What SRDP actually is, and the choice it forces
SRDP is not a top-up. It is an alternative to ongoing incapacity payments, offered once, and taken instead of something else.
Special Rate Disability Pension sits under the Military Rehabilitation and Compensation Act. It is offered where a client's service injury or illness means they are unlikely to ever work more than a nominal number of hours per week, and where their impairment reaches the threshold. It can be paid for life while eligibility is maintained (MRCA s209 continuing eligibility rules apply), it is not means tested in the way income support is, and it is not taxed.
That last sentence is where most of the confusion starts. Advocates hear "tax free, paid for life" and reasonably assume SRDP must be the better option. But SRDP is offered as a substitute for incapacity payments, and it arrives with offsets attached. The comparison is never headline versus headline. It is net-of-offsets, after tax, over a lifetime, against the alternative.
The three things that make this decision different from every other claim decision
- It is a choice, not a determination. The client elects. An advocate who treats it as an outcome to accept has already narrowed the client's options.
- It is effectively permanent. Once the election is made and incapacity payments cease, the client does not get to re-run the numbers in five years when their circumstances change.
- The legislation itself contemplates financial advice before the election. That is a signal, not a formality – the decision is financial, not administrative.
- Confirm in writing to the client: this is an election, not a decision made for you.
- Diarise the decision window the moment the offer arrives, and tell the client the date.
- Ask for the full determination bundle, not the summary letter.
- Flag early that a licensed adviser needs to run the comparison, and that the cost of that advice may be recoverable.
A client asks you whether SRDP will leave them better off than staying on incapacity payments. What is the correct response?