than evidence that the member cannot continue in their ADF role.
Relevant evidence may include:
- medical transition and discharge documents;
- records identifying the retiring impairments;
- specialist and treating-practitioner reports;
- rehabilitation and return-to-work material;
- education, qualifications and civilian employment history;
- evidence of transferable skills;
- functional restrictions affecting particular occupations;
- prognosis and expected treatment; and
- CSC’s benefit estimate, draft classification and final Decision Notice.
CSC relies on information supplied by the ADF, but the member can provide further medical, employment and qualification information before the classification is finalised.
Medical reports should explain functional capacity rather than diagnosis alone. A useful report identifies the restrictions caused by the retiring impairments and explains how those restrictions affect the member’s ability to perform identified civilian work reliably, safely and sustainably.
The report should also address prognosis, treatment and whether capacity is likely to improve. Evidence that a person can perform an activity once does not necessarily establish that they can sustain the relevant employment on a dependable basis.
What should be checked in the draft classification?
CSC’s medical-transition process includes a draft classification stage. CSC contacts the member to discuss the proposed outcome, and the member can provide further information before the classification is finalised.
Before the decision is finalised, check whether CSC has:
- identified the correct retiring impairments;
- accurately recorded the member’s qualifications and work history;
- included relevant pre-service and in-service experience;
- identified realistic civilian occupations;
- considered the actual physical, psychological and cognitive requirements of that work;
- addressed whether the work can be performed reliably and sustainably; and
- applied the correct classification threshold.
This stage provides an important opportunity to correct missing or inaccurate information. It is generally preferable to address an issue before the final Decision Notice rather than waiting to challenge the completed classification.
CSC’s current guidance also states that DFRDB and MilitarySuper members no longer need to submit the former M40 or D40 forms under the updated medical-transition process. Older CSC factsheets referring to those forms may no longer describe the current process.
What should be checked in the final decision?
The final Decision Notice should be compared with the medical evidence, vocational information and draft assessment.
Check the incapacity percentage, classification and types of civilian employment relied upon. Consider whether those occupations genuinely align with the member’s skills, qualifications and experience and whether CSC accurately assessed the restrictions arising from the retiring impairments.
The calculation should also be checked against the correct scheme. For DFRDB, this includes salary for superannuation purposes and, for some Class B members, years of effective service. For MilitarySuper, the employer, member and ancillary components should be distinguished. For ADF Cover, the calculation may involve salary for ADF Cover purposes, qualifying service, prospective service and the applicable incapacity factor.
If the member disagrees with the final classification, CSC states that the decision may be appealed. The Decision Notice should be reviewed promptly for the applicable process and timeframe.
Before accepting an invalidity classification
The CSC invalidity classes measure incapacity for appropriate civilian employment, not the seriousness of the diagnosis or the member’s inability to continue serving in the ADF.
KSC Law can review a military super invalidity claim, the retiring impairments, medical and vocational evidence and CSC’s reasons. We can identify whether the proposed civilian employment is realistic, whether relevant restrictions were overlooked and whether the evidence supports a Class A pension, Class B pension or another outcome.