Ombudsman’s Inquiry into DFRDB Commutation

The Ombudsman’s office today (11th December) released a Media Statement on the outcome of his inquiry into DFRDB Commutation. A copy of that Statement and the Ombudsman’s Report is here.

Ministerial Statement – Independent Inquiry Report into DFRDB Scheme

 The Government acknowledges the release of the Commonwealth   Ombudsman’s independent investigation into the Defence Force   Retirement and Death Benefits (DFRDB) scheme.The Government   listened to the concerns of the ex-service community in initiating an independent review of the DFRDB scheme, which focused on the accuracy of information provided about commutation by the Department of Defence (Defence), the Australian Defence Force (ADF) or the scheme administrators, such as the Commonwealth Superannuation Corporation (CSC).

While the investigation found that some information provided by Defence in the 1980s and 1990s regarding commutation was incorrect, the Ombudsman concluded that the decision to commute was, and still is, the more financially beneficial option.

In reaching this conclusion, the Ombudsman requested separate independent actuarial reports from the Australian Government Actuary and KPMG, considered a range of investment scenarios, which determined that it is highly unlikely any ADF members who commuted through the DFRDB scheme would have incurred a financial loss. For these reasons, the Ombudsman has determined that a specific compensation scheme is not appropriate.

The investigation also found that efforts had been made since 2004 by Defence and CSC to correct the information provided, and this report now reinforces the steps taken to provide clearer information on the decision of commutation.

While the report acknowledges that it is unlikely any members who commuted would be financially worse off, we recognise that the provision of misinformation has caused confusion and distress over many years with some ADF members believing their retirement pay would increase once they reached their notional life expectancy.

If anyone believes they did incur a financial loss they can apply for Compensation for Detriment caused by Defective Administration. Eligibility criteria and information on how to apply is available on Defence’s website.

The Government has no plans to make changes to the DFRDB scheme. Further information, including the report, is available on the Commonwealth Ombudsman website.

RELATED ARTICLES

Defence chief sorry for retirement scheme

download 2019 12 12T135942.127

 Australia’s Chief of Defence Angus Campbell has apologised to veterans ripped off by dodgy advice about a retirement benefit scheme.
 General Campbell acknowledged many veterans were misled by Defence.
” We apologise for providing incorrect advice to some (scheme)   members and for the confusion and emotional impact that it may   have caused,” he said in a letter published on Wednesday.
His apology follows an ombudsman’s report into a compulsory Australian Defence Force retirement scheme that began in 1973 and closed to new members in 1991.
ADF members were required to choose between taking a defined pension for life or a lump sum upon retirement, with a lower pension for life.
Most members did – and still do – choose the second option.
Many members were told if they took this option, their pension would subsequently increase to the higher rate once they reached a defined life expectancy age.
“This was false, and created an expectation of a more generous long term outcome than the law provided,” Commonwealth Ombudsman Michael Manthorpe said.
Despite the misleading advice, the ombudsman found it was unlikely any members who took the lump sum and lower pension were financially worse off.
Even so, Veteran’s Affairs Minister Darren Chester has also apologised.
“We recognise that the provision of misinformation has caused confusion and distress over many years,” he said.
“If anyone believes they did incur a financial loss they can apply for compensation.”
The government has no plans to change the scheme.

December 11, 2019 

Comments

  1. George Mansford says

    GEE,GOLLY WHIZ
    I feel so much better now with a multi typed widely robot distributed apology that some staff, well fed, well housed were told to write in the terrible confines of an airconditioned office. Such a shame those of our military family long gone are not on the distribution list. WHAT REALLY ENRAGES ME is that many of the Canberra Suits guilty for both such dishonesty and neglect are still stealing oxygen and collecting regular gold payments for incompetence.
    A curse on all those who with deceit and indifference destroyed many a soldier’s dreams of bright tomorrows after long and demanding military service.
    George Mansford

  2. Guys, you made a choice and some lost, live with it. Stop taking up valuable bandwidth with this stuff!

    • The value of the amount that Veterans have been duped out of by the Commonwealth is all but incalculable. Sounds like you are luxuriating in the MBBS.

  3. Russell Hill. says

    OK, so when I was in 2 Mil Hosp, in 1983, from my injuries I got from being injured at RCB, that i was with Delta Coy 5/7 RAR 1982, After the base Hospital doctors ruined my life. With cutting my shoulder and putting me on Cructhes as I couldn’t walk. Then a Major knocked on my mum and dad’s place to let them k ow I was hurt overseas. My mum collapsed as back in the day, that’s the only time an officer will call at the family home. The officer told me at 2 Mil Hosp. Tick a box, one was a lump sum or a pension, nothing about getting a pension as well as a lump sum. It has taken me 35 years to get TPI. If I sued the Defence Dept, I wouldn’t be having this talk. As I would be a multi millionaire, but I am a digger, I go by the system. It needs to change. Also how many of us as ex serving man, gets told it active service, then come back and get told its peacekeeping. Time for the government to grow a set and look after there serviceman and women.

  4. Colin "Tiny" Russell says

    In a round about sort of way, although not having anything to do with commutation. I elected to take the lump sum and pension as part of the DFRDB package. I thought that being a smart Sgt that I would also bolster that pension etc by taking out a civilian pension plan. This lasted for about 12 months until I was marched into the CO’s office and was informed that “Following investigation via pay roll / policy, some one in authority. my Army pension etc was enough to cover any expenses I may encounter post – Army” and I was ordered to cease that civilian pension plan in case other members became aware of what I had been doing. Really good advice from some one in the hierarchy that filtered down the line – As I said, not to do with commutation, just bad Defence advice / direction that has affected this ex-member at least, although not as badly as the commutation “victims”

  5. I don’t believe I was given incorrect information when I was discharged from the RAAF 11th of October 1974. From my reading of the DFRDB Act 1973 sections 23 and 24 nowhere did it state that my retirement pay would permanently decrease when I had reached my LEF date and the lump sum commuted had been repaid to DFRDB. Note that my retirement pay amount was a combination of my final salary and Schedule 1 of the Act. Could be deemed to be “Legal”. The information was that I could access four times my retirement pay as a lump sum and from the date I elected to commute until I reached my LEF date 32.5 years later my pension would decrease by an amount calculated by dividing my lump sum by 32,5. It all sounded logical and correct so I elected to commute. Add 32.5 to my election date and I had repaid the lump sum in June 2007. A similar story to thousands of others in a similar situation. Now here is my take on what happened. Some time in the late 90’s or early 2000’s DFRDB was receiving pension decrease amounts from a lot of people like me who were rapidly approaching their LEF date and as things stood DFRDB would soon be paying out these amounts instead of receiving them. A double whammy to their bottom line. At this point some enterprising and innovative gentleman in DFRDB came up with the idea of reinventing the meaning of the word “after” in the phrase “on and after” in Section 24, subsection 3 b of the Act. from ,and I quote Collins English Dictionary, “prep. 1. following in time, in succession to; to mean, forever more, permanently , ad infinitum and inserted the “Note” in the DFRDB booklet.
    This scenario gels with what happened. According to the Ombudsman everyone received the wrong information – everyone. How could so many people get it wrong. They didn’t. They got it right and we have been paying for it ever since.

Speak Your Mind

*