Defence Force Retirement and Death Benefits (DFRDB)

Overview

We are undertaking an own motion investigation into the administration of the Defence Force Retirement and Death Benefits (DFRDB) scheme, specifically the issue of commutation.

The investigation is focused on the accuracy of information about commutation provided to scheme members by the Department of Defence and/or the Australian Defence Force and scheme administrators (including the Commonwealth Superannuation Corporation (CSC)).

What we are investigating

We are only investigating the information scheme members were given about commuting a portion of their pension.

Note—we will not be considering issues relating to indexation of the DFRDB, or any other aspects of the scheme as it was established by Parliament.

Update on progress – 2 September 2019

Submissions

Submissions for this investigation closed on 30 June 2019, although we continued to accept submissions and review information received after that date.

Since the investigation commenced on 21 April 2019 we received 3,430 submissions in various forms, from former members of the Royal Australian Navy, the Australian Army and the Royal Australian Air Force.

Thank you to all of the DFRDB members who shared their circumstances with us.

Our team of investigators have now completed a first stage analysis of all submissions and agency responses. Although we provided a template to guide input, we accepted submissions in any format and have carefully considered all material provided.

What’s been happening?

The primary focus of our investigation is that many members are concerned they may have been misled to believe that the reduction to their retirement pay was temporary and would cease on reaching their notional life expectancy factor age. People told us this was due to a lack of information or because they received information that was incorrect or ambiguous. Many members say this caused them financial detriment.

The submissions process has identified a number of further avenues of inquiry.

We have spoken with some individuals who provided further information relevant to the investigation.

We have asked for information from the Department of Defence (Defence) and the Commonwealth Superannuation Corporation (CSC) to clarify some issues that arose in submissions.

We have also engaged the Australian Government Actuary (AGA) and KPMG to model the commutation outcomes in a number of real life examples, to compare the longer term financial outcomes of decisions to commute or not.

Other issues raised

Submitters raised a number of other concerns, which include:

  • concern about the absence of a definition of commutation in the DFRDB Act and about CSC’s interpretation of the commutation provisions in the Act
  • dissatisfaction or disagreement with the DFRDB Act provisions, which make the reduction permanent
  • dissatisfaction with other aspects of the scheme, including indexation arrangements and administration of spouse payments.

We are carefully considering all of the matters raised with us. Some of these matters go to issues of government policy, which are not usually within our role, but we intend to at least acknowledge these areas of concerns in our report.

What happens next?

We are continuing to assess all of the information we have been provided to inform our conclusions about what occurred. Our report will also be supported by the financial modelling we have commissioned.

At this stage the investigation remains on track for completion and report by the end of 2019.

Further updates on our progress will be periodically published on this page.

For further information about the investigation please contact us via DFRDB.investigation@ombudsman.gov.au or by calling 1300 362 072.