On 11 December 2019 the Commonwealth Ombudsman, Mr Michael Manthorpe PSM, published a report into the administration of the Defence Force Retirement and Death Benefits (DFRDB) scheme, specifically the issue of commutation. The Ombudsman's media release can be accessed here.
The investigation focused on the accuracy of information about commutation provided to scheme members by the Department of Defence and the Australian Defence Force (Defence), and DFRDB scheme administrators (including the Commonwealth Superannuation Corporation (CSC)).
The Ombudsman found that even though the scheme was administered in accordance with the law, some DFRDB scheme members were provided with misleading, and even incorrect, advice about their rate of retirement pay by Defence. The Ombudsman found this to be defective administration by Defence.
For this reason, the Ombudsman recommended the Secretary of the Department of Defence and Chief of the Defence Force acknowledge these errors and provide a formal apology. This recommendation was accepted and a letter of apology was provided. It is published as part of the report and is separately available to be downloaded on this page.
As part of the report, the Ombudsman commissioned two separate and independent sets of financial modelling, from the Australian Government Actuary (AGA) and KPMG. Both reports showed that, despite the defective administration, there was no identified cohort of people for whom this caused financial detriment. For this reason, the Ombudsman did not recommend any financial compensation or other remedy be paid.
The Ombudsman also looked at information provided by the CSC, both currently and historically. While this information has at all times been correct, using clearer language may have avoided much of the inconvenience, frustration and disappointment experienced by scheme members. For this reason, the Ombudsman recommended the CSC update certain documents to further clarify these issues.
Both the CSC and Defence were consulted on the draft report prior to publication. We are pleased to confirm that both agencies have accepted all recommendations made by the Ombudsman. Their formal responses to the report can be found in the report appendices.
The Ombudsman thanks the DFRDB members who provided 3436 valuable submissions, information and evidence to the investigation.
Accessing the report
The report can be accessed by clicking the following links:
You can download a copy of the apology from the Secretary of the Department of Defence and the Chief of the Defence Force by clicking here.