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.
Defence chief sorry for retirement scheme
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